Is There an ERC Statute of Limitations?

September 27, 2023
Dayes Law Firm

If you’re a business owner interested in applying retroactively for the Employee Retention Tax Credit, you should know that there is limited time left to do so. You’ll have to get all of your documentation and your application in before the ERC statute of limitations runs out, or potentially miss out on this amazing financial lifeline for businesses. ERC deadlines loom on the horizon, and you don’t want to leave any funds that could help your company on the table. 

What is the ERC?

The Employee Retention Tax Credit, also called the ERC or ERTC, is a refundable tax credit for businesses that faced specific challenges during the COVID-19 pandemic and kept employees on staff anyway. It is also available for tax-exempt organizations.

The ERC is available for eligible employers that paid qualified wages to employees after March 12, 2020, and before January 1, 2022. According to official IRS guidance about the credit, businesses and tax-exempt organizations that qualify are ones that:

  • Were shut down due to government orders as a result of the COVID-19 pandemic during 2020 or the first three calendar quarters of 2021, or
  • Experienced a decline in gross receipts during the eligibility periods during 2020 or the first three calendar quarters of 2021, or
  • Qualified as a Recovery Startup Business for the third or fourth quarters of the year 2021

Your business may qualify if it saw a decrease in gross receipts by 50 percent in a qualifying quarter of 2020 compared to the same quarter in 2019 or a decrease in gross receipts by 20 percent in a qualifying quarter of 2021 when compared to the same 2019 quarter. 

What is the ERC Statute of Limitations?

There is a statute of limitations when it comes to the ERC. Employers can still amend previously filed Forms 941 and qualify retroactively for the Employee Retention Tax Credit, but time is running out to do so before you could lose out on ERC funds that your business has earned and is entitled to. 

The first ERC deadline is actually less than a year away! Generally, employment tax returns for the year need to be filed in April, and the end of the first three-year ERC statute of limitations, for tax year 2020, is April 15, 2024

The deadline to apply for the ERC for tax year 2021 for most businesses is another year later, on April 15, 2025. But for the third quarter of 2021, a special five-year statute of limitations applies, rather than the usual three-year rule, Bloomberg Tax reported.

As for the fourth quarter of 2021, only Recovery Startup Businesses are eligible for the tax credit for that period. Ultimately, for those two quarters, the IRS can audit the tax returns until April 15, 2027

Dayes Law Firm Offers ERC Assistance 

Keeping track of all the Employee Retention Tax Credit deadlines and statute of limitations can be a lot for business owners who already have a lot on their plate. You and your business may benefit from working with an experienced team to claim the ERC, and that’s how Dayes Law Firm could help. 

The ERC team at Dayes Law Firm and our partners have already helped numerous businesses claim the ERC. Our tax professionals can help you decide if your business should apply for the Employee Retention Credit and offer a free consultation to talk through any questions you may have about the tax credit. 

If you contact us for a free evaluation of your situation, you are under no obligation to work with our firm after we discuss your needs. But we think we can prove to you why so many businesses have already chosen to work with Dayes Law Firm to receive more than $25 million in funds for ERC tax credit claims to date.

Please give us a call to see how we can help you when it comes to the ERC before any deadlines to claim the credit arrive. Feel free to fill out the form on this page or give us a call at (800) 503-2000 to discover how our ERC team can assist you today!