Client Alert: The Employee Retention Credit and How to Handle Unprocessed Claims
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...