The ERC is available to businesses, non-profit organizations, and specific governmental agencies if they experienced any of the following:

‍Significant Decline in Gross Receipts: There must be a substantial reduction in the business's gross receipts. For 2020, this is defined as a decline in gross receipts of more than 50% compared to the same quarter in 2019. For the first three quarters of 2021, the requirement is a decline in gross receipts of more than 20% compared to the same quarter in 2019.

‍Full or Partial Suspension: The employer must have experienced a full or partial suspension of business operations during 2020 or the first three quarters of 2021 due to orders from a governmental authority related to COVID-19. This suspension could be due to limitations on commerce, travel, or group meetings.

Recovery Startup Business: For businesses that started after February 15, 2020, and have annual gross receipts of less than $1 million, they may qualify as a recovery startup business. Recovery startup businesses can qualify for the fourth quarter of 2021 in addition to the other eligible quarters. Eligible employers can claim the ERC for qualified wages paid between March 13, 2020, and December 31, 2021.

With recent updates and complexities surrounding ERC, businesses are now navigating the landscape of programs like the Voluntary Disclosure Program and the Withdrawal Program to ensure compliance.

Read more from the IRS here

The Employee Retention Credit (ERC) Withdrawal Program is offering flexibility for businesses in their ERC claims process. Whether a business has applied for ERC but hasn't yet received it, or has received the credit but not yet cashed or deposited the check, this program allows them to retract their claim. This program is crucial for businesses that have reassessed their eligibility or need for the credit post-application. By withdrawing the claim, businesses can avoid potential penalties, as it is treated as if the claim was never filed. It's important to emphasize that this option is exclusively for businesses that haven't utilized the ERC funds yet.

For those who have already received and used the credit, alternative options like the IRS's Voluntary Disclosure Program may apply.

Read more from the IRS here

The Employee Retention Credit Voluntary Disclosure Program offers a lifeline to businesses that mistakenly claimed the Employee Retention Credit (ERC), aiming to prevent severe penalties and potential criminal charges from unintentional misfiling or incorrect claims. This program is open to businesses not currently facing criminal investigations or employment tax audits, who have inadvertently received ERC credits or refunds. There's a critical deadline of November 22, 2024, to apply for a reduced repayment of only 85% of the received ERC. Missing this deadline, however, could lead to increased repayments and penalties.

Read more from the IRS here

The IRS is expected to ask for documentation such as payroll records, evidence of COVID-19 effects (including government restrictions, relevant regulations, and decreases in revenue), Form 941s, and possibly calculations for the Employee Retention Credit to support your claims.

If the IRS audits you for the Employee Retention Credit, it doesn't automatically mean you have to give back all the money. What happens next depends on things like how accurate and thorough your documentation is. If they find mistakes or see that you claimed the credit incorrectly, they might ask for some or all of it back. But it's not always the whole amount, and it really depends on what they find during the audit.

Not necessarily. The IRS doesn't audit every quarter for the Employee Retention Credit. Audits are typically conducted based on various factors: claim complexity, potential red flags in documentation provided, or random selection for audit purposes. So, not all quarters are audited, but it's essential to maintain accurate records and be prepared in case of an audit for any quarter in which you've claimed the credit.

During an Employee Retention Credit (ERC) audit, the IRS will mainly be checking if your claim for the credit is eligible and accurate. However, they might also look into other parts of your business. For example, they could review your payroll records and financial statements to make sure everything aligns with tax laws. If they find any issues during the ERC audit, it could lead to a broader examination of your business's tax situation. So, while the main focus is on the ERC, be ready for them to look into other aspects of your business too.

You will receive a notice from the IRS if you're being audited. This notice will outline the specific reasons for the audit and may request certain documentation or information from you. The notice will include instructions on how to respond and what steps you need to take.

The time you have to respond to an IRS audit notice varies. It's usually several weeks from when you receive the notice. Make sure to check the deadline and respond promptly.