Last Updated on December 22, 2023 by Robert C. Hoopes
In a bid to address fraudulent claims made by businesses, the Internal Revenue Service (IRS) has unveiled a new “voluntary disclosure program” for companies that mistakenly took advantage of a pandemic-era tax credit. The employee retention tax credit (ERC) was primarily designed to provide assistance to small businesses severely impacted by the ongoing Covid-19 crisis. However, numerous firms were found to be dishonestly claiming this credit.
To rectify this issue, the IRS had initially launched a “special withdrawal process” for companies with pending claims. Now, this new program has been introduced, offering businesses a chance to repay the erroneously claimed credit with a 20% discount on the total amount to cover associated fees.
Highlighting the significance of the voluntary disclosure program, IRS Commissioner Danny Werfel emphasized that businesses must seize this time-limited opportunity before the deadline on March 22, 2024. Considering the potential repercussions of fraudulent practices, Werfel encouraged companies that believe they were misled by promoters to carefully consider participating in the disclosure program or the withdrawal option.
This initiative follows the recent crackdown on fraudulent filings by the IRS, as evidenced by their decision to send out over 20,000 rejection letters relating to the ERC. By taking swift action against these illicit activities, the IRS aims to safeguard the integrity of the tax system and ensure that those truly in need receive the support they deserve.
As businesses continue to navigate the complexities brought on by the pandemic, it is essential for organizations to maintain ethical practices when accessing government assistance. The voluntary disclosure program serves as a vital opportunity for businesses to rectify erroneous claims, thereby mitigating potential penalties and legal consequences. By opting for transparency, companies can contribute to a fair and equitable recovery for all, ensuring that the funds reach those truly in need.