The Employee Retention Credit Endgame: Late Claims Barred and Enforcement Ramps Up
Part of our 2025 Tax Law Changes guide — the complete breakdown of the One Big Beautiful Bill Act.
The Employee Retention Credit (ERC) was one of the most-claimed — and most-abused — pandemic relief provisions. Recent legislation and IRS enforcement have effectively closed the door on new and late claims, and preparers need to know where things stand.
What changed
- ERC claims filed after a cutoff date (on or after January 31, 2024) were disallowed, ending the window for late filings.
- The IRS extended the period it has to examine and assess ERC claims.
- Additional penalties were aimed at promoters and preparers of improper claims.
What it means for your clients
- Clients still waiting on a legitimately filed ERC refund should keep documentation ready — processing and scrutiny continue.
- Clients approached by aggressive “ERC mills” should be cautioned; improper claims carry repayment and penalty exposure.
- If a questionable claim was filed, discuss the IRS’s resolution options and correct course promptly.
Solid documentation of eligibility (government orders or gross-receipts decline) remains the key to defending any claim.
Keep up with the changes
Every new provision brings client questions. Stay current with CPE — browse the catalog, get a full year with Unlimited Access, or compare all plans. Review your state’s rules on our CPE requirements page.
This article is general information for tax and accounting professionals and is not tax or legal advice. Dollar thresholds are indexed and provisions have effective dates and phase-outs — confirm current figures and eligibility with the IRS or qualified counsel before acting or advising clients.
