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Has anyone received ERC refund 2023?

March 21, 2024 Uncategorized

Has Anyone Received ERC Refunds in 2023?

The Employee Retention Credit (ERC) has been a valuable lifeline for many businesses during the pandemic, but the rules and eligibility around the tax credit have been complex and evolving. With the ERC program now expired, many businesses are wondering if they can still claim the credit in 2023 for prior eligible periods. Here’s what we know so far.

What is the Employee Retention Credit?

The ERC was introduced through the CARES Act in 2020, expanded through the Consolidated Appropriations Act of 2021, and further through the American Rescue Plan Act of 2021. The ERC Tax Credit is a refundable payroll tax credit for employee salaries, wages, and healthcare insurance, offered as a relief measure to encourage businesses to keep employees on their payroll.

The good news is, it’s not too late to retroactively file your ERC claim in 2023! The credit was available for qualified wages paid between March 13, 2020 and September 30, 2021. Eligible employers can still amend their payroll tax returns to claim the credit for those periods.

How Does the ERC Work?

The ERC is a tax credit that transforms into a tax-free refund once any payroll taxes owed to the IRS (employer’s share of social security taxes (FICA) March 31, 2020, to March 31, 2021/Medicare tax after March 31, 2021, to October of 2021) have been paid in full. This refund is tax free (see below rule for additional details) and can be used by the employer in any which way they want.

How to Claim the ERC

Companies are required to file a 941-X for the specific qualified quarter in order to claim the ERC. They must fill out specific lines in the 941-X that tell the IRS they are claiming the credit. An amended state unemployment tax form may also need to be filed.

ERC Eligibility Rules

The eligibility rules for the ERC have been complex with several changes since the program was introduced. In general, to qualify for the ERC, employers must have experienced one of the following circumstances:

  • Full or partial suspension of operations due to a COVID-19 government order
  • Significant decline in gross receipts compared to the same quarter in 2019

There were also rules around the maximum amount of qualified wages per employee that could be claimed each quarter. The credit originally applied to qualified wages up to $10,000 per employee for 2020. This was increased to $10,000 per quarter in 2021. There were also aggregation rules that applied for companies with more than 100 employees.

Christine Twomey
Christine Twomey
2024-03-21
Just had my Divorce case settled 2 months ago after having a horrible experience with another firm. I couldn’t be happier with Claire Banks and Elizabeth Garvey with their outstanding professionalism in doing so with Spodek Law Group. Any time I needed questions answered they were always prompt in doing so with all my uncertainties after 30 yrs of marriage.I feel from the bottom of my heart you will NOT be disappointed with either one. Thanks a million.
Brendan huisman
Brendan huisman
2024-03-18
Alex Zhik contacted me almost immediately when I reached out to Spodek for a consultation and was able to effectively communicate the path forward/consequences of my legal issue. I immediately agreed to hire Alex for his services and did not regret my choice. He was able to cover my case in court (with 1 day notice) and not only was he able to push my case down, he carefully negotiated a dismissal of the charge altogether. I highly recommend Spodek, and more specifically, Alex Zhik for all of your legal issues. Thanks guys!
Guerline Menard
Guerline Menard
2024-03-18
Thanks again Spodek law firm, particularly Esq Claire Banks who stood right there with us up to the finish line. Attached photos taken right outside of the court building and the smile on our faces represented victory, a breath of fresh air and satisfaction. We are very happy that this is over and we can move on with our lives. Thanks Spodek law 🙏🏼🙏🏼🙏🏼🙏🏼🙌🏼❤️
Keisha Parris
Keisha Parris
2024-03-15
Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
Taïko Beauty
Taïko Beauty
2024-03-15
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence. Thank you team!
Anthony Williams
Anthony Williams
2024-03-12
Hey, how you guys doing? Good afternoon my name is Anthony Williams I just want to give a great shout out to the team of. Spodek law group. It is such a honor to use them and to use their assistance through this whole case from start to finish. They did everything that they said they was gonna do and if it ever comes down to it, if I ever have to use them again, hands-down they will be the first law office at the top of my list, thank you guys so much. It was a pleasure having you guys by my side so if you guys ever need them, do not hesitate to pick up the phone and give them a call.
Loveth Okpedo
Loveth Okpedo
2024-03-12
Very professional, very transparent, over all a great experience
Bee L
Bee L
2024-02-28
Amazing experience with Spodek! Very professional lawyers who take your case seriously. They treated me with respect, were always available, and answered any and all questions. They were able to help me very successfully and removed a huge stress. Highly recommend.
divesh patel
divesh patel
2024-02-24
I can't recommend Alex Zhik and Spodek Law Firm highly enough for their exceptional legal representation and personal mentorship. From the moment I engaged their services in October 2022, Alex took the time to understand my case thoroughly and provided guidance every step of the way. Alex's dedication to my case went above and beyond my expectations. His expertise, attention to detail, and commitment to achieving the best possible outcome were evident throughout the entire process. He took the time to mentor me, ensuring I understood the legal complexities involved to make informed decisions. Alex is the kind of guy you would want to have a beer with and has made a meaningful impact on me. I also want to acknowledge Todd Spodek, the leader of the firm, who played a crucial role in my case. His leadership and support bolstered the efforts of Alex, and his involvement highlighted the firm's commitment to excellence. Thanks to Alex Zhik and Todd Spodek, I achieved the outcome I desired, and I am incredibly grateful for their professionalism, expertise, and genuine care. If you're in need of legal representation, look no further than this outstanding team.

