The IRS extended the deadline for third-party payers that filed employee retention credit (ERC) claims for clients to use the consolidated claim process to resolve incorrect claims (IR-2024-296).

In September, the IRS announced the deadline for the process was Friday. It is now Dec. 31, the IRS said Thursday.

Some third-party payers, who report and pay clients' federal employment taxes under their employer identification numbers, have also filed ERC claims for clients. If a client wants to resolve an ERC claim that it now believes is ineligible, the third-party payer must correct it. 

Because some third-party payers filed ERC claims for multiple employers, the consolidated claim process allows the third party to withdraw only some clients while maintaining the claims of the qualifying clients. 

Another special program for incorrect ERC filings, the second voluntary disclosure program (VDP), closed Friday. The program allowed businesses 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.

During the first VDP, over 2,600 applications disclosed credits worth $1.9 billion. 

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.