Employer Retention Credit Mis-information By now I am certain you have heard on the radio, YouTube, or on Spotify the ads by companies that promise to help you claim ERC credits of up to $26,000 per employee your business is entitled to due to the impact of COVID-19. They urge you to call the toll-free number as time is running out; “Call Today”!
What is ERC
ERC is Employee Retention Credit (ERC) or the Employee Retention Tax Credit (ERTC). The ERC is a program that was passed with the CARES Act of 2020 and enhanced through subsequent appropriations passed later in 2020. The objective was to incentivize small businesses to retain their employees on payroll during the pandemic. When small businesses had to scale back or completely shut down business operations due to government COVID-19 mandates. Hence suffered a significant reduction in revenues compared to 2019. The ERC programs cover the period from March 12, 2020 through December 2021. It allows small businesses to claim a tax credit as a percentage of payroll paid during the period of coverage up to a certain limit. The credit can either be claimed against payroll taxes or claim a refund by filing an amended payroll tax form 941X.
Wait! ERC Program Ended?
While the ERC program coverage ended in December 2021, businesses still have more time to file the required returns to claim the credit. Contrary to the messages from these ads. They try to create the perception of an imminent filing deadline. Or the often repeated line in the ads that the ERC program is about to run out of funding. Both of these assertions are not accurate. The filing deadline to claim ERC credits are April 2024 for 2020 wages and April 2025 for 2021 wages. The ERC program is also not about to run out of funds.
Three Things You Should Do?
Make sure your 941X credit claims are filed by a reputable provider who will be around for a while; should IRS have follow-up questions. As the business owner, you are ultimately on the hook for the accuracy of the 941X claims. These credit specialists would not typically sign the forms.
Review your ERC claims for accuracy. IRS is scrutinizing ERC claim submissions and cracking down on fraudulent filings.
Work with a trusted advisor that has your best interest in mind.
Update on ERC Claims - IRS Halts ERC Processing.
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