The Employee Retention Credit (ERC) was supposed to be a lifeline for struggling businesses during the pandemic. Congress created ERC to help employers keep people on payroll during a time when no one knew how quickly or how strongly the economy would recover. But if this is a pandemic-era program, why is the ERC something you are once again hearing in the news?
New 2025 legislation changed how the agency handles certain claims, especially late-filed ones. The IRS has made it clear that it plans to examine the ERC for years to come. So, if your small business claimed the credit, it’s a good time to make sure those claims still hold up. Highland Tax Group can help you get your ducks in a row before the IRS takes a closer look on its own.
Why ERC Is Still on the IRS Radar
ERC has been around for several years, but it’s still in the spotlight. Over the summer, the One, Big, Beautiful Bill changed ERC enforcement provisions. The IRS continues to encourage businesses with pending ERC claims to withdraw them if they now believe the claims are incorrect or overly aggressive. That alone tells you the IRS thinks some existing ERC claims may be flawed or based on bad advice.
The timelines around ERC have also shifted. In some cases, the window to claim ERC has closed, and some claims for certain 2021 quarters are no longer payable. There are many significant changes, so even if you acted in good faith, it’s worth a fresh review to see whether your eligibility and calculations still align with what the IRS expects today.
Take a Second Look Before the IRS Does
One thing you want to avoid is a sudden ERC audit or a surprise letter saying the IRS is denying a tax credit you already counted on. You can work with Highland Tax Group to:
- Review how your small business originally qualified for ERC and compare that to the current IRS rules.
- Organize the records that matter most, like payroll reports and gross receipts comparisons.
- Choose whether to stand by your ERC claims, amend them, or potentially withdraw a pending claim that now looks risky.
- Prepare for the possibility of IRS questions or audits.
It’s always better to find and fix potential issues on your terms than to discover them in the middle of an audit. If your small business claimed ERC and you’re unsure what the new crackdown means for you, Highland Tax Group is here to help.