Frequently asked questions about the second Employee Retention Credit Voluntary Disclosure Program

 

More In 新聞 （英文）

Program closed Nov. 22

The second Voluntary Disclosure Program to resolve incorrect claims for the ERC closed Nov. 22, 2024.

Other ERC options:

Program closed Nov. 22, 2024. Information on this page is no longer current.

The Employee Retention Credit Voluntary Disclosure Program (ERC-VDP) lets employers pay back ineligible Employee Retention Credits at a discounted rate.

A second ERC-VDP program is open from Aug. 15, 2024, through Nov. 22, 2024. The first ERC-VDP program was available from Dec. 22, 2023, through March 22, 2024. The second ERC Voluntary Disclosure Program is for taxpayers returning ERC funds that were paid before Aug. 15, 2024. The second ERC Voluntary Disclosure Program is not a way to claim ERC.

The second program has different terms than the first ERC-VDP.

  • Taxpayers can now only apply for the ERC-VDP for tax periods in 2021.
  • The payback rate is now discounted 15%, meaning a taxpayer needs to pay back 85% of the credit for which they’re ineligible.

These frequently asked questions provide information about the second ERC-VDP, who can apply, and how to do so.

If you already claimed the ERC but it hasn't yet been paid or you haven't cashed or deposited the check, you’re not eligible for the ERC-VDP. See Withdraw an Employee Retention Credit claim for other options.

On this page

General information about the second Employee Retention Credit Voluntary Disclosure Program

Q1. What is the second ERC-VDP?

A1. The second ERC-VDP is a program developed by the IRS that allows certain taxpayers who received but were not entitled to any non-refundable or refundable Employee Retention Credit(s) to self-identify and repay that ERC.

As a participant of the second ERC-VDP, you'll be required to:

You will not be subject to an employment tax audit for ERC resolved within the terms of this program.

Another benefit of the second ERC-VDP is that a reduction to your wage expense on your income tax return is not required, as the settlement eliminates a participant's entitlement to the claimed ERC.

Throughout these FAQs, reference to ERC means both non-refundable and refundable portions of ERC.

The nonrefundable portion of the ERC can reduce your tax liability to zero, but the refundable portion of the ERC can reduce your total tax liability below zero. If the amount of your credit exceeds the tax you owe on the employment tax return, the IRS pays it to you as a refund.

Q2. Is there a deadline to apply to the second ERC-VDP?

A2. Yes. Complete applications for the second ERC-VDP must be received by 11:59 p.m. local time on Nov. 22, 2024. The IRS will process applications after the deadline, but all submissions need to be received by the deadline.

Q3. How do I know if I'm not entitled to any ERC?

A3. The eligibility requirements for ERC depend on the time period for which you claim the credit.

Resources for help:

Q4. How much will I have to pay in the second ERC-VDP?

A4. You will need to repay the amount of ERC you received minus a 15% reduction of that amount afforded by your participation in the second ERC-VDP to resolve your employment tax obligation.

For example, if you received a total of $100,000 in non-refundable and refundable ERC, under the second ERC-VDP terms, you would have to repay $85,000 ($100,000 minus a $15,000 reduction). This example assumes full payment is received by the time you return the signed second ERC-VDP closing agreement to the IRS, so no interest or penalties apply.

See the Calculating & paying the balance due under the second ERC-VDP section for more information.

Q5. What happens if I don't participate in the second ERC-VDP?

A5. The IRS continues to identify new methods of analyzing ERC claims to identify ineligible taxpayers. If you claimed and received ERC you're not entitled to, and you don't participate in the second ERC-VDP to correct it, you risk detection by the IRS, which could lead to substantial interest and penalties and increase your risk of criminal investigation and prosecution.

Civil interest and penalties that could apply to your employment tax liability depending on your particular facts and circumstances
Type of interest or penalty Code section that provides authority to assess Interest or penalty rate
Interest IRC 6601 Varies quarterly. 2nd quarter 2024 rate is 8%-10%
Failure-to-pay penalties IRC 6651(a)(2)

IRC 6651(a)(3)

 .5-25%

Or 1/4% or 1%
Failure-to-file penalties IRC 6651(a)(1) 5-25%
Failure-to-deposit penalties IRC 6656(a) 2-15%
Accuracy-related penalties IRC 6662(a) 20%
Civil fraud penalties IRC 6663 75%
Fraudulent failure-to-file penalties combined with the failure-to-file penalties IRC 6651(f) 15-75%
Trust fund recovery penalties IRC 6672 Equal to total amount of the tax evaded, or not collected, or not accounted for and paid over.

Criminal charges related to taxes can include, but are not limited to, tax evasion (IRC 7201), filing a false return (IRC 7206(1)), false claims (18 USC 287) and false statements (18 USC 1001). A person convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. Filing a false return subjects a person to a prison term of up to three years and a fine of up to $250,000.

