Lance's Corner

IRS Issues ERC Update

Nov 21, 2024

Per the notice below, the United States Internal Revenue Service (IRS) has issued an update on the Employee Retention Credit (ERC).

IRS urges businesses to act by Nov. 22 to resolve improper Employee Retention Credit claims through Voluntary Disclosure Program; third-party payer deadline newly extended to Dec. 31

With a Nov. 22 deadline rapidly approaching for the second Voluntary Disclosure Program, the Internal Revenue Service urgently recommends that businesses review Employee Retention Credit guidelines and resolve incorrect claims soon to avoid future issues.  And to help payroll companies and other third-party payers assist more clients with resolving incorrect ERC claims, the IRS announced today the extension of the deadline for third-party payers through Dec. 31, 2024, to use the consolidated claim process.  Originally, the third-party option was set to close Nov. 22.  Amid high-pressure marketing that misled many ineligible businesses into filing claims for this pandemic-era tax credit, the IRS opened special programs to help businesses voluntarily resolve incorrect claims.

“Tax professionals and IRS staff are hearing repeatedly that many businesses very much believe they qualify for the credit when, in fact, they don’t,” said IRS Commissioner Danny Werfel.  “We urge businesses with pending claims to reexamine their claims to see if they were misled and use the options to proactively resolve their issues.  They should listen to trusted tax professionals, not promoters.”

The claim withdrawal program and consolidated claim program remain open and the IRS strongly recommends that business learn about the warning signs of incorrect claims, which outline tactics that unscrupulous promoters have used, and why their points are wrong.  Eligibility for this credit depends on very specific facts and circumstances.  The second ERC Voluntary Disclosure Program allows businesses that received the credit after filing a claim in error to apply for this program to repay the credit, minus 15%, for tax periods in 2021.  Generally, businesses that enter the program don’t have to pay penalties or interest and don’t have to repay interest received from the IRS on an ERC refund.  The second ERC Voluntary Disclosure Program ends Nov. 22.  During the first Voluntary Disclosure Program more than 2,600 applications disclosed $1.9 billion worth of credits.

Programs remain open for businesses whose claims haven’t been processed

The Claim Withdrawal Program remains open for businesses who need to ask the IRS not to process an ERC claim for any tax period that hasn’t been paid yet.  The IRS will treat the claim as though the taxpayer never filed it.  No interest or penalties will apply.  With today’s announcement, the IRS extended its similar program for third-party payers through Dec. 31, 2024.  The consolidated claim process for third-party payers was set to close Nov. 22.  Third-party payers report and pay clients’ federal employment taxes under the third-party payer’s Employer Identification Number.  They handle clients’ payroll and tax reporting duties.  Some of these third-party payers filed ERC claims for multiple employers.  If a third-party payer’s client has since determined it is ineligible for the ERC and wants to resolve their claim, it is the third-party payer that needs to correct it.  This consolidated claim process lets a third-party payer that filed a prior claim with multiple clients “withdraw” only some clients while maintaining the claims of the qualifying clients. 

“Thousands of businesses came forward during the first disclosure program,” Werfel said.  “Thousands more have withdrawn incorrect claims.  Businesses that enter these programs can avoid penalties and interest they’d face if the IRS takes compliance actions later.  The IRS reminds businesses involved with incorrect claims that the risk can sharply escalate over time.”

Even if the terms Employee Retention Credit and Employee Retention Tax Credit don’t sound familiar, businesses should still review their records.  Some promoters called the credit a grant, business stimulus payment, government relief, or other names.  The IRS is continuing to process valid ERC claims as quickly as possible, while guarding against improper payments driven by unscrupulous marketers.

Businesses that can’t pay in full can still apply to Voluntary Disclosure Program

Taxpayers who can’t pay the full amount of ERC, minus 15%, by the time they return their signed closing agreement can still apply to the ERC Voluntary Disclosure Program and request an Installment Agreement to pay over time.  Businesses who need an installment plan should request it by Nov. 22.  See Payment options for accepted second ERC-VDP applications for details.  Under an Installment Agreement, the business must make monthly payments.  Interest and penalties that normally apply to a tax liability will apply starting from the ERC Voluntary Disclosure Program closing agreement date.  This date, however, is better for businesses than an agreement outside of the ERC Voluntary Disclosure Program where the penalties and interest date back to when the business received the incorrect ERC.  Tax laws require the IRS to use a variety of collection tools to recapture incorrect ERC payments or credits.  The IRS will continue tax compliance activities on ERC claims to protect taxpayers and enforce the tax law.  If the IRS finds an incorrect ERC claim after these programs end, the agency can disallow unpaid claims or require repayment with penalties and interest.

Resources for more information

The IRS has resources to help businesses or a trusted tax professional check ERC eligibility, learn the signs of incorrect claims, get information about the VDP or Claim Withdrawal Program, or report a promoter:

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