What Do Business Owners Need to Know About the Employee Retention Credit (ERC) Heading Into 2024?

The Employee Retention Credit (ERC) was a pandemic-era program designed to help businesses that were struggling due to the economic impacts of COVID-19. Under the program, eligible businesses could claim a refundable credit for “qualified wages,” effectively subsidizing their payroll as long as they kept their employees onboard.

But, the refundable nature of the ERC also made it a target for fraud. From the earliest days of the ERC promoters and scam artists used unsuspecting business owners to profit from the pandemic. For a fee, these promoters and scam artists would help businesses claim refundable credits regardless of whether they qualified. This led to billions of dollars in fraudulent claims.

As a result, heading into 2024, recovering the government’s losses from ERC fraud is a top federal law enforcement priority. Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, explains what business owners need to know heading into the New Year:

What Business Owners Need to Know if They Claimed the ERC

Businesses that claimed the ERC have been under the microscope in 2023, and this will continue to be the case in 2024. The Internal Revenue Service (IRS) and its Criminal Investigation Division (IRS CI) have made clear that they are focused on holding business owners accountable for submitting fraudulent claims.

Recognizing that many business owners fell victim to ERC filing scams, the IRS announced a limited-time withdrawal program in October 2023. Under the program, qualifying businesses can withdraw their ERC claims and avoid the risk of having their claims trigger an audit or investigation.

But, not all businesses qualify—and not all businesses need to file for withdrawal. For those who have concerns, working with a Boston tax attorney to assess the validity of their ERC claims is the first step toward deciding what (if anything) to do next. In some cases, non-qualifying businesses will need to consider other options, such as filing an amended return or submitting a voluntary disclosure to IRS CI.

What Business Owners Need to Know if They Haven’t Claimed the ERC

While the ERC was only offered for the 2020 and 2021 tax years, qualifying businesses can still claim the credit retroactively—or at least they could until September 2023. On September 14, the IRS announced a moratorium on new ERC claims that will extend at least through the end of the year. While this implies that the moratorium will be lifted eventually, likely sometime in 2024, it means businesses that have yet to claim the ERC will need to monitor for updates—and they will need to be very careful to confirm their eligibility and accurately calculate the ERC when they file.

Request a Confidential Consultation with Boston Tax Attorney Kevin E. Thorn

If you own a business in Massachusetts and need to know more about the IRS' efforts to crack down on ERC fraud, we invite you to get in touch. Please call 617-692-2989 or contact us online to request an appointment with Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group.