Please note that if you willfully filed an employment tax return that fraudulently claimed ERC, or if you assisted or conspired in such conduct, filing for the second ERC-VDP will not exempt you from potential criminal investigation and prosecution.

Q6. Will my participation in the second ERC-VDP affect future tax years?

A6. No. ERC was available only for wages paid March 13, 2020, through Dec. 31, 2021. The only employment tax returns that taxpayers can resolve in the second ERC-VDP are for tax periods ending:

  • March 31, 2021
  • June 30, 2021
  • Sept. 30, 2021
  • Dec. 31, 2021

Q7. Is the second ERC-VDP part of IRS Criminal Investigation's Voluntary Disclosure Practice? Do I need to be pre-cleared by IRS Criminal Investigation before applying for the second ERC-VDP?

A7. No. The ERC Voluntary Disclosure Program is a civil settlement program offered by the IRS specifically for ERC non-compliance. It's not part of Criminal Investigation's Voluntary Disclosure Practice. Information and procedures for CI's Voluntary Disclosure Practice, including pre-clearance, do not apply to the second ERC-VDP. Don't request pre-clearance for participation in the second ERC-VDP, and don't submit your second ERC-VDP application to CI.

Q8. If I already amended my employment tax return to eliminate my entire ERC or if IRS already disallowed it all, can I still get the 15% reduction?

A8. No, you aren't eligible for the second ERC-VDP.

Q9. If I applied during the first ERC-VDP and haven’t heard anything, should I submit it again?

A9. No, if you submitted an application during the first open period from Dec. 22, 2023, through March 22, 2024, you don’t need to resubmit your application. We are still working through the first round of submissions.

Back to top

Second ERC-VDP eligibility questions

Q1. Who is eligible for the second ERC-VDP?

A1. Businesses, tax-exempt organizations and government entities that are not under criminal investigation or notified that IRS intends to commence such an investigation are eligible to apply for second ERC-VDP for each tax period that meets the requirements below:

  1. Your ERC claimed on a Form 941, 941-X, 941-PR, 941-PR-X, 941-SS-X, 943, 943-X, 944, 944-X, CT-1, or CT-1-X has been processed and paid as a refund before August 15, 2024, which you have cashed or deposited, or paid in the form of a credit applied to the tax period or another tax period;
  2. You're entitled to $0 ERC;
  3. You're not under employment tax examination (audit) by the IRS for the quarters submitted on Form 15434;
  4. The IRS has not reversed or notified you of intent to reverse your ERC to $0;
    • For instance, if you received a notice or letter from the IRS disallowing your ERC, you are not eligible for second ERC-VDP for the period(s) on that notice or letter. Disallowance notices or letters from IRS, if they indicate ERC disallowance, include but are not limited to:
      • Letter 950-D, Employment Tax 30 Day Letter
      • Letter 5376, Full/Partial Claim Disallowance
      • Letter 6362, COVID-19 Employer Credit Disallowance Letter for PPP Loan Recipient or Government Entity
      • Letter 6362-A, COVID-19 Employer Credit Disallowance for Third Party Payor reporting a Government Entity
      • Letter 6577-C, Employee Retention Credit (ERC) Recapture
      • Letter 905, Final Partial Claim Disallowance Letter
      • Letter 906, Final Full Claim Disallowance Letter
    • Note: If the reversal notification was for only a portion of your ERC, the remaining portion is still eligible for the second ERC-VDP.
  5. You have not reversed your ERC to $0:
    • For instance, if you previously filed an amended employment tax return to eliminate all of your ERC, you aren't eligible for second ERC-VDP for the period(s) you amended.
  6. IRS doesn't have information from a third party alerting us to your ERC noncompliance.
  7. IRS doesn't have information directly related to your ERC noncompliance from an enforcement action.

Please note that if you willfully filed an employment tax return that fraudulently claimed ERC, or if you assisted or conspired in such conduct, filing for second ERC-VDP will not exempt you from potential criminal investigation and prosecution.

If you're not eligible to participate in second ERC-VDP:

Q2. If my employment tax Forms 941, 943, 944, or CT-1 were filed late, am I still eligible for the second ERC-VDP?

A2. Yes, if you meet all the other eligibility requirements you can use the second ERC-VDP.

Q3. If I can't pay the full amount of the second ERC-VDP liability, can I still participate in the second ERC-VDP?

A3. Yes, if you meet all the other second ERC-VDP eligibility requirements. However, interest and penalties will apply.

If you can’t pay in full, you must submit a signed and completed Form 433-B, Collection Information Statement for Businesses, and all required supporting documentation with your second ERC-VDP application by 11:59 pm local time Nov. 22, 2024.

You also must sign Form 2750, Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty PDF, since your tax liability may be subject to the trust fund recovery penalty (TFRP). All potentially responsible persons for the business entity must submit their own Form 2750 with your second ERC-VDP application by 11:59 p.m. local time Nov. 22, 2024. The IRS may file a notice of federal tax lien (NFTL).

