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ERC voluntary disclosure ended Nov. 22, but third-party consolidated claim process extended to Dec. 31

November 12, 2024

UPDATE, Nov. 21, 2024: To help payroll companies and other third-party payers assist more clients with resolving incorrect Employee Retention Credit (ERC) claims, the IRS has extended the deadline for third-party payers to use the consolidated claim process. The new deadline is Dec. 31. Originally, the third-party option was set to close Nov. 22.

IRS logo over flag image_ERC VDP No2 ends Nov22

If your company received an incorrect Employee Retention Credit (ERC) payment, you have 10 more days to set things right with the Internal Revenue Service.

The deadline to report your erroneous ERC claim and repay a portion of the improperly paid funds is next week, Friday, Nov. 22.

After that, the IRS’ second ERC Voluntary Disclosure Program, or VDP, will be closed.

Countering aggressive promoters: The tax agency offered this and an earlier VDP opportunity because many business owners filed claims at the urging of aggressive tax credit promoters.

The ERC mill agents convinced many business owners that their companies qualified for the COVID-era tax break when in fact they did not. The promoters got a fee for their bad tax advice. The ill-informed businesses got a potential audit.

In light of that bad advice, the latest IRS ERC VDP allows companies to correct their claim errors, pay back most of the tax break, and avoid potentially harsher IRS follow-up action.

Specifically, the IRS will accept remittance of 85 percent of the incorrectly claimed ERC amount the businesses received. The 15 percent discounted payback accounts for fees taxpayers likely paid the promoters to file the bad ERC claim.

But again, such admissions and remittance or incorrect ERC amounts must be done by Nov. 22.

You can find more on the ERC VDP in IRS.gov’s frequently asked questions about the program.

Consolidated claim process for third-party payers: The IRS also has instituted a consolidated claim process to help third-party payers, or TPPs, and their clients resolve incorrect ERC claims filed at the instance of aggressive tax credit promoters.

This process lets TPPs that filed a prior claim with multiple clients “withdraw” only some clients’ claims while maintaining the claims of qualifying clients.

TPPs must verify that the claim:

  • Includes only business clients that were part of a previous ERC claim.
  • Doesn’t increase the amount of ERC claimed by clients.

Consolidated claims must include the full statement on this topic provided at preparing your consolidated claim

Third-party payers can use this process through Nov. 22 Dec. 31 (see update at top of post).

Withdrawing a bad ERC claim: Finally, if you discover you filed a wrong ERC claim, but it hasn’t yet been paid, consider withdrawing it. Here, you remove the claim from the IRS processing queue.

You can find more in my on this option in my post IRS allows businesses to withdraw improper ERC claims, as well as at the IRS’ ERC claim withdrawal webpage.

You also might find these items of interest if you’re anywhere in the ERC claim, disclosure, or withdrawal process:

 

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TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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