Lance's Corner

IRS Launches Second ERC Voluntary Disclosure Program

Aug 15, 2024

Per the notice below, the United States Internal Revenue Service (IRS) is launching a second Employee Retention Credit (ERC) voluntary disclosure program to resolve incorrect ERC claims.

IRS provides details of second Employee Retention Credit Voluntary Disclosure Program; program for improper claims open through Nov. 22 

The Internal Revenue Service urged businesses that have received Employee Retention Credit payments to recheck eligibility requirements and consider the second Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP) to resolve incorrect claims without penalties or interest.  The second ERC-Voluntary Disclosure Program will run through Nov. 22, 2024, and allow businesses to correct improper payments at a 15% discount and avoid future audits, penalties and interest.  The reopening of ERC Voluntary Disclosure Program is designed to help businesses with questionable claims to self-correct and repay the credits they received after filing ERC claims in error.  Many of these claims were driven by aggressive marketing from unscrupulous promoters.  To help businesses caught in this situation, the IRS urges businesses to review important warning signs and eligibility requirements, and to talk to a trusted tax professional to see if the VDP is a good option.  The IRS’s ERC Eligibility Checklist can also help businesses understand eligibility requirements and suggest next steps.  As the IRS continues intensifying compliance work involving improper ERC claims, the VDP can protect businesses from potential costly compliance action in the future, such as audits, full repayment, penalties, and interest.  Full details are available in IRS Announcement 2024-30, also released today.  The IRS’s claim withdrawal program remains open for businesses whose ERC claims haven’t been paid yet.

Details about the second ERC Voluntary Disclosure Program

Interested employers must apply to the second ERC Voluntary Disclosure Program by Nov. 22, 2024.  Applicants that the IRS accepts into the program will need to repay only 85% of the credits they received.  This second round of the program is open for tax periods in 2021.  Employers can’t use the second VDP to disclose and repay ERC money from tax periods in 2020.  If the IRS paid interest on the employer’s ERC refund claim, the employer doesn’t need to repay that interest.  Employers who are unable to repay the required 85% of the credit may be considered for an Installment Agreement on a case-by-case basis, pending submission and review of Form 433-B, Collection Information Statement for Businesses, and all required supporting documentation.  Form 433-B is available on IRS.gov.  The IRS will not charge program participants interest or penalties on any credits they timely repay.  However, if an employer can’t repay the required 85% of the credit at the time they sign their closing agreement, they’ll be required to pay penalties and interest in connection with an alternative payment arrangement such as an installment agreement.  To qualify for this program, employers must provide the IRS with the names, addresses, telephone numbers, and details about the services provided by any advisors or tax preparers who advised or assisted them with their claims.  The IRS has provided a set of Frequently Asked Questions about the second ERC Voluntary Disclosure Program to help employers understand the terms of the program.

ERC Voluntary Disclosure Program: Who can apply?

A variety of ERC recipients can apply for the second ERC Voluntary Disclosure Program.  Any employer who already received the ERC for a tax period in 2021 for which they weren’t entitled can apply if the following are also true:

  • The employer hasn’t already applied to the first ERC VDP for the same tax periods.  The IRS is still processing VDP applications from the first program.  Taxpayers should not reapply for the same periods.
  • The employer isn’t under criminal investigation.
  • The employer isn’t under an IRS employment tax examination for the tax period for which they’re applying to the VDP.
  • The employer hasn’t received a Letter 6577-C, Employee Retention Credit (ERC) Recapture, or an IRS notice and demand for repayment of part or all of its ERC claim.
  • The employer hasn’t already filed an amended return to eliminate their ERC.
  • The IRS hasn’t received information from a third party or directly from an enforcement action that the taxpayer is not in compliance.

How to apply

To apply, employers must file Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, available on IRS.gov, and submit it through the IRS Document Upload Tool.  Employers are expected to repay their full ERC, minus the 15% reduction allowed through the VDP.  Under certain conditions, employers who aren’t able to pay the amount in full will have the option to set up an installment agreement.

