Capture recurring seasonal opportunities with proven analysis. Seasonal calendars, historical performance data, and timing tools to profit from patterns that repeat year after year. Capitalize on predictable seasonal patterns. The Internal Revenue Service has issued a reminder that a key COVID-19 relief refund deadline for businesses is approaching. Eligible employers have a limited window to claim the Employee Retention Credit for certain tax periods, with the latest filing cutoff arriving in the coming weeks. Business owners are urged to review their eligibility and submit amended payroll returns promptly.
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- The Employee Retention Credit (ERC) deadline for 2020 quarters applies to businesses of all sizes, including tax-exempt organizations.
- Eligible employers can claim a refundable tax credit of up to 50% of qualified wages paid per employee during the applicable periods.
- To claim the credit, businesses must file Form 941-X for each affected quarter. The IRS notes that processing times may vary, and some claims could face additional review if documentation is incomplete.
- The current cutoff only pertains to the 2020 quarters; deadlines for 2021 quarters are later, but business owners are encouraged to act promptly for all eligible periods.
- Industry groups have reported that many small and mid-sized businesses remain unaware of their potential eligibility, particularly those that did not take PPP loans or that operated below the 100-employee threshold.
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Key Highlights
The IRS recently announced that the deadline for businesses to claim COVID-19-related refunds—specifically the Employee Retention Credit (ERC) for the third and fourth quarters of 2020—is rapidly approaching. The agency has set a statutory cutoff that falls within the next several weeks, after which businesses will no longer be able to retroactively claim the credit for those periods.
The ERC was originally enacted as part of the CARES Act to help employers retain staff during the pandemic. While many businesses initially focused on Paycheck Protection Program loans, the ERC remained available for eligible employers who experienced a full or partial suspension of operations or a significant decline in gross receipts. The IRS has since processed thousands of claims, but many eligible businesses have yet to file amended payroll tax returns (Form 941-X) to claim the refund.
For business owners who may have missed prior communications, the IRS has emphasized that the deadline is fixed by law and will not be extended. The agency’s website provides detailed guidance on eligibility criteria and the filing process. Tax professionals are advising clients to gather wage records and gross receipts data as quickly as possible to avoid missing the window.
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Expert Insights
Tax professionals suggest that businesses should move quickly to evaluate whether they qualify for the ERC before the approaching deadline. CPAs caution that the process can be complex, particularly for firms that dealt with partial suspensions, supply chain disruptions, or fluctuating revenue patterns during the pandemic.
“Any business that is unsure about its eligibility should consult a qualified tax advisor as soon as possible,” notes a recent IRS webinar. The agency also warns against third-party “ERC mills” that may charge high fees or make unrealistic promises. Business owners are reminded that only legitimate payroll tax filings will be accepted, and the deadline is set by statute.
Given the IRS’s ongoing efforts to clear pandemic-era claims, businesses that file late may face significant delays or be automatically denied. While the credit itself is not new, the approaching cutoff may create a surge in filings, potentially straining IRS processing capacity. Companies that act in the coming weeks could improve their chances of seeing the refund before the end of the calendar year.
Disclaimer: This article is for informational purposes only and does not constitute tax advice. Business owners should consult a licensed tax professional regarding their specific situation.
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