Q4. If I used a third party payer to file my employment tax returns or claim my ERC, am I eligible to participate in second ERC-VDP?

A4. If a third party payer filed an employment tax return that reported the wages and credits related to your ERC, you're eligible to participate in second ERC-VDP, but only through your third party payer. If you apply for second ERC-VDP under your own employer identification number (EIN), it will be rejected. Consult with the third party payer to apply for the second ERC-VDP. See the Third party payers section for more information.

Q5. I am currently under audit, or my parent, subsidiary or another member of my consolidated or affiliated group is. Am I eligible for the second ERC-VDP?

A5. If you, your parent, subsidiary or another member of your consolidated or affiliated group are under employment tax audit for a tax period where the ERC was claimed, you do not qualify for the second ERC-VDP for that tax period. This examination, however, does not disqualify you from the second ERC-VDP for tax periods that are not under audit. Consult with your examiner.

If you, your parent, subsidiary or another member of your consolidated or affiliated group are under any other type of audit, such as for income tax or excise tax, that audit does not disqualify you from the second ERC-VDP eligibility for the audited period(s). Check Who is eligible for the second ERC-VDP? to see if you meet the other eligibility requirements.

Q6. If I'm currently contesting the results of an employment tax examination (audit), such as in IRS Appeals or in litigation, am I considered to be under employment tax audit for purposes of the second ERC-VDP?

A6. Yes. For purposes of the second ERC-VDP, you're considered under an employment tax audit for any tax period you're appealing or challenging in court. You can't apply for the second ERC-VDP for any employment tax return period that is currently in Appeals or in litigation. This appeal or litigation, however, does not disqualify you from the second ERC-VDP for tax periods that are not in Appeals or litigation.

Q7. I received a letter saying I'm not eligible for ERC, adjusting ERC to $0 and requiring repayment. Can I participate in second ERC-VDP?

A7. You can't participate in the second ERC-VDP for the tax period(s) covered by the denial letter. This letter, however, does not disqualify you from the second ERC-VDP for any tax period(s) not covered in the letter.

Q8. I received ERC in multiple tax periods. I determined I'm entitled to ERC in some, but not all, of these tax periods. Am I still eligible for the second ERC-VDP?

A8. Yes, for the tax periods in which you're entitled to $0 ERC, if you meet all the other second ERC-VDP eligibility requirements. Being entitled to ERC in some periods does not disqualify you from the second ERC-VDP for other period(s) in which you're not entitled to any ERC. Do not include on your second ERC-VDP application any tax period(s) in which you're entitled to ERC.

You can't include in the second ERC-VDP any tax period in which you're entitled to some, but not all, of the ERC you claimed in that period. Instead, you may file an amended employment tax return to correct your ERC for this period.

For example, if you received ERC in three tax periods during 2021 and determined you're entitled to ERC in one of those periods, but not in the other two, you're eligible for the second ERC-VDP for those two tax periods, assuming you meet all other eligibility requirements. Include only these two tax periods on your second ERC-VDP application, not the period for which you're entitled to ERC. If you need to eliminate some, but not all, of the ERC in that one period you’re entitled to ERC, you may file an amended employment tax return to correct this ERC.

Back to top

Second ERC-VDP process

Q1. How do I enter the second ERC-VDP?

A1. If you meet the eligibility rules for the second ERC-VDP, submit a complete application package by 11:59 p.m. local time Nov. 22, 2024, by following the instructions on Form 15434.

For more information about the application process see What do I include in my application package, and how do I prepare it? and How do I submit my second ERC-VDP application package?

Q2. What do I include in my application package, and how do I prepare it?

A2. All applicants must complete, sign and date:

For more information see Will I be required to complete and sign a consent to Extend the Time to Assess Employment Taxes to participate in the second ERC-VDP?

Some applicants may need additional forms:

Tip: We encourage you to use the fillable version of Form 15434 and your other forms, rather than printing the form and writing the information. The forms make calculations for you to ensure accuracy and the fillable forms help the IRS process the documents faster.

When using these forms, you should enable features when prompted and ensure you have a recent version of Adobe Reader for the functionality to operate properly. Access Downloading and printing for an up-to-date Adobe version. However, forms filled out by hand are acceptable as long as we can read them.

See Signatures on second ERC-VDP documents for important guidance.

Q3. How do I submit my second ERC-VDP application package?

A3. Use the Document Upload Tool to submit your completed and signed second ERC-VDP application package, inclusive of all tax periods you wish to apply for second ERC-VDP (no need for each tax period to be submitted separately). To do so:

  1. Go to IRS.gov/dut and click the blue "Use the Document Upload Tool" box.
  2. Acknowledge the authorized use statement and the privacy statement.
  3. On the welcome page, select "No" access code.
  4. Type "15434" to pull up the Form 15434 submission portal.
  5. Enter your Tax Year, Business Name, and Business Employer Identification Number (EIN). For "Tax Year" select "2021."
  6. Click "Next."
  7. Upload the required documents (see list above).
  8. Click the "Submit" button to transmit the documents. Your documents won't be submitted to IRS if you don't click "Submit" after your upload.
  9. After you hit "Submit" you should receive the message, "Your documents have been successfully uploaded. You may be contacted at a future date regarding your response.” You should allow approximately 3-4 months for a reply from the IRS. Make sure you see this message to confirm submission was successful.
  10. For your own records, keep copies of all documents submitted via DUT.

