Do you have an outstanding Employee Retention Credit (ERC) claim, also known as an Employee Retention Tax Credit (ERTC)? The newly signed One Big Beautiful Bill Act (OBBB) finalizes provisions that will significantly impact taxpayers with outstanding ERC claims. The provisions in the Big Beautiful Bill limit the number of taxpayers who qualify for the ERC and grant the IRS to assess and adjust accepted claims. Pay close attention to when you filed your claim to stay ahead of these codified provisions.
There are three main stipulations that taxpayers should pay close attention to, and begin planning for, with your financial advisor as soon as possible.
ERC Claims Filed After January 31, 2024:
The OBBB codifies the January 31, 2024, deadline into law for ERC filers. ERC claims filed after January 31, 2024, aren’t allowed. Even if your claims were timely and validly filed under existing law on February 1, 2024, the IRS will no longer permit a refund for the claim beyond the deadline set by the new legislation.
IRS Statute of Limitations:
The statute of limitations on IRS assessments relating to Employee Retention Credits has also been expanded by the OBBB. The agency will now be allowed a six-year period to examine, adjust or assess ERC claims for the third and fourth quarters of 2021. Please note that the extended statute of limitation expires on April 15, 2028, or six years after the claim has been filed for credit or refunds.
Enforcement for Improper Promotion of ERC Claims:
Expect tougher penalties and compliance standards for individuals and/or entities promoting ERC claims. The IRS was already aggressively pursuing promoters and marketers that steered their clients toward ERC claims they were ineligible for. The OBBB legislation imposes stricter penalties and compliance standards on those promoting ERC claims while also expanding the IRS’ authority to take action against these bad actors. The IRS released guidance for taxpayers who believe they’ve been impacted by a fraudulent ERC promoters. Some taxpayers can qualify for the ERC withdrawal process, granted the IRS didn’t pay out your claim. If they did, you may still qualify as long as you haven’t cashed or deposited the refund check. Learn more about ERC withdrawal process eligibility requirements.
The Anders CARES Act Consulting team will continue to monitor how the One Big Beautiful Bill impacts CARES Act programs and keep clients informed on new guidance released by the IRS concerning the Employee Retention Tax Credit. Check out our CARES Act Relief Radar for all pandemic relief-related funding updates.
