Frequently Asked Questions

As of Aug. 8, the IRS’s ERTC moratorium on processing claims filed after Sept. 14, 2023, has been lifted. The agency will begin processing claims filed between Sept. 14, 2023, and Jan. 31, 2024 – the latter of these dates was proposed in a bill as the new end date to file employee retention tax credit (ERTC), also known as the employee retention credit (ERC), claims. The U.S. House of Representatives passed the bill, but the Senate failed to consider it. The result: The original end date to file amended returns for the tax year 2021 to claim the ERTC remains April 15, 2025.

The IRS continues to be diligent and deliberate in handling ERC claims, focusing on processing low-risk submissions while ferreting out fraudulent claims. In its recent announcement, the IRS said it was moving forward on tens of thousands of valid claims. Still, the agency also sent out 28,000 disallowance letters for claims that still needed to meet the eligibility requirements. Individuals receiving this type of letter can initiate a formalized appeal process.

The IRS has provided no timetable on when claims filed after Jan. 31, 2024, will be processed.

Although the IRS said it is accelerating the processing of valid claims to the ERTC program and earmarking September to begin issuing refunds, with the mere volume of submissions, taxpayers should not expect an expedited payment pace.

Yes, businesses can still apply for the ERTC. Although the ERTC program has officially ended and businesses can no longer pay wages that qualify them to claim the ERTC credit, their ability to claim the credit retroactively is still being determined.

Businesses can do a lookback to determine if they meet the eligibility requirements. At present, companies have until April 15, 2025, to file amended returns for the quarters in 2021 in which they were eligible to claim the ERTC.

For most businesses, the credit could be claimed on wages paid until Sept. 30, 2021, with certain companies having until Dec. 31, 2021, to have paid qualified wages. Again, businesses can no longer pay wages to apply for the credit. The ERTC is not a loan. It is a tax credit based on payroll taxes employers previously remitted, so employers do not have to pay back the funds they receive.

The IRS Notice 2021-20  provides guidance for employers claiming the Employee Retention Tax Credit. However, the notice only guides the credit as it applies to qualified wages paid between March 12, 2020 and Sept. 30, 2021. Additionally, most of the notice reiterates the ERTC FAQs previously published on the IRS website.

The notice includes guidance on how employers who received a PPP loan can retroactively claim the employee retention tax credit. To claim the credit for past quarters, employers must file Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, for the applicable quarter(s) in which the qualified wages were paid. The IRS includes three examples (Q&A No. 57) to highlight the process.

The IRS notice 2021-20 includes seven examples (Q&A No. 49) of scenarios in which an employer with a PPP loan determines which wages, if any, are eligible for the tax credit. The amount of eligible wages largely depends on how the qualified wages were reflected on the PPP loan forgiveness application.

The IRS clearly states that expenses eligible for PPP forgiveness that were not included in the loan forgiveness application cannot be factored in after the fact. Consequently, it’s important to ensure all eligible expenses, including non-payroll costs such as utilities, rent, and operations expenses, to name a few, are included on PPP loan forgiveness applications to maximize the qualified wages available for ERTC.