Regardless of whether you complete the forms electronically or manually, you must use the Document Upload Tool to submit the second ERC-VDP package. There are no mail, fax or drop-off options for applying to the second ERC-VDP.

To learn what happens next see What happens after I submit my second ERC-VDP application? Will I get a letter of acceptance or rejection?

Q4. Will I be required to complete and sign a Consent to Extend the Time to Assess Employment Taxes to participate in the second ERC-VDP?

A4. Yes, if the Form 15434 lists the quarter ended March 31, 2021, or June 30, 2021, you are required to include with your application a properly completed and signed second ERC-VDP SS-10, Consent to Extend the Time to Assess Employment Taxes. This second ERC-VDP SS-10 is a restricted consent, and it’s within the application Form 15434. It is the only Form SS-10 approved for second ERC-VDP purposes because it contains special language required for this program. Do not submit any other Form SS-10 for the second ERC-VDP purposes.

Q5. What do I do if my address changed?

A5. Include Form 8822-B, Change of Address or Responsible Party – Business PDF with your second ERC-VDP application package. If the address on your Form 15434, Lines 3 through 7, doesn't match IRS records, we can't process your application. Even if you've already submitted Form 8822-B to the IRS, include a copy of it with your Form 15434 to ensure we can process your second ERC-VDP application.

Q6. What resources can help me with my Second ERC-VDP application?

A6. Review the application instructions included with Form 15434.

  • Tax forms and publications. Go to IRS.gov/forms to view, download or print all the forms, instructions and publications you may need.
  • Answers to your ERC questions. You can find links to ERC resources and information on the law, eligibility, recordkeeping, scams, events and other ERC resources on the Employee Retention Credit page.
  • More information about the second ERC-VDP. See the ERC Voluntary Disclosure Program page.
  • ERC-VDP hotline. If you need help completing Form 15434, have questions on the status of your second ERC-VDP application, or have other second ERC-VDP related questions, contact the ERC-VDP hotline at 414-231-2222 and leave a voicemail for a return call. Calls will generally be returned within three business days. The second ERC-VDP hotline is available only for help with Form 15434, questions about the second ERC-VDP application status and other questions related to the second ERC-VDP. Calls regarding any other matter, including other ERC-related inquiries, will not be returned. Staff at this hotline can't provide status updates for ERC claims or claim withdrawals, only the second ERC-VDP applications.
  • Trusted tax preparers. Using a certified public accountant, enrolled agent or other knowledgeable and trusted tax professional can help avoid errors that could result in a processing delay.

Q7. What happens after I submit my application to the second ERC-VDP? Will I get a letter of acceptance or rejection?

A7. The IRS will review the application package and verify your eligibility for the second ERC-VDP. The IRS will mail you (or your authorized representative if a valid Form 2848, Power of Attorney and Declaration of Representative PDF, is included with the application) a letter letting you know the next steps to take or if it was rejected. We may contact you for additional or missing information.

If your application is accepted, the IRS will mail you Form 15434-A, Closing Agreement On Final Determination Covering Specific Matters For Second Employee Retention Credit Voluntary Disclosure Program, and subsequently adjust your employment tax account to reflect the reduced or eliminated ERC amount.

You don't need to adjust your income tax return for the 15% of your ERC you're not required to repay under this program. Do not submit amended employment tax returns correcting your ERC with your second ERC-VDP application package.

If your application was rejected, the IRS will send a letter that explains why and offer potential solutions. You may be able to correct the error and resubmit your application or you may wish to file an amended employment tax return.

Q8. How long does the second ERC-VDP process take before it is completed?

A8. Because every case is different, there is no way to estimate how long the process will take for you. However, the IRS has taken steps to improve our efficiency in processing cases. Steps you can take to speed up processing:

Once we assign your completed second ERC-VDP application to an employee, most cases should be resolved quickly. The second ERC-VDP generally operates on a first-come, first-served basis.

Q9. When do I have to pay the amount due under the second ERC-VDP?

A9. To avoid any penalties and interest, make full payment of any amount due under the second ERC-VDP by the time you return the signed Form 15434-A, Closing Agreement On Final Determination Covering Specific Matters For Second Employee Retention Credit Voluntary Disclosure Program, to the IRS. If you can’t make full payment, submit a Form 433-B PDF and Form 2750 PDF for all potentially responsible persons for the business entity. See What do I include in my application package, and how do I prepare it?

