The employee retention credit (ERC), implemented during the COVID era, will officially end April 15. However, according to the Journal of Accountancy "its legacy will live on in delayed payments to the businesses it was designed to help, fraudulent activity related to its claims and confusion not only for taxpayers and tax professionals but also for the IRS."

The program was initially created by Congress in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security Act, P.L. 116-136. It was was deemed necessary during that period since  the pandemic wave had just begun rippling through the U.S.

The Journal reports that, while taxpayers have started receiving approvals of ERC claims, the process has been applied inconsistently and characterized as slow. For example, the IRS has not been assessing each set of claims from one business at the same time.

Meanwhile,  the IRS has issued five new FAQs to clarify how the ERC should be treated on income tax returns, especially amid timing and eligibility complications. 

As reported by Journal of Accountancy, the new guidance, released Mar. 20, provides important clarification for businesses grappling with expired statutes of limitations, amended returns and rejected claims.