On Oct. 22, the IRS released FAQs with eight questions on the Employee Retention Credits (ERCs) under the ERC compliance provisions of the One, Big, Beautiful Bill Act (OBBBA). The FAQs were announced in IR-2025-106.
The FAQs address the questions on how the OBBBA will impact the ERC. The fact sheet also offers FAQs about the limitation on credits and refunds for ERCs claimed for the third and fourth quarters of 2021 filed after Jan. 31, 2024.
In one of the questions, the OBBBA introduced new enforcement provisions impacting the ERC. One of these provisions, section 70605(d) of the OBBBA, stops the IRS from permitting or refunding ERCs after Jul. 4, 2025 for the third and fourth quarters of 2021 if those claims were filed after Jan. 31, 2024. This applies even if the taxpayer otherwise met eligibility requirements.
It also answers the question about whether all ERC claims for the third and fourth quarters of 2021 are limited by section 70605(d) of the OBBBA. According to the IRS, only new ERC claims filed after Jan. 31, 2024 are limited by section 70605(d).
The tax agency clarified these FAQs may not address any particular taxpayer’s specific facts and circumstances, and they might be updated or modified upon further review.
Given that these FAQs have not been published in the Internal Revenue Bulletin, they will not be depended on or utilized by the agency to resolve a case.
In the same way, if a FAQ turns out to be an inaccurate statement of the law as applied to an individual taxpayer’s case, the IRS said the law will control the taxpayer’s tax liability.
Nonetheless, a taxpayer who reasonably and in good faith depends on these FAQs will not be subject to a penalty that offers a reasonable cause standard for relief such as a negligence penalty or other accuracy-related penalty. This is to the extent that the dependence would lead to an underpayment of tax.