The Coronavirus Aid, Relief, and Economic Security (CARES) Act authorized a credit called the Employee Retention Credit (ERC) to support employers hurt by the COVID-19 pandemic. Since being created by the CARES Act the ERC retroactively improved by the Consolidated Appropriations Act of 2021 (CAA) and the expanded and extended again by the American Rescue Plan Act (ARPA). ERC eligibility factors have changed with the expansion and extension.
Many employers are confused by the multiple retro-active changes, expansions, and updates to the law. The credits can be applied retroactively if employers discover that they were eligible in the past and did not take advantage of the ERC program.
Eligible businesses may claim the Employee Retention Tax Credit (ERC) credit if they haven’t already. The program is set to sunset at the end of 2021 if it is not extended.
If an eligible employer has not claimed the credit for wages paid after March 12, 2021, they may do so by filing amended payroll tax returns for the periods of eligibility.
We have summarized the basics that will apply to most employers. The credits can be applied retroactively if employers discover that they were eligible in the past and did not take advantage of the ERC program. Please review ERC Update for Employers: Understanding Available Credits under Each Act for the details including a comparison chart.