Compliance Stuff

The Employee Retention Credit (ERC) was introduced as part of the March 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act to encourage businesses to maintain their workforce during the economic disruptions of the COVID-19 pandemic . Over time, legislative developments—most notably through the December 2020 Consolidated Appropriations Act and the March 2021 American Rescue Plan Act—expanded both the eligibility criteria and the potential credit amounts. Despite the intention of the ERC to serve as a swift economic lifeline, numerous businesses have encountered significant delays in receiving their anticipated funds from the Internal Revenue Service (IRS or the Service) . These delays create significant cash flow challenges, as many small business owners have taken on additional liabilities or made operational decisions in reliance on receiving ERC refunds. We are providing this update to help our employer and business clients understand why their ERC funds may be delayed a...

On August 15, 2024, the Internal Revenue Service (IRS) launched a second Employee Retention Credit (ERC) Voluntary Disclosure Program for employers to correct any mistakes related to their ERC claims. The ERC, introduced by the Coronavirus Aid, Relief, and Economic Security Act, was designed to help businesses and tax-exempt organizations that kept paying employees during the COVID-19 pandemic, even if they had to shut down or reduce operations due to government orders, saw a significant drop in revenue, or were recovery startups during the eligible periods. This new program provides participants another chance to fix any errors in such claims. The IRS has found that the ERC has become quite complex and significantly vulnerable to fraud . This issue led the agency to stop processing ERC claims entirely on September 14, 2023 . The IRS paused the voluntary disclosure program on March 22, 2024, to address the growing backlog of unprocessed claims. The recent announcement reflects the IRS...