Employee Retention Credit

The Employee Retention Credit (ERC) is a refundable tax credit for businesses that continued to pay employees while either shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020 to Dec. 31, 2021. Eligible employers can claim the ERC on an original or adjusted employment tax return for a period within those dates.

Only recovery startup businesses are eligible for the ERC in the fourth quarter of 2021.

Employee Retention Credit - 2020 vs 2021 Comparison Chart

Who Is Eligible

An employer is eligible for the ERC if it:


  • Wages reported as payroll costs for PPP loan forgiveness or certain other tax credits can't be claimed for the ERC in any tax period.

How to Claim

Follow guidance for the period when qualified wages were paid:

Forms and Instructions

Use the revision date for the relevant tax period:

Beware of Third-Party ERC Schemes

Employers should be wary of third parties advising them to claim the ERC when they may not qualify. For details see News Release IR-2023-40, IRS issues renewed warning on Employee Retention Credit claims; false claims generate compliance risk for people and businesses claiming credit improperly and COVID Tax Tip 2022-170.

To report tax-related illegal activities relating to ERC claims, submit by fax or mail a completed Form 14242, Report Suspected Abusive Tax Promotions or PreparersPDF and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail: Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, CA 92677-3405
Fax: 877-477-9135

Penalty Relief

Get information on penalty relief related to claims for the Employee Retention Credit.

More Information

The Employee Retention Credit Frequently Asked Questions provide historical information about the credit and do not reflect the current status of the credit.


Don’t Fall for Employee Retention Credit Scams