The Employee Retention Credit (ERC) is a valuable tax incentive that was designed to encourage businesses to retain their employees during challenging economic times during the COVID-19 pandemic. Initially established under the CARES Act and subsequently extended through various legislative updates, the ERC has proven to be a lifeline for businesses grappling with financial uncertainties.  Many businesses took advantage of the ERC.

The Internal Revenue Service (IRS) is concerned that “ERC promoters were aggressively marketing and encouraging businesses to ignore the advice of tax professionals and apply for the credit anyway.”  As a result, the IRS has intensifying audit work and criminal investigations on promoters and businesses filing dubious claims. The IRS has hundreds of criminal cases being worked, and thousands of ERC claims have been referred for audit.

In addition to enforcement actions, the IRS has taken multiple actions to try and incentivize taxpayers to revisit, withdraw, or repay their ERC claim if they did in fact not qualify.  In September 2023, the IRS announced a moratorium on processing new claims submitted from September 14, 2023, to December 31, 2023.  In October 2023, the IRS announced a special program for withdrawal of ineligible ERC claims.

Of particular interest is the ERC Voluntary Disclosure Program (ERC-VDP) for taxpayers that claimed and received the ERC, but are ineligible and need to repay the ERC.  For Taxpayers that qualify, the ERC-VDP requires Taxpayers to repay the ERC minus 20%, cooperate with any requests from the IRS for more information, and sign a closing agreement.  This unique program ends March 22, 2024.

The ERC and the ERC-VDP consists of intricate rules and guidelines. Partnering with the former IRS attorneys at Holtz, Slavett & Drabkin can prove instrumental in understanding and complying with these complexities.

The former IRS attorneys at Holtz, Slavett & Drabkin are your trusted allies in navigating the intricate landscape of the ERC, especially when it comes to programs like the ERC Voluntary Disclosure Program.  Former IRS Attorneys of Holtz, Slavett & Drabkin, APLC, assist clients in all types of disputes with the Internal Revenue Service and state tax authorities.

If you have been contacted by the IRS regarding your ERC, are concerned about a submitted claim, or have questions about eligibility for the ERC, you can schedule a consultation with Richard Gano.  He can be reached at (310) 550-6200 or His profile can be accessed here.