Claiming the ERC in 2023

The ERC program expired on October 1, 2021, so no new credits can be claimed for wages paid after that date. However, eligible employers can still retroactively claim the ERC for prior periods in 2023 by amending their payroll tax returns.

For example, if a business qualified for the ERC in Q2 and Q3 of 2020 based on a significant decline in gross receipts, they could file 941-X forms in 2023 to claim the credit for those quarters. The deadline for amending those returns would be 3 years from their original due dates.

So in summary – yes, the door is still open in 2023 to claim ERC refunds for eligible wages paid in 2020 and 2021!

Claiming the Credit with an ERC Consultant

Many businesses have turned to ERC consulting firms such as Innovation Refunds, Bottom Line Concepts and others to help them identify if they qualify for the credit and file amended returns. These firms take a percentage of the refund as their fee. This can be a good option for companies who don’t have the bandwidth to determine their eligibility and manage the complex filing process.

However, business owners should be aware that some ERC promoters have been overly aggressive, claiming credits that exceed what employers are entitled to. The IRS has cracked down on inflated ERC claims, so it’s important to work with a reputable consultant.

IRS Scrutiny of ERC Claims

The IRS has been closely scrutinizing ERC claims, particularly from Q3 and Q4 of 2020 when eligibility expanded significantly. The agency has identified billions in potentially fraudulent credits, often stemming from consultant-promoted schemes. Some red flags include:

  • Claiming the credit despite no decline in gross receipts or COVID-19 impact
  • Claiming the maximum credit for employees who continued working full time
  • Claiming credits for fake employees or employees whose wages were not actually paid

The IRS has sent thousands of questionnaires to employers questioning suspect ERC claims. In some cases, promoters claimed credits exceeding payroll tax liabilities, resulting in inflated tax refunds. The IRS has disallowed such credits and assessed penalties for excessive refund claims.

Best Practices for Claiming the Credit

If amending returns to claim the ERC in 2023, it’s wise to take steps to avoid IRS scrutiny:

  • Work with a reputable CPA or tax attorney rather than unknown consultants
  • Be conservative in the amount of credits claimed
  • Make sure your decline in gross receipts or COVID-19 impact is well documented
  • Only claim credits for employees who truly provided services

Mistakes can be costly – the IRS can assess accuracy penalties up to 20% of any underpayment plus interest. Structuring claims to maximize credits could be viewed as outright fraud in some cases.

What’s Next for the ERC?

While new ERC claims can no longer be filed for periods after September 2021, Congress could potentially revive the credit retroactively in future legislation. There have been calls by some legislators to enact a “Taxpayer Clarity and Relief Act” that would reopen and extend the ERC for 2022.

However, the IRS has pushed back strongly against reopening the credit, citing billions in potentially fraudulent claims already filed for 2020 and 2021. In September 2022, the IRS announced it will not be accepting new ERC claims until at least 2024 to allow time to process the backlog of amended returns.

So for now, the window remains open to retroactively claim credits for prior periods, but appears closed for any potential extension to 2022 or beyond.

The Bottom Line

The ERC provided a valuable lifeline to struggling businesses during COVID-19 shutdowns and economic turmoil. While complex, the credit is still available to eligible employers who amend prior payroll tax returns in 2023.

Companies interested in pursuing the ERC should consult legitimate tax advisors, carefully review eligibility, and be conservative in the amounts claimed. With scrutiny high, thoughtful planning can help maximize benefits from the credit while minimizing audit risk.

References

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CLAIRE BANKS

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RAJESH BARUA

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