Where Employee Retention Credit Claims Actually Stand

The Employee Retention Credit was a legitimate pandemic-era relief provision that became the subject of one of the most aggressive promotional campaigns in recent tax history. Businesses were told, often by firms that appeared out of nowhere and charged a percentage of the refund, that they qualified regardless of their circumstances.

Many did qualify. Many did not. Sorting out which is which has occupied the IRS for years, and the rules changed again under the One Big Beautiful Bill Act.

The two changes that matter

Refunds are barred for third- and fourth-quarter 2021 claims filed after January 31, 2024. The bar is narrower than it is often described. It reaches claims for those two quarters only, filed after that date, and not paid before July 4, 2025 — a claim for 2020 or for the first half of 2021 is not affected by it, and neither is one that was already refunded. If your pending refund is inside that description, the wait is not a processing backlog with an end.

The IRS has at least six years from the filing date to challenge these claims. The normal assessment period for employment tax is shorter. Extending it to six years means a claim filed in 2023 can be examined well into the next decade.

What this means depending on your situation

You claimed the ERC, received the refund, and you're confident you qualified. Keep your documentation. The extended assessment window means the file needs to remain accessible and complete for years. What you want on hand: the specific basis for eligibility, the governmental orders you relied on if you claimed a full or partial suspension of operations, the quarter-by-quarter gross receipts calculations if you claimed a significant decline, payroll records supporting the wage amounts, and documentation that those wages weren't also used for a PPP loan forgiveness or another credit.

If a promoter prepared the claim and you never received a substantive explanation of why you qualified, you have a documentation problem regardless of whether the claim was correct.

You claimed the ERC and you're not confident you qualified. This is worth addressing rather than hoping. The most common problems: relying on generalized supply chain disruption without meeting the specific requirements, treating any pandemic-era business difficulty as a partial suspension, miscalculating gross receipts declines, claiming wages that were also used for PPP forgiveness, and claiming for majority owners and their relatives, whose wages are generally not eligible.

The IRS has operated withdrawal and voluntary disclosure processes for ERC claims at various points. Availability changes, and the terms differ depending on whether the refund has been paid. Interest and penalties are meaningfully better for businesses that come forward than for those found in an examination.

You never claimed it and wonder if you should have. For most businesses, the filing windows have closed. There's little to do here besides ignore anyone who contacts you claiming otherwise.

The promoter problem hasn't ended

Firms that pushed ERC claims have not all disappeared. Some have moved on to other credits with similar marketing: research credits, fuel credits, and various state incentives, promoted with the same structure — contingency fees, aggressive eligibility claims, and no ongoing responsibility if the position fails.

The tell is consistent. A legitimate advisor explains why you qualify in terms specific to your business and will still be reachable in three years. A promoter explains that you qualify, charges a percentage, and provides a summary that could describe any business.

If you're contacted about a credit you've never heard of, with a fee structure based on the refund, the correct response is to ask us before signing anything.

The part that matters most

Liability for an incorrect claim rests with the business, not the preparer. If a promoter filed an aggressive ERC claim on your behalf and the IRS disallows it, the business repays the refund with interest and potentially penalties. The promoter's fee is generally not recoverable in practice.

That's the reason to know where you stand now rather than in year five of a six-year window.

This article is general information, not tax advice for your specific situation. ERC eligibility is highly fact-specific and IRS procedures in this area continue to change. Please talk with us before acting on anything here.