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The Employee Retention Credit (ERC) – sometimes called the Employee Retention Tax Credit or ERTC – is a refundable tax credit for certain eligible businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic.
The IRS reminds businesses that have received Employee Retention Credit payments to recheck eligibility requirements and consider the second Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP) to resolve incorrect claims without penalties or interest.
As the agency moves forward, it will now start judiciously processing claims filed between Sept. 14, 2023, and Jan. 31, 2024. Like the rest of the ERC inventory, work will focus on the highest and lowest risk claims at the top and bottom end of the spectrum.
If taxpayers don’t agree with the IRS’s denial of the claim – regardless of which letter the taxpayer received – they can seek review by petitioning the IRS’s Independent Office of Appeals (Appeals).
The IRS is also working on a settlement initiative for taxpayers who believe they shouldn’t have claimed the ERC and want to repay it. Check IRS.gov/erc and IRS Operations: Status of Mission-Critical Function (Filed a Return in 2022/Status of Processing Form 941) f or updates. Additional Resources
The ERC is now available for all four quarters of 2021, up to $7,000 per quarter. The level of qualifying business disruption has been reduced so that a 20% decline in gross receipts during a single quarter will make a business eligible, for a maximum yearly benefit of $28,000 per employee.
The employee retention tax credit is a broad based refundable tax credit designed to encourage employers to keep employees on their payroll. The credit is 50% of up to $10,000 in wages paid by an employer whose business is fully or partially suspended because of COVID-19 or whose gross receipts decline by more than 50%.