See Calculating & paying the balance due under the second ERC-VDP for more information.

Q10. If my Second ERC-VDP application is rejected, can I apply again later?

A10. It depends on the reason your application was rejected. Review the rejection letter you received for the reason(s) and possible resolution. If the reason can be corrected, please resubmit a complete application package, taking care to address any errors or omissions cited in the rejected application letter.

Q11. How can I check the status of my second ERC-VDP application?

A11. You may contact the ERC-VDP hotline at 414-231-2222 and leave a voicemail for a return call. Calls will generally be returned within 5 business days.

Note that the ERC-VDP hotline is available only for help with Form 15434, questions about the ERC-VDP application status, and other questions related to ERC-VDP. Calls regarding any other matter, including other ERC-related inquiries, will not be returned. Staff at this hotline can't provide status updates for ERC claims or claim withdrawals, only the ERC-VDP applications.

Q12. What happens if I don't cooperate after I submit my application?

A12. You won't get the benefits of the second ERC-VDP. You may be required to pay the full amount of ERC, with no 15% reduction allowed through the second ERC-VDP. You may also be subject to civil and criminal interest and penalties. Cooperation includes, but is not limited to, responding timely and accurately to any requests.

Q13. How do I complete the Form 2750?

A13. The Form 2750, Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty PDF, is partially pre-filled to meet the second ERC-VDP requirements and reduce burden. You'll need to complete the following:

  • Form 2750-Line 1: Name and address of person potentially responsible. Per IRS Internal Revenue Manual (IRM) 5.7.3.4.1, Establishing Responsibility, responsibility is a matter of status, duty, and authority. A determination of responsibility is dependent on the facts and circumstances of each case. Potential responsible persons include:
    • Officer or employee of a corporation
    • Partner or employee of a partnership
    • Corporate director or shareholder
    • Another corporation
    • Employee of a sole proprietorship
    • Limited liability company (LLC) member, manager or employee
    • Surety lender
    • Other person or entity outside the delinquent business organization
    • Payroll Service Provider (PSP)
    • Responsible persons within a PSP
    • Professional Employer Organization (PEO)
    • Responsible persons within a PEO
    • Responsible persons within the common law employer (client of PSP/PEO)
    • Business entities (including corporations, S corporations, LLC, etc.) that are determined to be the collection agency in the case of certain collected excise taxes
  • Form 2750-Line 2: Social Security number (SSN)
  • Form 2750-Line 3: Statutory Period Extended to. This is pre-filled. Don’t edit it.
  • Form 2750-Line 4: Name and Address of Employer or Collection Agency. In most cases, this will be the name of your business entity.
  • Form 2750-Line 4: Form Number. Input the form number the business would typically file for employment taxes, such as Form 941.
  • Form 2750-Line 4: Tax Period. This is pre-filled. However, if your business is an annual filer of 941s, instead of quarterly, delete “March 31, 2021, June 30, 2021, and Sept. 30, 2021.”
  • Form 2750-Line 4: Employer Identification Number
  • Form 2750-Line 5: Signature
  • Form 2750-Line 6: Date

To learn more about the IRS Collection Process, see Publication 594, The IRS Collection Process. PDF

Back to top

Signatures on the second ERC-VDP documents

Q1. Who is authorized to sign Form 15434 and the second ERC-VDP closing agreement?

A1. Your second ERC-VDP application and closing agreement must be signed by an authorized person.

People authorized to sign Form 15434 and the second ERC-VDP closing agreement
Type of employer Who can sign
Sole proprietorship The individual who owns the business
Corporation, including a limited liability company (LLC) treated as a corporation The president, vice president, or other principal officer duly authorized to sign
Partnership (including an LLC treated as a partnership) or unincorporated organization A responsible and duly authorized member, partner, or officer having knowledge of its affairs
Single-member LLC treated as a disregarded entity for federal income tax purposes The owner of the LLC or a principal officer duly authorized to sign
Trust or estate The fiduciary

Your second ERC-VDP application can also be signed by a duly authorized agent (for example, an individual with valid power of attorney via Form 2848, Power of Attorney and Declaration of Representative PDF, or a reporting agent with Form 8655, Reporting Agent Authorization PDF).

Remember, if you used a third party payer to file your employment tax returns or claim your ERC, you can't sign or submit these documents. You must contact the third party payer to apply to the second ERC-VDP.

Q2. Can I sign the second ERC-VDP application or closing agreement electronically or digitally?

A2. Yes, following IRS requirements in IRM 10.10.1, IRS Electronic Signature (e-Signature) Program, and other related guidance.

Acceptable electronic signatures on Form 15434 and the second ERC-VDP closing agreement are as follows:

  • Form 15434: Images of documents with original signatures (scanned or photographed) in any common file type such as JPEG, TIFF, PDF, etc.
  • Form 15434 and the second ERC-VDP Closing Agreement: Digital signatures that use encryption techniques that provide proof of original and unmodified documentation when transmitted by an approved secure messaging or file transfer system.

