The Employee Retention Credit ("ERC") offered tax credits of 50% - 70% of your payroll costs during the COVID-19 Pandemic, but the time to claim the credit is running short, and, surprise! Congress is trying to slam the refund window shut much sooner than expected.
Current Law: Businesses could still claim the credit for wages paid between March 13 and Dec. 31, 2020, until April 15, 2024. And for wages paid between Jan. 1, 2021, and Sept. 30, 2021, the existing deadline is April 15, 2025.
Pending Change: A proposal just voted out of the Ways and Means Committee would shorten the deadline to file all claims for the ERC to Jan. 31, 2024, for eligible wages paid during 2020 and 2021.
I know what you're saying: never gonna happen, this Congress couldn't legislate its way out of a paper bag. But consider this: it came out of committee on a bipartisan basis, 40 - 3. It might happen.
UPDATE 3/30/24: The House passed this bill, and the Senate has begun considering it. Should you file for the ERC? We just don't know. If the application window closes retroactively, you lose the cost of filing. If it doesn't, you could win a big refund. Ask your accountant for a rough estimate of the prospective refund before you decide.
