Here’s what HIVE AI had to say about “Can I still claim the Employee Retention Credit (ERC) in 2025?”:
No, you cannot claim the Employee Retention Credit (ERC) in 2025. The Employee Retention Credit (ERC) is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and December 31, 2021 IRS IRM 21.7.2 Employment and Railroad Tax Returns IRS IRM 21.7.2 Employment and Railroad Tax Returns .
ERC Eligibility Period Has Ended
The period of eligibility for the credit for affected businesses is very limited, covering only between March 13, 2020, and Dec. 31, 2021 IRS Newsroom – IR-2023-135 . This means that the qualifying period for earning ERC credits has already concluded, and no new ERC credits can be earned for wages paid after December 31, 2021.
Filing Deadline Still Available But Limited
While you cannot earn new ERC credits in 2025, there is still time to file claims for credits that were legitimately earned during the qualifying period. Under the current law, businesses can typically continue to file claims for the credit until April 15, 2025 IRS Newsroom – IR-2023-135 . This deadline applies to filing amended employment tax returns (Form 941-X) to claim ERC credits for wages paid during the eligible period of March 13, 2020, through December 31, 2021.
Current IRS Enforcement and Compliance Measures
The IRS has implemented significant compliance measures regarding ERC claims due to widespread fraud and abuse. As the IRS continues its moratorium on processing ERC claims submitted after Sept. 14, 2023, businesses will continue to have an option to pull back on any unprocessed claims IRS Newsroom – IR-2024-78 . This moratorium was implemented because the IRS has growing concerns about scams and potential fraud within the ERC program given the troubling increase in false and misleading public advertisements and scams taking advantage of taxpayers IRS Newsroom – IR-2023-135 .
Options for Incorrect Claims
If you previously filed an incorrect ERC claim, you have several options available:
Withdrawal Process: Businesses should quickly pursue the claim withdrawal process if they need to ask the IRS not to process an ERC claim for any tax period that hasn’t been paid yet. Taxpayers who received an ERC check but haven’t cashed or deposited it can also use this process to withdraw the claim and return the check IRS Newsroom – IR-2024-78 . The IRS will treat the claim as though the taxpayer never filed it. No interest or penalties will apply IRS Newsroom – IR-2024-78 .
Voluntary Disclosure Program: The IRS announced a new Voluntary Disclosure Program (VDP) to help businesses who want to pay back the money they received after filing incorrect ERC claims IRS IRM 21.7.2 Employment and Railroad Tax Returns . Under this program, employers meeting ERC VDP requirements will generally be required to repay 80 percent of the erroneous ERC amount claimed, will not be required to repay associated overpayment interest allowed when erroneously claimed ERC was recorded by the IRS, and will not be charged penalties and interest otherwise associated with the erroneous ERC claimed if the required amount is paid in full when due IRS IRM 21.7.2 Employment and Railroad Tax Returns .
Important Considerations for 2025
The IRS continues to emphasize the importance of proper eligibility verification. The IRS continues to urge businesses, tax-exempt organizations and others considering applying for this credit to carefully review the official requirements for this limited program before applying IRS Newsroom – IR-2023-135 . Additionally, the IRS reminds anyone who improperly claims the ERC that they must pay it back, possibly with penalties and interest IRS Newsroom – IR-2023-135 .
Given the complexity of ERC eligibility requirements and the significant compliance risks involved, it’s crucial to work with a qualified tax professional who understands the intricate rules governing this credit. The IRS has made it clear that they are actively pursuing compliance actions against improper claims, and the consequences of filing an incorrect claim can be severe.
Sources
- IRS IRM 21.7.2 Employment and Railroad Tax Returns
- IRS Newsroom – IR-2023-135
- IRS Newsroom – IR-2024-78
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