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Tracking the ERC: Voluntary Disclosure Program Deadline Approaching and Other ERC Updates By SANDRA R. BROWN and HUNTER KEASTER

The Employee Retention Credit (ERC) is a refundable tax credit created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in 2020 to help businesses negatively impacted by the COVID-19 pandemic maintain their payroll. The credit has very specific eligibility requirements including full or partial suspension of business operations because of government orders and significant declines in gross receipts during 2020 or the first three quarters of 2021. Despite, or perhaps because of, these complex eligibility requirements, the IRS received a deluge of dubious claims caused by aggressive third-party promoters encouraging (oftentimes ineligible) employers to claim the ERC – receiving a percentage of the (oftentimes illegitimate) refund as payment for their “service.” For employers who have determined their claim is incorrect but have already received the ERC, the IRS created the Employee Retention Credit Voluntary Disclosure Program (ERC-VDP). The program allows employers to repay 80% of the credit to avoid paying interest or penalties, with an approaching deadline of March 22, 2024. 

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