IRS Announces Voluntary Disclosure Program related to ERC

by | Jan 5, 2024

ARTICLE | January 05, 2024

The Internal Revenue Service (IRS) recently announced a new voluntary disclosure program aimed at employers who have potentially misused the Employee Retention Credit (ERC). This program, set to expire on March 22, allows employers to pay back questionable ERCs at a discounted rate.

The ERC was originally introduced as part of the CARES Act in 2020 to incentivize employers to retain workers during the COVID-19 pandemic. However, its misuse, often due to misunderstanding or misinterpretation of the credit’s complex rules, has led to the IRS establishing this voluntary disclosure program.

Under the new program, employers who have claimed the ERC inappropriately can voluntarily disclose this to the IRS and repay a portion of the credit, thereby limiting potential penalties and interest. The IRS has stated that it will not impose penalties beyond the understatement penalty if taxpayers take advantage of this program.

To participate in the program, taxpayers must apply by March 22 and voluntarily disclose full details of their questionable ERC claims. This information should include the quarters involved, the amount of credit claimed, and a brief explanation of why the credits are questionable.

According to the IRS, the benefit of participating in the program is that it allows taxpayers to resolve the issue without undergoing a formal examination process. Moreover, the understatement penalty will replace any other accuracy-related penalties that might be applicable.

Applicants should be aware that the IRS will not accept any application if they are currently under examination for the ERC. If a taxpayer is under examination for other issues, they can still apply for the program, but the ERC issue will be addressed separately.

The new voluntary disclosure program is part of the IRS’s broader efforts to enforce compliance and promote fairness in the tax system. It recognizes that many employers may have inadvertently claimed the ERC incorrectly due to its complexity.

In conclusion, the IRS voluntary disclosure program for ERC provides a unique opportunity for employers to rectify errors in their ERC claims without incurring heavy penalties. However, the program is short-lived and employers are encouraged to take advantage of it by March 22.

For more detailed guidance, contact our ERC experts or visit the IRS website at this link. 

Disclaimer: This article is for informational purposes only and does not provide legal, tax, or accounting advice. For advice on your specific situation, please consult your own attorney, tax, or accounting professional.

Questions or Want to Talk?

Call us directly at 972.221.2500 (Flower Mound) or 940.591.9300 (Denton),
or complete the form below and we’ll contact you to discuss your specific situation.

  • Should be Empty:
  • Topic Name:

The Great Wealth Transfer: How Real Estate Owners Can Protect and Pass On Their Legacy

Aug 4, 2026

Trillions of dollars in real estate assets are set to change hands as baby boomers pass wealth to the next generation, and how that transition is handled will determine whether families thrive or struggle. Whether you own a single investment property or a complex real estate portfolio, understanding your options for ownership structure, tax planning, and succession is not just smart, it’s essential. This article breaks down the strategies every real estate owner should have on their radar.

Your Corporate Tax Rate Is Only Half the Story

Jul 30, 2026

A lower tax rate feels like a win — but it may only be telling half the story. New research reveals that cost recovery provisions, system complexity, and investment incentives often drive more value than the rate alone. Is your tax strategy built around the full picture?

Is Your Dental Practice Growing or Just Getting Busier? The Financial Blind Spots Costing You More Than You Think

Jul 28, 2026

Dental practice owners are working harder than ever, yet many are finding it increasingly difficult to predict where their finances will land at the end of the month. The culprit is not a lack of patients or revenue — it is the gap between what the numbers show and what they actually mean. From escalating overhead to operational inefficiencies hiding in plain sight, the forces quietly undermining profitability deserve a closer look. This article breaks down what is really happening inside dental practices today and what it takes to build a financial foundation that can keep pace with growth.

Building a Stronger Financial Foundation: How Outsourced Accounting Helps Construction Companies Scale

Jul 21, 2026

Growth is the goal for every construction contractor, but scaling a business means more than winning bigger projects. As companies move through each stage of development, the financial complexity grows right along with the revenue. Without the right accounting infrastructure in place, that growth can quickly become a liability. Outsourced accounting offers construction companies a smarter path forward, delivering clear visibility into project performance, tighter financial controls, and the strategic insight needed to grow with confidence.