IRS Form 15434 – The Employee Retention Credit (ERC) was a major COVID-19 relief program, but aggressive marketing led to billions in improper claims. To help businesses self-correct without full repayment, penalties, or audits, the IRS launched the Second Employee Retention Credit (ERC) Voluntary Disclosure Program (second ERC-VDP) in August 2024. Employers applied using IRS Form 15434 (Rev. August 2024), officially titled Application for Second Employee Retention Credit (ERC) Voluntary Disclosure Program.
Important 2026 Update: The program closed on November 22, 2024. Form 15434 is now obsolete, and new applications are no longer accepted. The IRS continues to process applications received by the deadline and urges businesses with questionable ERC claims to review their filings and work with a trusted tax professional to resolve issues proactively.
This guide covers everything about Form 15434, program eligibility, benefits, application process (for reference), repayment terms, and current options now that the program has ended. All information is based on official IRS sources, including Announcement 2024-30, the Form 15434 instructions, program FAQs, and IRS.gov updates.
What Is the Second ERC Voluntary Disclosure Program?
The second ERC-VDP allowed eligible employers who received ERC refunds or credits for 2021 tax periods (quarters ending March 31, June 30, September 30, or December 31, 2021) but were not entitled to any portion of the credit to voluntarily repay only 85% of the erroneous amount.
- It applied only to 2021 claims (the first ERC-VDP, which closed March 22, 2024, covered 2020–2021 with an 80% repayment rate).
- Participants avoided full repayment, underpayment penalties, interest (in most cases), employment tax audits on resolved periods, and the need to amend income tax returns to reduce wage deductions.
- The 15% reduction (the amount retained) was not treated as taxable income.
The program targeted non-fraudulent but improper claims often driven by promoters promising easy qualification. Over 2,600 participants used the first program; the second gave a final chance before intensified IRS enforcement.
Who Was Eligible for the Second ERC-VDP (and Form 15434)?
Eligibility was strict and required all of the following for each 2021 tax period:
- The ERC claim was fully processed and paid (refund cashed/deposited or applied as a credit) before August 15, 2024.
- The employer now believes they were entitled to $0 ERC for that period.
- Not under an IRS employment tax examination (audit) or criminal investigation for the relevant periods.
- The IRS had not already reversed or notified intent to reverse the ERC (e.g., via Letter 6577-C).
- No prior amendment that fully eliminated the ERC for the period.
Ineligible if:
- Any ERC was legitimately owed for the period (partial entitlement required amending the return instead).
- The claim was fraudulent or willful (criminal prosecution risk remains even if participating).
- Using a third-party payer (PEO, Section 3504 agent, etc.) — the payer had to file Form 15434 on the client’s behalf.
Consolidated groups had additional rules: one member under audit could disqualify the group for that period.
Key Benefits of Participating (85% Repayment)
| Benefit | Details |
|---|---|
| Repayment Rate | Only 85% of total ERC claimed (refundable + non-refundable) |
| No Interest on Overpayment | IRS does not require repayment of interest already received on the refund |
| No Penalties | No failure-to-pay or underpayment penalties if 85% paid by closing agreement deadline |
| No Audit Protection | IRS will not audit the resolved ERC claims on those employment tax returns |
| Income Tax Relief | No need to reduce wage expense deductions or amend prior income tax returns; the 15% retained is not additional income |
| Installment Option | Possible (with Form 433-B and Form 2750) but subject to IRS approval and potential interest after closing agreement |
Compared to the first VDP (80% repayment for 2020/2021), the second required slightly more repayment but still offered significant relief versus full enforcement (100% repayment + penalties + interest + possible liens or criminal charges).
How to Apply: IRS Form 15434 Details (Historical Process)?
Form 15434 (August 2024 revision) was a fillable PDF submitted exclusively via the IRS Document Upload Tool (irs.gov/DUT). Paper filings were not accepted.
Main Sections of Form 15434:
- Part I: Employer name, EIN, address, phone, email.
- Part II: Third-party payer client information (if applicable).
- Part III: Representation authorization (attach Form 2848 if needed).