Employers who outsource their payroll must apply to VDP through the third party

Many employers outsource their payroll obligations to a third party who reports, collects and pays employment taxes on the employer’s behalf using the third party’s Employer Identification Number.  In this situation, the third party, not the employer, must file Form 15434.  See the form and its instructions for details.

Next steps after an application is approved

Once the employer has applied to the VDP and submitted their Form 15434, an IRS employee will contact them to go over the application and answer any questions.  If the IRS approves the employer’s application, they will mail the employer a closing agreement.  The employer must then repay 85% of the ERC they received, either online or by phone, using the Electronic Federal Tax Payment System (EFTPS).  EFTPS is the Treasury Department system that most businesses already use to pay various federal tax obligations.  VDP participants unable to repay 85% of the ERC they received in full may enter into an installment agreement with the IRS to pay over time.  Penalties and interest will apply under the standard installment agreement policy, so the IRS encourages those who can’t pay in full to consider getting a loan from a financial institution to avoid these costs.  Once payment has been made, the employer must return the signed closing agreement to the IRS.

USDOL Issues Comprehensive Employer Guidance on Long COVID

The United States Department of Labor (USDOL) has issued a comprehensive set of resources that can be accessed below for employers on dealing with Long COVID.

Supporting Employees with Long COVID: A Guide for Employers

The “Supporting Employees with Long COVID” guide from the USDOL-funded Employer Assistance and Resource Network on Disability Inclusion (EARN) and Job Accommodation Network (JAN) addresses the basics of Long COVID, including its intersection with mental health, and common workplace supports for different symptoms.  It also explores employers’ responsibilities to provide reasonable accommodations and answers frequently asked questions about Long COVID and employment, including inquiries related to telework and leave.

Download the guide

Accommodation and Compliance: Long COVID

The Long COVID Accommodation and Compliance webpage from the USDOL-funded Job Accommodation Network (JAN) helps employers and employees understand strategies for supporting workers with Long COVID.  Topics include Long COVID in the context of disability under the Americans with Disabilities Act (ADA), specific accommodation ideas based on limitations or work-related functions, common situations and solutions, and questions to consider when identifying effective accommodations for employees with Long COVID.  Find this and other Long COVID resources from JAN, below:

Long COVID, Disability and Underserved Communities: Recommendations for Employers

The research-to-practice brief “Long COVID, Disability and Underserved Communities” synthesizes an extensive review of documents, literature and data sources, conducted by the USDOL-funded Employer Assistance and Resource Network on Disability Inclusion (EARN) on the impact of Long COVID on employment, with a focus on demographic differences.  It also outlines recommended actions organizations can take to create a supportive and inclusive workplace culture for people with Long COVID, especially those with disabilities who belong to other historically underserved groups.

Read the brief

Long COVID and Disability Accommodations in the Workplace

The policy brief “Long COVID and Disability Accommodations in the Workplace” explores Long COVID’s impact on the workforce and provides examples of policy actions different states are taking to help affected people remain at work or return when ready.  It was developed by the National Conference of State Legislatures (NCSL) as part of its involvement in USDOL’s State Exchange on Employment and Disability (SEED) initiative.

Download the policy brief

Understanding and Addressing the Workplace Challenges Related to Long COVID

The report “Understanding and Addressing the Workplace Challenges Related to Long COVID” summarizes key themes and takeaways from an ePolicyWorks national online dialogue through which members of the public were invited to share their experiences and insights regarding workplace challenges posed by Long COVID.  The dialogue took place during summer 2022 and was hosted by USDOL and its agencies in collaboration with the Centers for Disease Control and Prevention and the U.S. Surgeon General.

Download the report

Working with Long COVID

The USDOL-published “Working with Long COVID” fact sheet shares strategies for supporting workers with Long COVID, including accommodations for common symptoms and resources for further guidance and assistance with specific situations.

