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1 1 (September 21, 2023)

handle is hein.crs/govemxg0001 and id is 1 raw text is: Congressional ____ ~ Research Service IRS Processing and Examination of COVID Employee Retention Credit Claims September 21, 2023 The Employee Retention Credit (ERC) is a temporary tax credit that was available to employers during the COVID-19 pandemic. The ERC could be claimed by certain employers who experienced specific adverse effects from COVID. For most employers, the ERC expired on September 30, 2021. However, the IRS has experienced a surge in employers filing amended payroll tax returns in 2022 and 2023 to retroactively claim the credit. The IRS warned about the potential for widespread ineligible claims and fraud within the program and, on September 14, 2023, announced a moratorium on processing new ERC claims through the end of 2023. Background on the Employee Retention Credit The ERC was a temporary payroll tax credit available to employers during parts of 2020 and 2021 that was intended to partially offset the cost of paying workers during the COVID-19 pandemic. Determining eligibility for the credit is a key factor for employers claiming the ERC. The ERC is not available to all employers. To be eligible, an employer needed to meet one of the four criteria: Shutdown: Be subject to a full or partial government shutdown order issued by the federal or a state or local government. The IRS determined that the shutdown must have been due to an official government order, not government guidance, recommendation, or a statement; Decline in Gross Receipts: Experience a significant decline in gross receipts during one of the quarters covered by the ERC relative to the same calendar quarter during 2019. For the 2020 ERC, eligibility required gross receipts less than 50% of the comparable quarter of 2019. For the 2021 ERC, employers were eligible for all quarters for which gross receipts were less than 80% of the comparable quarter in 2019; Startup: For the third or fourth quarter of 2021, be a recovery startup business. A recovery startup business is an employer that began operations after February 15, 2020, and has average annual gross receipts of $1 million or less; or Congressional Research Service https://crsreports.congress.gov IN12246 CRS INSIGHT Prepared for Members and Committees of Congress