Withdrawing an ERC claim, amending it, and what remains of the ERC voluntary disclosure programs

Status of the ERC programs in October 2026

The IRS ERC-VDP page now opens with a closure banner and the statement “Information on this page is no longer current.” No third program had been announced as of October 2026. A client who received and spent an ERC it was not entitled to therefore has no discounted repayment route; the choices are an amended return with repayment, or waiting for the IRS to act and responding then.

Who can withdraw

The withdrawal process asks the IRS not to process an entire adjusted employment tax return. The IRS page sets four conditions, all of which must be met:

• the claim was made on an adjusted return (Form 941-X, 943-X, 944-X or CT-1X);
• the adjusted return was filed only to claim the ERC and no other adjustments were made;
• the employer wants to withdraw the entire ERC claim for the period; and
• the IRS has not paid the claim, or paid it by a check the employer has not cashed or deposited.

The effect is favorable: “Claims that are withdrawn will be treated as if they were never filed. The IRS will not impose penalties or interest.” A withdrawal is per tax period; an employer with four quarters withdraws each separately. An employer that received a Letter 105-C for a period cannot withdraw that period, though it may still withdraw others. Under audit, withdrawal remains possible but routes through the examiner (below). A third-party payer that filed the claim under its own EIN is the party that must act; the client cannot withdraw directly.

The IRS states the limit of the protection in one sentence that belongs in every engagement letter on this subject: “if you willfully filed a fraudulent ERC claim, or if you assisted or conspired in such conduct, withdrawing a fraudulent claim will not exempt you from potential criminal investigation and prosecution.”

How to withdraw, by situation

Section A: no refund received, no audit notice.

1. Make a copy of the adjusted return containing the claim to be withdrawn.
2. In the left margin of the first page, write Withdrawn
3. In the right margin of the first page, have an authorized person sign and date it and write their name and title next to the signature.
4. Fax the signed copy to the ERC claim withdrawal fax line at 855-738-7609 from a computer or mobile device. Keep the copy with the tax records. The IRS cautions: “This fax line is only for ERC claim withdrawals.” Other documents sent there are not processed.
5. If faxing is impossible, mail the request to the address in the instructions for the adjusted return. The IRS notes mail is slower and asks that the package be tracked.

Section B: no refund received, audit notice received. Prepare the same marked copy, but do not use the fax line or the mailing address. If an examiner has been assigned, ask the examiner how to submit it; if not, respond to the audit notice with the withdrawal request using the notice's response instructions. Letter 6612, the ERC audit letter, invites exactly this: if in preparing the response the employer determines it is not entitled to the credit, it can call the number on the letter and the IRS will give specific instructions on how to withdraw. See ERC examinations.

Section C: refund check received but not cashed or deposited. Prepare the marked copy, but do not fax it. Write Void in the endorsement section on the back of the check, add a note reading ERC Withdrawal with a brief reason for returning it, copy the front and back of the check, the note and the signed first page, and mail everything (check unstapled and unbent) to Cincinnati Refund Inquiry Unit, PO Box 145500, Mail Stop 536G, Cincinnati, OH 45250, tracked.

What happens after a withdrawal request

The IRS sends a letter accepting or rejecting the request, and the page is clear that the request is not self-executing: “Your approved request is not effective until you have your acceptance letter from the IRS.” Until then the claim is still pending, which matters if a Letter 105-C or a refund issues in the interim. Keep the fax confirmation and the marked copy; if no letter arrives in a reasonable time, the representative can call the ERC line with the fax date. A withdrawn claim leaves the original Form 941 in place; the IRS does not assess anything, and no Letter 105-C issues for that period.

Accepted withdrawals have an income tax consequence if the employer had already reduced its wage deduction in anticipation of the credit; see below.

When to amend instead

The withdrawal process is all or nothing for a period. The IRS FAQs route two cases to an amended return instead. If the employer claimed more than it was entitled to but is still entitled to some credit, the instruction is: “Prepare a new adjusted return (Form 941-X, Form 943-X, Form 944-X, Form CT-1X) with the correct amount of ERC and any other corrections for that tax period.” The same answer applies where the employer wants to withdraw the ERC but also needs other corrections on the period. In both cases the new adjusted return is mailed to the address in the form instructions, and the FAQ repeats: “Do not send the new adjusted return to the dedicated ERC claim withdrawal fax line.”

