The Employee Retention Credit (ERC) provides a refund of up to $26,000 per employee to eligible employers for wages paid during the COVID-19 pandemic.

The ERC is available to businesses, non-profit organizations, and specific governmental agencies if they experienced any of the following:

Significant Decline in Gross Receipts: There must be a substantial reduction in the business's gross receipts. For 2020, this is defined as a decline in gross receipts of more than 50% compared to the same quarter in 2019. For the first three quarters of 2021, the requirement is a decline in gross receipts of more than 20% compared to the same quarter in 2019.

‍Full or Partial Suspension: The employer must have experienced a full or partial suspension of business operations during 2020 or the first three quarters of 2021 due to orders from a governmental authority related to COVID-19. This suspension could be due to limitations on commerce, travel, or group meetings.

‍Recovery Startup Business: For businesses that started after February 15, 2020, and have annual gross receipts of less than $1 million, they may qualify as a recovery startup business. Recovery startup businesses can qualify for the fourth quarter of 2021 in addition to the other eligible quarters. Eligible employers can claim the ERC for qualified wages paid between March 13, 2020, and December 31, 2021.

With recent updates and complexities surrounding ERC, businesses are now navigating the landscape of programs like the Voluntary Disclosure Program and the Withdrawal Program to ensure compliance.

The Employee Retention Credit (ERC) Withdrawal Program is offering flexibility for businesses in their ERC claims process. Whether a business has applied for ERC but hasn't yet received it, or has received the credit but not yet cashed or deposited the check, this program allows them to retract their claim. This program is crucial for businesses that have reassessed their eligibility or need for the credit post-application. By withdrawing the claim, businesses can avoid potential penalties, as it is treated as if the claim was never filed. It's important to emphasize that this option is exclusively for businesses that haven't utilized the ERC funds yet.

For those who have already received and used the credit, alternative options like the IRS's Voluntary Disclosure Program may apply.

The Employee Retention Credit Voluntary Disclosure Program offers a lifeline to businesses that mistakenly claimed the Employee Retention Credit (ERC), aiming to prevent severe penalties and potential criminal charges from unintentional misfilings or incorrect claims. This program is open to businesses not currently facing criminal investigations or employment tax audits, who have inadvertently received ERC credits or refunds. There's a critical deadline of March 22, 2024, to apply for a reduced repayment of only 80% of the received ERC. Missing this deadline, however, could lead to increased repayments and penalties.