ERC Credits and the "One Big Beautiful Bill"

The recently passed One Big Beautiful Bill Act (OBBB) introduces a significant change: "Section 70605 Enforcement Provisions With Respect To Covid-Related Employee Retention Credits (ERC)" that could impact nonprofits and small businesses still waiting for their ERC refunds. The ERC was a pandemic-era relief program designed to help employers retain staff during COVID-19 disruptions. Eligible businesses could claim substantial tax credits for qualified wages paid in 2020 and 2021.

The original ERC filing deadlines were April 15, 2024, for 2020 wages and April 15, 2025, for 2021 wages. However, under the new law, the IRS is prohibited from paying any ERC claims filed after January 31, 2024. Claims submitted on or before January 31, 2024, remain eligible for processing, though they may face delays.

The OBBB also extends the statute of limitations for IRS assessments related to ERC claims from three years to six years for all applicable calendar quarters. This change increases the audit exposure period for employers who claimed the credit.

If you submitted a claim, determine the date it was submitted and ensure the related receivable remains collectible.  You will also need to maintain all ERC related documentation during the extended statute of limitations.  The federal government is undertaking audits of ERC claims and being able to supply all requested documentation is crucial.  

If you have any questions regarding your organization’s ERC refunds, please contact a member of your audit team.