An amended return is also the only route for a paid and deposited claim. A Form 941-X reducing a previously claimed ERC is a tax increase and should carry payment of the credit being returned. Whether interest and penalties apply depends on the facts; the IRS ERC page says anyone who incorrectly claimed the credit and received a refund must repay it, possibly with penalties and interest, and IRC 6676 (as amended by section 70605(f) of Public Law 119-21) imposes a penalty of 20 percent of the excessive amount on a claim for refund or credit of income or employment tax made for an excessive amount without reasonable cause, and failure to pay penalties can attach to the resulting balance. IRM 21.7.2.7.8 reminds campus employees that the normal assessment statute for 2020 and 2021 Forms 941 has expired except for certain 2021 ERC credits, so the statute analysis in ERC examinations applies to a voluntary correction as well.

The two ERC voluntary disclosure programs

IRM 21.7.2.7.9 records both programs for the employees who still see their account markers. The first ERC-VDP ran from the December 21, 2023 announcement through March 22, 2024, for tax periods 202006 through 202112; participants “Were generally required to repay 80 percent of the erroneous ERC amount claimed,” kept any overpayment interest the IRS had paid, and were not charged penalties or interest if the amount was paid when due. The second ran from August 15, 2024 through November 22, 2024, for periods 202103 through 202112 only, at 85 percent. Both required Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program (Rev. 8-2024 for the second program), submitted through the Document Upload Tool, and a closing agreement.

The second program's eligibility terms, from the IRS page, explain why many employers could not use it: the ERC must have been processed and paid (cashed, deposited or applied as a credit); the employer had to conclude it was entitled to zero ERC for the period; it could not be under employment tax examination or criminal investigation; and the IRS must not have already reversed or notified it of intent to reverse the credit, for example by a disallowance letter. Employers that could not pay in full could submit Form 433-B and had to sign Form 2750 extending the trust fund recovery penalty statute for every potentially responsible person. The IRS page states: “The terms of the second ERC-VDP closing agreement can't be appealed.”

For account research, IRM 21.7.2.7.9 lists the markers: an accepted application posts a TC 971 AC 804 with C ERC-VDP ACCEPT in the miscellaneous field, dated with the closing agreement execution date; a rejection posts C ERC-VDP REJECT The adjustment to the account was 80 or 85 percent of the erroneous credit. Accounts Management assistors were told not to answer ERC-VDP questions and to refer callers to the web pages, so a client with a question about a closed application is better served by the closing agreement itself and the transcript.

IR-2024-263 (October 10, 2024) framed the second program as it closed: the IRS described it as a way for businesses with questionable claims to self-correct and repay, while intensifying audits and pursuing civil and criminal investigations. The same release described the consolidated claim process that let a third-party payer withdraw some clients' claims while keeping others, with a December 31, 2024 deadline.

A paid claim with no program

With both VDPs closed, an employer that was paid and now concludes it was ineligible has three realistic paths, none discounted.

Where the balance after repayment cannot be paid at once, the ordinary installment agreement rules apply, and an employment tax balance brings the trust fund recovery penalty analysis into view for any responsible person, which is why the second ERC-VDP required Form 2750 from each of them.

The income tax return after a withdrawal or repayment

The IRS withdrawal page notes that after an accepted withdrawal the employer may need to amend its income tax return, because the ERC rules required the wage deduction to be reduced by the credit in the year the wages were paid. The ERC FAQs (Income tax and ERC section, added March 20, 2025) give two simplified fixes. An employer that received the credit but never reduced its wage expense can include the overstated amount in gross income in the year the ERC was received, under the tax benefit rule, instead of amending the earlier year. An employer that reduced its wage expense and whose claim was disallowed may increase wage expense in the year the disallowance becomes final, or alternatively amend, file an AAR or file a protective claim for the original year. A withdrawn claim that was never paid is treated as never filed, so an employer that had reduced the deduction in anticipation is in the second position: the deduction can be restored. IRM 25.6.1.9.5.10 adds that the extended ERC assessment statute can also keep related income tax returns open when wages are adjusted, so the income tax years are not necessarily closed either.

Fraud, promoters and referrals

Withdrawal and amendment resolve the civil account; they do not resolve conduct. The IRS repeats on both the withdrawal and the ERC-VDP pages that willful fraud and assisting or conspiring in it remain subject to criminal investigation. For a client whose claim was prepared by a promoter, the IRS asks for reports to the Lead Development Center (Form 14242 for abusive promotions, Form 3949-A for other referrals), and the ERC FAQs give the Ogden address and fax. For the practitioner's own exposure, see preparer penalties and the Office of Professional Responsibility; the ERC FAQs link a March 7, 2023 IRS bulletin, Professional Responsibility and the Employee Retention Credit, on the Circular 230 duties of practitioners asked to sign or rely on promoter-prepared ERC computations.

Questions practitioners ask