On March 21, 2025, the IRS released updated FAQs and guidance that introduce a new process for taxpayers dealing with Employee Retention Tax Credit (ERTC) refunds, particularly when those refunds relate to wages paid in prior tax years like 2020 or 2021. This update aims to simplify reporting requirements and provide clarity for taxpayers who either received ERTC refunds or had their claims disallowed. Here’s a breakdown of what this means for you and how to handle your tax filings moving forward. . Background on ERTC and Wage Expenses The Employee Retention Credit, introduced as part of COVID-19 relief measures, allowed eligible businesses to claim a credit for qualified wages paid to employees. However, claiming the ERTC comes with a catch: taxpayers are generally required to reduce their...
