Getting a Refund for the ERC Isn’t the End of the Story

Many employers have filed for a tax refund due to the COVID-19-related employee retention credit (ERC). Unfortunately, there has been a lot of fraud, with unscrupulous promoters telling employers that just about everybody qualifies for the credit, which just isn’t true. Employees who have filed for a refund should know that the IRS has a set period of time to challenge the refund and recoup the money if warranted. For the credit related to the third quarter of 2021, the IRS usually has until April 15, 2025, to act. But the IRS can file a lawsuit within 2 years of payment, even if later than the usual 3-year statute of limitations. As of June 14, 2023, there were about 537,000 unprocessed Form 941 and there are IRS employees in the service centers Cincinnati and Ogden trained to work possible ERC refunds. Note: The Treasury’s 2024 Greenbook proposed that Congress extend this period to give the IRS more time to challenge erroneous refund claims. #IdeaoftheDay

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