Taking the Off Ramp: IRS Opens Limited Program To Return Wrongly Received Employee Retention Credits

Mardy Gould • January 26, 2024

By Matthew P. Chiarello and Carlene Y. Lowry

The IRS continues to evaluate and process Employee Retention Credit (“ERC”) claims with a focus on inaccurate and ineligible filings. Among its efforts to police the ERC program, the IRS announced a new initiative that permits taxpayers to return ERCs to which the employer is not entitled and avoid audit and penalty.

The short-duration relief, known as the Employee Retention Credit Voluntary Disclosure Program (“ERC-VDP”), will run until  March 22, 2024 . Under the ERC-VDP, employers that received ERCs for which they were ineligible may self-identify and return 80% of the credits to the IRS (the 20% discount is intended to factor in the portion of the ERC payment lost to the promoter).

To participate in this program, the IRS requires that an eligible taxpayer: (1) apply to the ERC-VDP using a template form; (2) cooperate with the IRS, including providing additional information (e.g., the name and contact information of any advisors or tax preparers who advised or assisted with the claim and details about the services provided, etc.); (3) pay back 80% of the ERC received; and (4) sign a closing agreement. Employers unable to repay the required 80% of the ERC at the time of signing the closing agreement may be considered for an installment agreement on a case-by-case basis. No penalties or interest are generally due on the repayment of the ERCs, but an installment agreement arrangement carries penalties and interest.

In order to be eligible for the ERC-VDP, the employer must meet the following requirements: (i) the employer must not be under criminal investigation and cannot have been notified that it is under criminal investigation; (ii) the employer cannot be under an IRS employment tax examination for the tax period for which it is applying to the ERC-VDP; (iii) the employer cannot have received an IRS notice and demand for repayment of part or all of the ERC; and (iv) the IRS cannot have received information from a third party that the employer is not in compliance and the IRS cannot have acquired information directly related to the noncompliance from an enforcement action.

Employers in receipt of ERCs may wish to consult with tax and benefits counsel to evaluate participation in the ERC-VDP. For more information about the ERC-VDP, including eligibility information, employers may consult a  series of FAQs  published by the IRS. Additional details about the ERC can be found  here ,  here , and  here.  

In addition to the ERC-VDP, a separate program allows certain employers that filed an ERC claim who have not yet received or who have received but have not yet deposited/cashed their refunds to withdraw their submissions and avoid future repayment, interest, and penalties. More information about the ability to withdrawal can be found  here.

Employee burnout: what it is and how to prevent it

By Mardy Gould • May 24, 2024
Employee burnout has become an epidemic in today’s modern workplace. So much so that the World Health Organization (WHO) officially recognizes it as an “occupational phenomenon.”1 While many used to consider mounting workplace stress an individual employee problem, these days, it’s become an employer’s responsibility to prevent burnout before it hurts productivity and business performance—not to mention your employees’ physical and mental health. Luckily, you can prevent burnout from affecting your workforce in several ways. This article will explore the causes and signs of employee burnout and the steps you can take to create a positive work environment where employees feel safe from toxic stress levels.

Form 720 and PCORI fee FAQs

By Mardy Gould • May 23, 2024
If you're a small business owner, you may have heard of the acronym PCORI and the fees that come with it. But what is PCORI, and how does it apply to your organization? Under the Affordable Care Act (ACA), sponsors of self-insured health plans must pay a fee to fund the federal Patient-Centered Outcomes Research Institute (PCORI). PCORI is an independent organization the ACA created to conduct research to help healthcare consumers make better decisions for their specific needs and outcomes. It also performs research related to clinical effectiveness. Employers offering a self-insured medical reimbursement health plan, such as a health reimbursement arrangement (HRA), must pay this fee by July 31 each year via Form 7201. This fee was initially set to expire in 2019, but Congress extended it through September 30, 20292, due to the Further Consolidated Appropriations Act of 20203.
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