What Are the 2023 Updates for the Employee Retention Tax Credit?

October 5, 2023
Dayes Law Firm

If you’re a business owner who is vaguely aware of the Employee Retention Tax Credit but hasn’t yet applied for it, you might be confused about how it’s possible to still apply for the ERTC. The credit is for wages from 2020 and 2021 tax quarters. In 2023, updates about the Employee Retention Credit might not be as frequent as they were in previous years, but employers interested in the credit should still be aware of its current status. 

Employee Retention Tax Credit – Earlier Updates

The ERTC is available to eligible employers that paid qualified wages to some or all employees after March 12, 2020, and before January 1, 2022. According to the IRS, businesses and tax-exempt organizations that qualify:

  • Were shut down due to a government order because of the COVID-19 pandemic during 2020 or the first three calendar quarters of 2021, or
  • Experienced a significant 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 2021

Initially, the Employee Retention Tax Credit was available for wages paid from March 2020 to December 2020 but was later extended. The Consolidated Appropriations Act, 2021 (CAA) extended the ERTC to include wages paid before July 1, 2021, and The American Rescue Plan Act of 2021 (ARPA) later also expanded the coverage period to incorporate wages paid between July 1, 2021, and December 31, 2021.

However, 2021 had a monumental ERTC update. As of September 30, 2021, the Infrastructure Investment and Jobs Act retroactively ended the Employee Retention Tax Credit, with exceptions made for Recovery Startup Businesses that were still eligible through December 2021.

There was also a major update in regard to the tax credit and the Paycheck Protection Program (PPP) in previous years. Originally, business owners couldn’t claim both PPP loans and the ERTC. But changes made to the Consolidated Appropriations Act, 2021 mean employers are able to apply for the ERTC even if they received PPP loans. 

2023 Updates for the Employee Retention Tax Credit

The main concern for businesses now relates to processing claims before the program ends. 

In fact, on July 27, 2023, the Ways and Means Committee held an Oversight Sub Hearing on the ERTC to discuss fraud allegations, the claim processing backlog, and more. “As of September 6, 2023, our total inventory of unprocessed Forms 941-X was approximately 637,000,” the IRS recently reported. (Forms 941-X are how business owners apply for the ERTC).

While there may be a delay with the agency processing these claims, that shouldn’t stop you from applying for the Employee Retention Tax Credit if you qualify to do so. The two deadlines for claiming the ERTC in 2023 are April 15, 2024, for all quarters in 2020, and April 15, 2025, for all quarters in 2021.

ERTC Application Assistance 

Dayes Law Firm and our partners can help you with the Employee Retention Tax Credit if you haven’t already applied and keep you up to date on any current or future ERTC updates.

Please contact us for a free, no-obligation consultation about the ERTC, where you can feel free to ask a member of our team any questions you may have about the tax credit. We are proud to say we have been involved in filing for more than $250 million in refunds on behalf of many businesses to date! Give us a call to see how we can assist you, too.