ERC: Critical Actions To Take Before the April 15 Deadline

The April 15, 2025, deadline for filing Employee Retention Credit (ERC) claims for most quarters in 2021 is approaching quickly. Businesses that have yet to receive their refunds or have received IRS notices challenging their claims must take critical steps now.

Statute of Limitations for 2021 ERC Returns

The April 15 expiration of the statute of limitations could make it significantly harder – if not impossible – to rectify missing claims or disputes after this date. Taxpayers in the following situations may need to take action before April 15*:

1. Filed an ERC claim but have not received the refund
2. Received ERC funds but have subsequently received a notice challenging the credit in whole or part

*Note: If a refund has been received but no subsequent notices have been received, this article does not apply.

Taxpayers Who Have Not Received the ERC Refund

Unfortunately, many companies find themselves in this bucket. A claim has been filed months – or even years – ago and the refund has not arrived. For taxpayers in this category, two items should be considered:

1. Confirm receipt of the ERC claim: While the IRS will not provide an update on where a refund claim is in the queue, the IRS will confirm that it has received a claim. Taxpayers should confirm receipt prior to April 15 as it will be much harder, or potentially impossible, to rectify a missing claim after April 15.
2. Consider a protective refund claim: The ERC rules required taxpayers to reduce their wages on the income tax return by the amount of the credit. To the extent a taxpayer reduced a wage deduction on the 2021 tax return and the credit is later denied, the deduction may be lost. A protective refund claim may help preserve the ability to request a refund of the additional taxes paid should the claim be denied.

Taxpayers Who Have Received Notices or Denial Letters

Whether the credit has been received or not, if a taxpayer received a notice or denial letter from the IRS, it is a good idea to locate those prior to April 15, confirm whether the notice/letter was responded to and if any subsequent response has been provided, and work with your tax advisor to determine if immediate action is required.

Similar to the above scenario, taxpayers may want to consider filing a protective refund claim should they have to pay back part of the claim.

Need Help?

Whether confirming the receipt of an ERC claim, considering a protective refund claim, or responding to IRS notices, proactive action is essential. If your business needs help determining what to do with your ERC claim, reach out to your KSM advisor or contact us via the form below.