Employee Retention Credit — What Business Owners Need to Know
What This Video Covers
The Employee Retention Credit was a legitimate pandemic-era tax relief program that became one of the most heavily abused credits in IRS history. Promoters — often called “ERC mills” — filed billions of dollars in improper claims on behalf of businesses that did not qualify, charging substantial fees and leaving the business owners to face the consequences when the IRS came looking. The credit itself was real. The problem is that most of what the mills filed was not.
This video covers what the ERC actually is, who legitimately qualified for it, how the mills operated and what they got wrong, the IRS moratorium on new claims and the voluntary disclosure program the IRS created for businesses that want to correct improper filings, and what your options are right now if you are holding an ERC claim you are not sure about.
Key topics addressed include:
- What the Employee Retention Credit is and who originally qualified
- How ERC mills fabricated or inflated eligibility to file improper claims
- The IRS moratorium on processing new ERC claims
- The IRS Voluntary Disclosure Program for withdrawing improper ERC claims
- Penalties and interest exposure for businesses with improper claims already paid
- Why the business owner — not the mill — bears the legal consequences
- What to do if you filed an ERC claim and are unsure whether it was legitimate
- Why consulting a tax attorney now produces better outcomes than waiting
Why This Matters
The Employee Retention Credit was created during the COVID-19 pandemic to encourage businesses to keep employees on payroll during a period of government-mandated shutdowns and significant revenue disruption.
Eligible businesses could claim a refundable credit against payroll taxes — in some cases substantial amounts — for wages paid to employees they retained during qualifying periods in 2020 and 2021. It was genuine relief for businesses that genuinely qualified.
About the Presenter
Benjamin A. Goldburd, Esq.
Goldburd McCone LLP
Benjamin brings focused experience in IRS collection defense, including lien and levy disputes, CDP hearings and negotiated resolutions. Our team’s combined backgrounds in accounting, business and wealth management ensure that enforcement responses account for the full scope of a client’s financial position.
Frequently Asked Questions About Employee Retention Credit & IRS Enforcement
What was the Employee Retention Credit and who actually qualified?
The ERC was a refundable payroll tax credit available to employers who retained employees during the COVID-19 pandemic. To qualify, a business had to either have experienced a significant decline in gross receipts compared to a comparable pre-pandemic period, or have been subject to a full or partial suspension of operations due to a government order related to COVID-19. The eligibility rules were specific and required documentation.
What is the IRS moratorium on ERC claims?
In September 2023 the IRS announced a moratorium on processing new ERC claims, citing overwhelming evidence that a significant proportion of pending claims were improper. The moratorium was intended to give the IRS time to develop compliance processes and protect businesses from being victimized by mills still actively soliciting clients.
Can I withdraw an ERC claim that has not yet been paid?
Yes, in many cases. The IRS created a claim withdrawal process for businesses with ERC claims that were filed but not yet processed or paid. Withdrawal removes the claim from the IRS’s queue and eliminates exposure on that filing without penalty.
What happens if the IRS audits my ERC claim and disallows it?
You will owe the full amount of the credit back, plus interest from the date of payment, plus potential accuracy-related penalties.