Download the fact sheet

COVID-19: Long-Term Symptoms

This USDOL motion graphic informs workers with Long COVID that they may be entitled to temporary or long-term supports to help them stay on the job or return to work when ready, and shares where they can find related assistance.

Watch the motion graphic

A Personal Story of Long COVID and Disability Disclosure

In the podcast “A Personal Story of Long COVID and Disability Disclosure,” Pam Bingham, senior program manager for Intuit’s Diversity, Equity and Inclusion in Tech team, shares her personal experience of navigating Long COVID symptoms at work.  The segment was produced by the USDOL-funded Partnership on Employment and Accessible Technology (PEAT) as part of its ongoing “Future of Work” podcast series.

Listen to the podcast

HHS OIG Issues Annual Report on State MFCUs

Per the notice below, the Office of the Inspector General (OIG) of the United States Department of Health and Human Services (HHS) has issued its annual report on the performance of state Medicaid Fraud Control Units (MFCUs).

Medicaid Fraud Control Units Fiscal Year 2023 Annual Report (OEI-09-24-00200) 

Medicaid Fraud Control Units (MFCUs) investigate and prosecute Medicaid provider fraud and patient abuse or neglect. OIG is the Federal agency that oversees and annually approves federal funding for MFCUs through a recertification process. This new report analyzed the statistical data on annual case outcomes—such as convictions, civil settlements and judgments, and recoveries—that the 53 MFCUs submitted for Fiscal Year 2023.  New York data is as follows:

Outcomes

  • Investigations1 - 556
  • Indicted/Charged - 9
  • Convictions - 8
  • Civil Settlements/Judgments - 28
  • Recoveries2 - $73,204,518

Resources

  • MFCU Expenditures3 - $55,964,293
  • Staff on Board4 - 257

1Investigations are defined as the total number of open investigations at the end of the fiscal year.

2Recoveries are defined as the amount of money that defendants are required to pay as a result of a settlement, judgment, or prefiling settlement in criminal and civil cases and may not reflect actual collections.  Recoveries may involve cases that include participation by other Federal and State agencies.

3MFCU and Medicaid Expenditures include both State and Federal expenditures.

4Staff on Board is defined as the total number of staff employed by the Unit at the end of the fiscal year.

Read the Full Report

View the Statistical Chart

Engage with the Interactive Map

GAO Issues Report on Medicaid Managed Care Service Denials and Appeal Outcomes

The United States Government Accountability Office (GAO) has issued a report on federal use of state data on Medicaid managed care service denials and appeal outcomes.  GAO found that federal oversight is limited because it doesn't require states to report on Medicaid managed care service denials or appeal outcomes and there has not been much progress on plans to analyze and make the data publicly available.  To read the GAO report on federal use of state data on Medicaid managed care service denials and appeal outcomes, use the first link below.  To read GAO highlights of the report on federal use of state data on Medicaid managed care service denials and appeal outcomes, use the second link below.
https://www.gao.gov/assets/d24106627.pdf  (GAO report on federal use of state data on Medicaid managed care service denials and appeal outcomes)
https://www.gao.gov/assets/d24106627_high.pdf  (GAO highlights on federal use of state data on Medicaid managed care service denials and appeal outcomes)

CMS Issues Latest Medicare Regulatory Activities Update

The Centers for Medicare and Medicaid Services (CMS) has issued its latest update on its regulatory activities in the Medicare program.  While dentistry is only minimally connected to the Medicare program, Medicare drives the majority of health care policies and insurance reimbursement policies throughout the country.  Therefore, it always pays to keep a close eye on what CMS is doing in Medicare.  To read the latest CMS update on its regulatory activities in Medicare, use the link below.
https://www.cms.gov/training-education/medicare-learning-network/newsletter/2024-03-14-mlnc