A digital signature is a type of electronic signature that uses advanced features and encryption to validate the authenticity and validity of an electronic record. The IRS employee assigned to your second ERC-VDP case can provide more guidance if you wish to sign your second ERC-VDP closing agreement digitally.

Q3. Can I sign other ERC-VDP documents electronically or digitally?

A3. Yes, following IRS requirements in IRM 10.10.1, IRS Electronic Signature (e-Signature) Program, and other related guidance, you can sign other ERC-VDP documents electronically or digitally. Other related forms may include but are not limited to Form 2848, Form SS-10, 433-B, 433-D and 8822-B.

Back to top

Calculating & paying the balance due under the second ERC-VDP

Q1. Do I need to return the full amount of my ERC?

A1. No. Even though you're not entitled to any ERC, the second ERC-VDP requires you to return only 85% of it. The second ERC-VDP provides participants a 15% reduction in the amount of ERC to be repaid. This 15% is not taxable income to you under the program terms.

Q2. How do I calculate how much employment tax, interest, and penalties I owe under the terms of the second ERC-VDP?

A2. The second ERC-VDP requires payment of the entire ERC received minus 15%. You must make separate payments for each tax period. The fillable Form 15434 will help you calculate an estimate of your ERC re-payment amount for each tax period.

The second ERC-VDP terms don't require you to repay any interest that was paid to you with the ERC refund.

Interest and penalties will not apply to your second ERC-VDP liability (what you have to pay back) if full payment is received by the time you return the signed second ERC-VDP closing agreement to the IRS.

Q3. Should I submit my payment with the second ERC-VDP application?

A3. Paying at the time you apply to the second ERC-VDP can help speed up processing and resolve your case more quickly. You can pay using the Electronic Federal Tax Payment System (EFTPS).

Full payment of any amount due under the second ERC-VDP is required by the time you return the signed second ERC-VDP closing agreement to the IRS, to avoid interest and penalties going forward. If you can’t pay in full, see How do I request an installment agreement or alternative payment arrangement for my second ERC-VDP liability?

Q4. How do I submit payment for my ERC-VDP liability?

A4. Use Electronic Federal Tax Payment System (EFTPS). Form 15434, Part IV, Line 15a calculates an estimate due for each tax period you wish to resolve in ERC-VDP. You should make separate payments for each tax period via EFTPS when you submit Form 15434. For each EFTPS payment, select the category "Advanced Payment."

Example: In EFTPS, you would select Tax Form 941, Tax Type would be Audit Adjustment, and Advance Payment of Tax Deficiency.

Note: Do not use the amount on Form 15434, Line 15a, "Total All Periods" column to make a single, lump-sum payment.

If you're not enrolled in EFTPS, be aware that new enrollments can take up to five business days to process. Go to IRS.gov/eftps for more information.

For more information on EFTPS, see Publication 4990, Tax Payment Instruction Booklet PDF.

Q5. If my third party payer applied to the second ERC-VDP to correct my ERC, who pays the IRS?

A5. You should pay the third party payer applying to the second ERC-VDP for you. They will pay the IRS on your behalf. Don’t try to pay the second ERC-VDP amount to the IRS through other means. See Third party payers for more information.

Q6. Does the second ERC-VDP have payment options if I can't pay in full?

A6. Yes, the second ERC-VDP allows taxpayers to work with our collection department to explore payment options.

See Payment options for accepted second ERC-VDP applications for more information.

Q7. If I can't pay in full, can I submit an offer in compromise for my amount due in the second ERC-VDP?

A7. If you can't pay in full when you return the signed second ERC-VDP closing agreement to the IRS, then the IRS may consider you for another payment option including an installment agreement or offer in compromise after your second ERC-VDP application is approved and processed. You will need to submit both Form 2750 and Form 433-B with your Form 15434. See Payment options for accepted second ERC-VDP applications.

Back to top

Payment options for accepted second ERC-VDP applications

Q1. How do I request an installment agreement or alternate payment arrangement for my second ERC-VDP liability?

A1. If you can’t pay in full when you return the signed second ERC-VDP closing agreement to the IRS, then you may be considered for an alternate payment arrangement such as an installment agreement.

To be considered for an installment agreement or alternate payment arrangement for your second ERC-VDP liability, you must use the IRS Document Upload Tool to submit these documents with your second ERC-VDP application package:

  • A signed and completed Form 433-B, Collection Information Statement for Businesses PDF, and
    • All documentation required to support Form 433-B. Supporting documentation should include, at minimum:
      • Verification of assets, encumbrances, income and expenses reported,
      • Profit and loss statements from the past three to twelve months, and
      • Bank and investment statements, loan statements, financing statements, bills or statements for recurring expenses from the past three to twelve months.
  • Signed Form 2750, Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty PDF, for all potentially responsible persons for the business entity. The IRS must receive this information by 11:59 p.m. local time Nov. 22, 2024, to consider you for an alternate payment arrangement on your second ERC-VDP liability. Only timely requests will be considered. All requests for an alternate payment arrangement are subject to approval and will be considered on a case-by-case basis.

