The Employee Retention Tax Credit (ERC) has been a lifeline for many businesses during and after the COVID-19 pandemic. Designed to reward businesses for retaining employees, the program has helped countless companies recover funds to support their operations. However, recent changes and updates to the program have added complexity to the process, leaving many businesses with questions about how to proceed. In this blog, we’ll break down the current status of the ERC, the challenges businesses are facing, and how Comfort Profit Consulting can help navigate this evolving landscape.
What Is the Employee Retention Tax Credit?
The ERC was introduced as part of the CARES Act in 2020 to provide financial relief to businesses that kept employees on their payroll during the pandemic. Eligible businesses could claim a percentage of qualified wages paid to employees, helping to offset costs during a challenging time.
Over the years, the rules for eligibility and the process for claiming the credit have evolved, creating confusion for many business owners. Some businesses have already received their refunds, while others are awaiting responses from the IRS. A recent backlog in processing claims has added further complications.
Challenges Facing Businesses with ERC Claims
- Denial Letters from the IRS
- Many businesses that applied for the ERC have received denial letters without clear explanations. These letters often fail to outline the reasons for denial or provide guidance on how to appeal.
- Businesses need to act quickly if they receive a denial, as they typically have 30 days to respond to preserve their appeal rights.
- Backlog of Claims
- Due to the sheer volume of applications, the IRS has struggled to process claims efficiently. Some businesses have waited over a year for their refunds, adding financial strain to their operations.
- Complex Eligibility Rules
- Determining eligibility for the ERC can be challenging, particularly for businesses navigating multiple rule changes. For example, businesses must demonstrate a significant decline in revenue or disruptions to their operations during specific periods to qualify.
What’s New in 2025?
As the April 15, 2025, deadline for filing ERC claims approaches, businesses need to act quickly to ensure they don’t miss out on potential refunds. Key updates include:
- Protective Claims
- Businesses concerned about potential IRS challenges to their ERC claims should consider filing “protective claims” to preserve their rights to amend income tax returns if needed.
- Post-Chevron Impact
- Recent Supreme Court decisions have changed how federal agencies like the IRS enforce tax laws. Businesses should carefully review their claims in light of these rulings to ensure they align with updated interpretations.
- IRS Guidance and Processing Priorities
- The IRS has announced that it will begin processing claims identified as “low risk” while continuing to address issues with “high risk” applications. However, many medium-risk claims remain in limbo, leaving businesses uncertain about their refund status.
How Comfort Profit Consulting Can Help
Navigating the ERC process can be overwhelming, but Comfort Profit Consulting has the expertise to guide businesses through it. Here’s how we can help:
- ERC Eligibility Assessment
- We’ll review your payroll records, revenue data, and operational history to determine if your business qualifies for the ERC and ensure your claim is accurate.
- Appeals and Dispute Resolution
- If you’ve received a denial letter, our team can help you respond to the IRS, file an appeal, and provide the necessary documentation to support your claim.
- Filing Protective Claims
- We’ll help your business file protective claims before the deadline to safeguard your rights and minimize risks associated with potential IRS challenges.
- Ongoing Support
- As new IRS guidance is released, we’ll keep you informed and adjust our strategies to ensure your claim complies with the latest rules.
Why Work with Comfort Profit Consulting?
With over 20 years of experience helping businesses optimize costs and navigate complex regulations, Comfort Profit Consulting is your trusted partner for ERC claims. Our no-risk, contingency-based model means you only pay if we secure savings or refunds for your business.
Conclusion
The ERC remains an important opportunity for businesses to recover funds, but navigating the process requires expert guidance. With the 2025 deadline fast approaching, now is the time to act. Contact Comfort Profit Consulting today for a free consultation, and let us help you maximize your ERC benefits while minimizing the hassle.