- Part IV: Breakdown by 2021 quarter — Form filed (e.g., 941 or 941-X), non-refundable ERC, refundable ERC, total claimed, 15% reduction, and estimated repayment (auto-calculated).
- Part V: Details of any preparers/advisors who assisted with the claim (name, firm, services provided) — required if applicable.
Required Attachments (in this order):
- Signed Form SS-10 (Consent to Extend Time to Assess Employment Taxes) for Q1/Q2 2021 periods.
- Form 8822-B (if address changed).
- Form 2848 (Power of Attorney) if represented.
- Relevant Schedule R (Form 941) pages if a third-party payer filed (redacted as needed).
- Form 433-B (Collection Information Statement) + Form 2750 (Waiver for Trust Fund Recovery Penalty) if requesting an installment agreement.
Submission Steps:
- Complete Form 15434 under penalties of perjury (electronic or digital signatures accepted).
- Make separate EFTPS payments for each tax period (select “941”, “Audit Adjustment”, “Advance Payment of Tax Deficiency”).
- Upload the complete package via Document Upload Tool by 11:59 p.m. local time on November 22, 2024.
- IRS reviewed applications (typically 3–4 months), then issued a closing agreement (Form 15434-A) for signature.
A dedicated hotline (414-231-2222) assisted with questions.
What Happens Now That the Second ERC-VDP Is Closed?
Since November 22, 2024:
- No new Form 15434 applications are accepted.
- The IRS continues processing timely submissions and issuing closing agreements.
- For unresolved improper claims:
- If refund not yet received/cashed: Use the ongoing ERC Claim Withdrawal Program (irs.gov/newsroom/withdraw-an-employee-retention-credit-erc-claim) to stop processing without penalties.
- If refund received: Amend employment tax returns (Form 941-X) to repay 100% + interest/penalties, or wait for IRS enforcement (exams, assessments, collections).
- The IRS is using advanced analytics to identify questionable claims and has sent thousands of letters. Enforcement includes full repayment, penalties (up to 75% for fraud), interest (currently ~8%), liens, levies, and potential criminal prosecution.
Red Flags the IRS Highlights (from IRS warnings):
- Claims based solely on “supply chain disruptions” without government orders or significant gross receipts decline.
- ERC promoters charging contingency fees or promising “guaranteed” approval.
- Claims for businesses fully operational with no qualifying suspension or decline.
- Large claims relative to business size with little documentation.
Frequently Asked Questions (FAQ) About Form 15434 & Second ERC-VDP
Q: Can I still use Form 15434 in 2026?
A: No. The form and program are obsolete. Contact a tax professional for your specific situation.
Q: What if my third-party payer filed the ERC?
A: Only the payer could submit Form 15434 on your behalf. Clients could not apply directly.
Q: Do I have to amend my income tax return if I participated?
A: No — one of the key benefits was no wage expense reduction required.
Q: What are the risks of doing nothing?
A: Full repayment + substantial interest/penalties + possible audit or criminal referral. The statute of limitations for assessment is generally 3 years (extended in some cases via Form SS-10).
Q: Where can I find the official Form 15434 PDF?
A: Archived on IRS.gov (search “Form 15434”), though it is no longer active.
Final Advice for Employers
The ERC compliance landscape remains high-risk in 2026. If you received ERC and have any doubt about eligibility, immediately review your claims against the official IRS ERC Eligibility Checklist and consult a trusted, independent tax professional (not the original promoter). Early self-correction through amendments or withdrawal (where still possible) can minimize exposure.
For the most current guidance, always refer to official IRS resources:
- IRS ERC Voluntary Disclosure Program page
- Frequently Asked Questions about the Second ERC-VDP
- Employee Retention Credit main page
- Warning signs of incorrect ERC claims
Resolving ERC issues proactively protects your business from costly enforcement actions. Work with an Enrolled Agent, CPA, or tax attorney experienced in ERC compliance to determine the best path forward in 2026.
This article is for informational purposes only and is not tax or legal advice. Consult a qualified professional for your specific circumstances. Last updated based on IRS information as of February 2026.