IRS Reopens Voluntary Disclosure Program for Erroneous ERC Claims

by | Aug 17, 2024

ARTICLE | August 17, 2024

The Internal Revenue Service (IRS) has reopened the Voluntary Disclosure Program related to problematic Employee Retention Credit (ERC) claims. The first program period received more than 2600 applications disclosing more than $1 billion in improper claims.   The details of its announcement are found on this posting.

The initiative is part of the IRS' broader efforts to enforce compliance with tax laws in relation to the ERC, a benefit that was introduced under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The ERC was a credit against employment taxes for qualifying employers for certain quarters of 2020 and 2021.  It's aim was to support businesses that continued to provide employment during the COVID 19 pandemic.

The IRS has been intensely auditing the ERC and has identified thousands of erroneous ERC claims. These errors range from minor mistakes to serious issues such as false or fraudulent claims. The Voluntary Disclosure Program enables businesses to come forward and rectify erroneous claims voluntarily, potentially avoiding severe penalties and criminal prosecution.

Concurrent with the new VDP window, IRS is sending out up to 30,000 letters reversing and recapturing about $1 billion in claims it asserts were improperly paid.  Recipients of these notices will not be eligible for the reopened VDP.

The IRS also continues to offer a separate claim withdrawal program for those wh ohave submitted claims they now believe may have errors.  The details of this program are here: https://www.irs.gov/newsroom/withdraw-an-employee-retention-credit-erc-claim .

 

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:

When “Creative” Tax Deductions Invite the IRS to Your Door

Jun 2, 2026

What do an arsonist’s fee, a family dog, and a backyard fallout shelter have in common? They’ve all been claimed as tax deductions — and they all earned the kind of IRS attention no taxpayer wants. While most people aren’t pushing the limits quite that far, the truth is that questionable deductions don’t have to be outrageous to trigger an audit.

Are Taxes Driving Americans to Pack Up and Move?

May 26, 2026

Millions of Americans are moving — and tax burdens are part of the equation. New IRS data shows high-tax states like California and New York are losing billions in taxable income to no-income-tax states like Florida and Texas. The numbers tell a compelling story.

What Business Owners Must Know About Net Operating Loss Rules in 2025 and Beyond

May 19, 2026

The pandemic-era flexibility is gone, and the One Big Beautiful Bill has locked in the TCJA’s NOL rules for the foreseeable future. If your business is still planning around old assumptions — like the ability to carry losses back or fully offset taxable income — it’s time for a reset. Here’s what you need to know heading into 2025 and beyond.

Texas Limited Partners Get Good News from the Fifth Circuit — But Don’t Skip the Planning

May 12, 2026

If you are a limited partner in a Texas-based business, a January 2026 federal court ruling just changed the rules in your favor — and the savings could be significant. The U.S. Court of Appeals for the Fifth Circuit rejected the IRS’s long-standing “passive investor” test and ruled that any partner in a limited partnership with genuine limited liability qualifies for the self-employment tax exemption under IRC Section 1402(a)(13) — even if you actively work in the business. With self-employment tax running as high as 15.3%, the financial impact of this ruling can be substantial. But the law is still unsettled outside Texas, and the details matter. Read on to find out what this means for your tax strategy and what steps you should be taking right now.

Real Estate and Cost Segregation

Mar 24, 2026

Learn more about cost segregation studies and found out if performing one is a smart next step for your real estate portfolio.

Building a Family Limited Partnership That Lasts: What High-Net-Worth Families and Business Owners Need to Know

Mar 17, 2026

Most business owners think about succession planning far too late. A Family Limited Partnership, when established early and managed with discipline, gives founders something rare: the ability to transfer economic value to the next generation gradually, deliberately, and on their own terms — without giving up operational control in the process. It is one of the most effective wealth transfer and succession planning tools available. It is also one of the most scrutinized by the IRS. Before you build one, make sure you understand what it takes to make it last.