Q2. If I request to be considered for an installment agreement or other collection alternative for my second ERC-VDP liability, how will I know if I'm approved?

A2. The IRS will consider all requests for installment agreements or other collection alternatives on a case-by-case basis after the second ERC-VDP closing agreement is signed and processed.

Q3. What payment options are available if I cannot submit full payment for my second ERC-VDP liability?

A3. If you are unable to pay the full amount of ERC, minus 15%, then a collection team member will be assigned your case after the closing agreement is executed and will look to offer a resolution that fits your current financial condition and ability to pay. See Tax topic 202, Tax payment options, for more information.

Q4. I’m applying for the second ERC-VDP for tax periods in 2021 and want to voluntary pay on a 2020 tax period. How do I do that?

A4. Since the normal period to make an assessment of tax for a 2020 tax period passed on April 15, 2024, those tax periods generally can’t be assessed additional taxes. Voluntary payments are those made when the time period to make an assessment of tax has passed and can no longer be made. You have no legal obligation to make a voluntary payment. You will not be assessed employment taxes for any amount being submitted as a voluntary payment.

Should you still choose to make a voluntary payment, send it to the employee assigned to you that is working your Form 15434 and specify the tax periods to which you want to apply the payments. If you are a third party payer, specify the client that it should be applied towards.

Back to top

Amending an employment tax return to eliminate or reduce ERC I've received

Q1. If I participate in the second ERC-VDP to eliminate my ERC, do I need to also amend my employment tax returns?

A1. No. If your ERC non-compliance is resolved within the second ERC-VDP, the IRS will adjust your account according to the program terms. Do not submit amended employment tax returns correcting your ERC with your second ERC-VDP application package.

Q2. I'm not eligible for the second ERC-VDP, or I don’t want to apply for it, but I want to correct my ERC. How do I do that?

A2. Prepare a new adjusted return (Form 941-X, Form 943-X, Form 944-X or Form CT-1X) with the correct amount of ERC and any other corrections for that tax period.

Mail the new adjusted return to the IRS using the address in the instructions for the form that applies to your business or organization. Do not send the new adjusted return through the Document Upload Tool or to the ERC claim withdrawal fax line.

Q3. Can I apply to the second ERC-VDP for a tax period in which I'm entitled to some, but not all, of the ERC I claimed?

A3. No. You are not eligible for the second ERC-VDP for any tax period in which you're entitled to some ERC. The program is only for tax periods in which no ERC is allowed.

Instead, prepare a new adjusted return (Form 941-X, Form 943-X, Form 944-X or Form CT-1X) with the correct amount of ERC and any other corrections for that tax period. Mail the new adjusted return to the IRS using the address in the instructions for the form that applies to your business or organization. Do not send the new adjusted return through the Document Upload Tool or to the ERC claim withdrawal fax line.

Q4. Can I apply to the second ERC-VDP for a tax period to eliminate and repay my ERC if I need to make other corrections to my employment tax return?

A4. No. You are not eligible for the second ERC-VDP for any tax period in which you need to eliminate your ERC and make other corrections to your employment tax return.

Instead, for this tax period, prepare a new adjusted return (Form 941-X, Form 943-X, Form 944-X or Form CT-1X) with the correct amount of ERC and any other corrections for that tax period. Mail the new adjusted return to the IRS using the address in the instructions for the form that applies to your business or organization. Do not send the new adjusted return through the Document Upload Tool or to the ERC claim withdrawal fax line.

Back to top

Taxpayer representatives in the second ERC-VDP

Q1. Can someone else represent me for second ERC-VDP participation? If I want an authorized representative, what do I need to do?

A1. If you want to authorize someone to represent you in the second ERC-VDP, check the box on Line 12 of Form 15434, Part III, and make sure the IRS has your Form 2848, Power of Attorney and Declaration of Representative PDF, for the employment tax return(s) and tax period(s) listed in Part IV of your Form 15434:

  • If you already have a Form 2848 on file with the IRS for the employment tax return(s) and tax period(s) listed in Part IV of your Form 15434, then you don't need to include a copy or submit a new Form 2848 with your second ERC-VDP package.
  • If you don't have a Form 2848 on file with the IRS for the employment tax return(s) and tax period(s) listed in Part IV of your Form, then you do need to submit a completed Form 2848 with your second ERC-VDP package. To complete Form 2848, Line 3, for second ERC-VDP:
    • In Description of Matter, enter "Employment Taxes." Do not enter "second ERC-VDP."
    • In Tax Form Number, enter the employment tax form(s) listed in Part IV of your second ERC-VDP application, such as Form 941 or Form 944. Do not enter "Form 15434."
    • In Year(s) or Period(s), enter the tax period(s) listed in Part IV of your ERC VDP application.

