{{title}}
{{byline}}
{{byline}}
IRS officials announced last week that employers who received Employee Recovery Credit (ERC) tax credits from the federal government’s popular pandemic program, but who no longer think they were eligible, can repay 80% of the money they received, rather than the full amount, according to a recent Wall Street Journal article.
From the IRS announcement on its ERC Voluntary Disclosure Program: “The ERC is a refundable tax credit intended for businesses and tax-exempt organizations that continued paying employees during the Covid-19 pandemic if their operations were fully or partially suspended due to a government order, they experienced the required decline in gross receipts, or they were a recovery startup business during the relevant eligibility periods.”
“The repayment plan is the government’s latest attempt to combat what it says are fraudulent and ineligible claims for the employee retention credit, or ERC, which provides up to $26,000 per worker for employers who kept people on payrolls during 2020 and 2021,” said the WSJ article.
In an effort to crack down on what appears to be rampant fraud around the ERC, the IRS is looking into the large number of firms that sprang up to help small businesses navigate the required paperwork.
As part of the deal, participating employers must provide names of ERC firms and descriptions of the services they provided, zeroing in on ERC firms that the IRS says stretched the program beyond its intent as they collected a 20% fee for their services.
To qualify for the 80% repayment, employers must not be under criminal investigation or an employment tax audit and must notify the IRS by March 22.