USA: Employee Retention Credit - All good things come to an end

The Employee Retention Credit (ERC) has provided significant relief to taxpayers that have suffered a sharp decline in gross receipts or had their operations limited by governmental shutdown as a result of the COVID-19 pandemic. For more details on qualifications, please read ERC Opportunity .  There is still time to claim the credit, but that window will close eventually.

The ERC is claimed on the Form 941 Employer’s Federal Quarterly Tax Return. While the time has come and gone to claim the credit on the initial filings, the credit can still be claimed on the Form 941-X amended return. That said, the Form 941 is subject to the statute of limitations, which limits the window of time to amend and claim the credit. The statute of limitations will be the later of 3 years from the filing of the Form 941 or 2 years from the date the taxes are paid.

The Form 941 is due by the last day of the month following the end of the quarter. However, the IRS treats all quarterly Form 941 filings for a calendar year taxpayer as filed on April 15th of the following year as long as the Form 941s are filed prior to April 15th. If the Form 941 is filed after April 15th, the statute of limitations begins from the date the form is actually filed.

For example: if quarters 1, 2, & 3 of 2020 were filing on April 30th, 2020, July 31st, 2020, & October 31st, 2020, respectively, but quarter 4 of 2020 was not filed until May 31st, 2021, then quarters 1 – 3 of 2020 would be considered filed on April 15th, 2021 since they were filed prior to April 15th, 2021, but quarter 4 of 2020 would be considered filed on the actual day it was filed, May 31, 2021 because it was filed after April 15th, 2021. Therefore, the 3 years from filing for the statute of limitations for quarters 1 - 3 of 2020 would be April 15th, 2024, but quarter 4 of 2020 would be May 31st, 2024

If all quarters of a calendar year taxpayer are filed timely, then the statute of limitations to amend the Form 941s to claim the ERC credit is as follows:

• 2020 quarterly filings must be amended by April 15th, 2024
• 2021 quarterly filings must be amended by April 15th, 2025.

In summary, the window to claim the credit is shrinking; but there is still plenty of time to claim the credit to take advantage of this exciting opportunity for taxpayers negatively affected by COVID-19. If you think you might qualify for the ERC, you can reach Holsinger at (724) 934-4880 and we will be happy to assist you.