ERC Compliance Efforts Top $1 Billion in Six Months, IR-2024-78

The IRS announced that compliance efforts around erroneous Employee Retention Credit (ERC) claims have topped more than $1 billion within six months. “We are encouraged by the results so far of our initiatives designed to help misled businesses, and the IRS will continue our broader compliance work given the aggressive marketing we’ve seen with this credit,” said IRS Commissioner Danny Werfel. The special ERC Voluntary Disclosure Program (VDP) has yielded more than $225 million from over 500 taxpayers, while the ongoing claim withdrawal process for those with unprocessed claims has led to 1,800 entities withdrawing $251 million. Additionally. $3 billion claims are being reviewed by the IRS criminal investigation team. Although the ERC program began as a critical effort to help businesses during the COVID 19 pandemic, the program has been misused and become the target of aggressive marketing well after the end of the pandemic. Keeping this in mind, the IRS will continue its moratorium on processing ERC claims submitted after September 14, 2023. This moratorium helps the agency review the ERC inventory with stringent measures of scrutiny.

The IRS also announced that the VDP will be suspended after March 22, 2024. The reopening of the program at a later stage depends on whether Congress extends the statute of limitations for ERC claims. The VDP is for employers who need to repay ERCs they received through December 21, 2023, either as a refund or as a credit on a tax return. Meanwhile the agency guarantees that the ERC claim recapture will continue to expand. The IRS has other compliance actions underway, with thousands of claims being audited; promoter investigations and criminal investigations.

IR-2024-78