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COVID-Era Employee Retention Tax Credit May Still be Available; IRS Reviewing CLOSELY

One of many COVID-era policies adopted to incentivize employers to keep employees on the payroll during uncertain and trying times of the pandemic was the Employee Retention Tax Credit (ERC or ERTC).  The ERC was made available during most of 2020 and the first three quarters of 2021 for eligible employers. The standards for ERC changed between 2020 and 2021, making the credit nominally "easier" to claim during 2021.  That said, eligibility for the credit remained subject to meeting one of two primary tests (generally requiring a reduction in gross receipts or a suspension of operations due to a COVID-era government order).  

Since claiming the ERC generally involves amending payroll tax returns, eligible business may still be able to claim the credits.  However, the IRS has shined a bright light on the potential for abuse in claiming these credits.  The number of businesses "promoting" filing for ERCs has increased and the IRS is responding with frequent and clear warnings that taxpayers cannot and should not file a claim for an ERC without thoughtful investigation of the organization's eligibility. 

In fact, ERC has been spotlighted in the IRS's "Dirty Dozen" campaign – a annually updated list of 12 potentially abusive tax scams and schemes. 

"The aggressive marketing of these credits is deeply troubling and a major concern for the IRS," said IRS Commissioner Danny Werfel. "Businesses need to think twice before filing a claim for these credits. While the credit has provided a financial lifeline to millions of businesses, there are promoters misleading people and businesses into thinking they can claim these credits. There are very specific guidelines around these pandemic-era credits; they are not available to just anyone. People should remember the IRS is actively auditing and conducting criminal investigations related to these false claims. We urge honest taxpayers not to be caught up in these schemes."


irs, erc, ertc, employee retention tax credit, dirty dozen, tax season, covid, l&e