IRS Lets Taxpayers Who Wrongly Claimed Pandemic-Era Tax Credit Keep 20 Percent and No Penalty

The Internal Revenue Service (IRS) has launched a new program for taxpayers who want to pay back money they received after filing certain pandemic-era tax credit claims in error—and to encourage participation, the IRS is letting them keep 20 percent of the funds. The IRS said in a Dec. 21 announcement that the new “voluntary disclosure program” relates to a flood of bad claims for the pandemic-era relief program known as the Employee Retention Credit (ERC). This is a refundable tax credit designed for businesses that continued paying employees during COVID-19 shutdowns. The ERC tax credit, which is somewhat complex, is available to employers, not individual taxpayers. Since the program was enacted, over 3.6 million claims have come in, with the IRS saying that ERC-related fraud became worse over time....