The employee retention credit, or “ERC,” was introduced in 2020 as a part of the CARES Act to encourage businesses to keep workers on the payroll in 2020 and 2021 during the COVID-19 pandemic. For eligible businesses, the ERC provides payroll tax credits for wages and health insurance paid to employees during those difficult years. The ERC program ended with the enactment of the Infrastructure Investment and Jobs Act in November 2021, but businesses can still claim ERC credits retroactively for a period of three years.

Since the time the ERC was introduced, the IRS has issued ad hoc guidance on the program, which has not been vetted by the public or the courts. In recent weeks, the IRS decided to issue a moratorium on ERC payments and put into place a limited amnesty program for certain participants to unwind what the IRS perceives to be abusive claims. The IRS’s changing parameters for a program Congress created to help struggling businesses has put many well-intentioned taxpayers in a difficult position of either being unable to obtain their credits or left wondering whether they should withdraw the claims altogether. 

Download our PDF for the full article.