The Employee Retention Credit program (ERC), despite being less acclaimed than the Paycheck Protection Program, served as a critical source of Covid-relief for businesses in 2020 and 2021. The ERC allowed employers to claim refundable payroll tax credits for wages paid to their employees, but recent developments suggest that the Internal Revenue Service has halted the processing of ERC claims.
This suspension was seen as somewhat necessary as there was an observed spike in the number of fraudulent attempts associated with the ERC. Yet, this move is likely to impact numerous employers and businesses who were relying on these tax credits as a financial lifeline in these challenging times.
As per the initial provisions, an employer could claim up to $10,000 per employee for the entirety of 2020 and $10,000 per employee per quarter throughout 2021. The credit was available to employers who had to face a full or partial shutdown order, or experienced a significant revenue drop off.
There seems to be a heightened sense of anticipation amongst businesses, particularly those that are significantly financially strained due to the pandemic, regarding the potential implications of this halt and its impact on their financial viability.
Any additional information on this subject can be found from the detailed report compiled by Lowndes.