IRS Issues New FAQs on the Employee Retention Credit (ERC)
Posted in Offshore Account Update on December 17, 2025 | Share
The One Big, Beautiful Bill (OBBB) enacted on July 4, 2025 changed the rules for Employee Retention Credit (ERC) claims filed after January 1, 2024. Recently, the Internal Revenue Service (IRS) issued a Fact Sheet with answers to frequently asked questions (FAQs) about the revised rules. What do you need to know if you filed an ERC claim after January 1, 2024? Washington D.C. tax defense attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, shares some key insights:
The New Rules for ERC Claims Filed After January 1, 2024
The FAQs in the IRS’ new Fact Sheet provide guidance specifically with regard to ERC claims filed for the third and fourth quarters of 2021. As the IRS explains:
“The One Big, Beautiful Bill (OBBB) introduced new enforcement provisions affecting the ERC. One of these provisions, section 70605(d) of the OBBB, prevents the IRS from allowing or refunding ERCs after July 4, 2025, for the third and fourth quarters of 2021 if those claims were filed after January 31, 2024 . . . .”
As the IRS makes clear, this applies to all taxpayers who filed after January 31, 2024, “even if [they] otherwise met eligibility requirements.” Notably, however, the IRS also clarifies that if a taxpayer filed an ERC claim after January 31, 2024 and received a refund or credit before July 4, 2025, “section 70605(d) does not apply.” In other words, those who already received a refund or credit are not required to repay the IRS based on its current guidance.
For those who filed after January 31, 2024 and who did not receive a refund or credit before July 4, 2025, the IRS’ Fact Sheet does not provide clear guidance, other than stating that, “effective July 4, 2025, no new ERCs claimed on a return for [the third and fourth quarters of 2021] will be allowed or refunded if filed after the January 31, 2024, deadline.” Thus, taxpayers who are in this situation will need to make informed decisions based on their individual circumstances, and this may require working with a Washington D.C. tax defense attorney.
ERC Fraud Remains a Top IRS Enforcement Priority
Along with rejecting ERC claims under the OBBB, the IRS is also continuing to prioritize ERC fraud enforcement. Allegations of ERC fraud can expose taxpayers to civil or criminal penalties depending on the circumstances involved. With this in mind, taxpayers who have concerns about their ERC filings should take a proactive approach to mitigating their risk—whether this means confirming compliance, amending their returns, or submitting a voluntary disclosure.
Request a Consultation with Washington D.C. Tax Defense Attorney Kevin E. Thorn
If you have questions or concerns about the IRS’ ongoing efforts to target fraudulent claims under the pandemic-era Employee Retention Credit (ERC) program, we invite you to get in touch. To request a consultation with Washington D.C. tax defense attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 202-349-4033 or contact us confidentially online today.