Form 2848 PDF, its instructions PDF and Publication 4245, Power of Attorney Preparation Guide PDF, are available on IRS.gov/forms.

Back to top

Case resolution in the second ERC-VDP

Q1. If I don't agree to the terms of the second ERC-VDP closing agreement, will mediation with Appeals be an option?

A1. No. Participation in the second ERC-VDP requires you to sign a closing agreement. The terms of the second ERC-VDP closing agreement can't be appealed.

Back to top

Preparer/advisors

Q1. Am I required to give information about my preparer or someone who advised, encouraged or helped me to claim ERC?

A1. Yes. Form 15434, Part V requires information about any advisors or tax preparers who advised or assisted you with claiming ERC. In this section of the second ERC-VDP application, provide the name, address and telephone number of any of these advisors or preparers, and details about the services provided. If you need to add more than one preparer/advisor, click the "Add Additional Preparer/Advisor" button at the bottom of Part V. The form will expand to add another set of fields.

Q2. How can I report a promoter who scammed me?

A2. The IRS encourages people to report:

  • Tax-related illegal activities relating to ERC claims,
  • Individuals who promote improper and abusive tax schemes, and
  • Tax return preparers who deliberately prepare improper returns.

To report tax-related illegal activities relating to ERC claims:

  1. Complete Form 14242, Report Suspected Abusive Tax Promotions or Preparers PDF
  2. Include with your form any supporting materials.
  3. Provide your contact information: This is optional but will be helpful if we have questions and will let us acknowledge receipt of your referral.
  4. Send your form and materials by fax or U.S. mail to the IRS Lead Development Center in the Office of Promoter Investigations. Its contact information is:

Fax: 877-477-9135

Mail:

Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, CA 92677-3405

For more information, see ERC scam FAQs.

Back to top

Third party payers

Q1. What does "third party payer" mean?

A1. For purposes of the second ERC-VDP, reference to a third party payer who filed an employment tax return that reported the wages and credits related to your ERC means a third party payer, such as a section 3504 agent, professional employer organization (PEO), or a Certified Professional Employer Organization (CPEO), claimed the ERC for you on an employment tax return filed under the third party payer's own Employer Identification Number (EIN) rather than your EIN.

Q2. I'm a third party payer. Can I apply to the second ERC-VDP for only some of my clients, and if so, how?

A2. Yes. Prepare your second ERC-VDP application as follows:

  • Complete one Form 15434 by filling out Parts I and III about yourself, and Parts II, IV and V about client(s) for whom you're applying to the second ERC-VDP. See below for details on Parts II, IV and V.
  • Attach a copy of the relevant page(s) of the Schedule R that was filed with each Form 941 or Form 941-X on which you claimed the ERC for your client(s). See below details on Schedule R.

Fill out Parts II, IV, and V with client information as follows:

  • Part II – On Lines 11b-11d, enter the information of all clients for whom you're applying to the second ERC-VDP. In any field where there isn't enough space to enter all clients' information, don't enter any. Instead, enter "See attached Schedule R."
  • Part IV - Sum the information for all client(s) for whom you're applying to the second ERC-VDP and include the totals in Part IV.
  • Part V - If your clients had different preparers/advisors, use the "Add Additional Preparer/Advisor" button at the bottom of Part V to add more.

Prepare the Schedule R attachment as follows:

  • Attach a copy of the relevant pages of the Schedule R that you filed with each Form 941 or Form 941-X on which you claimed the ERC for your client.
    • Pages are relevant if they contain the information for the clients you're including in your second ERC-VDP application.
  • On these relevant pages, black-out (redact) the information for any client you're not including in the application.
  • Do not include other pages of Schedule R.

Q3. How do I, a third party payer, make the second ERC-VDP payment?

A3. Use Electronic Federal Tax Payment System (EFTPS) to pay ERC amounts for all clients you're entering into the second ERC-VDP. There’s no need to make a separate EFTPS payment for each client. Paying at the time you apply to the second ERC-VDP can help speed processing and resolve cases more quickly.

Full payment of any amount due under the second ERC-VDP should be made by the time the signed second ERC-VDP closing agreement is returned to the IRS, unless you’re requesting an alternative payment arrangement.

Clients of third party payers: You should make payment to the third party payer applying to the second ERC-VDP for you. Don’t try to pay the second ERC-VDP liability to the IRS through other means.

Q4. I'm a third party payer and already applied to the second ERC-VDP for one or more clients, but I need to apply for other clients now. Can I?

A4. Yes. Prepare a new second ERC-VDP application package for the new client(s) and submit it using the IRS Document Upload Tool. On this new application, only reflect the new clients information, prepared as described in I'm a third party payer. Can I apply to the second ERC-VDP for only some of my clients, and if so, how?

Don't include client information from any prior second ERC-VDP applications on the new application.

Page Last Reviewed or Updated: 23-Nov-2024