As the pandemic continues to impact businesses across the country, many employers are looking for ways to maximize their financial resources. One such opportunity is the employee retention credit, a refundable tax credit that was introduced as part of the CARES Act in March 2020. However, a recent development has shed light on a potential timeline for employers to claim this credit, known as “uncovering the clock.”
The employee retention credit is designed to provide financial relief to businesses that were affected by the COVID-19 pandemic. Eligible employers can receive a tax credit for up to 70% of qualified wages paid to employees, up to $10,000 per employee, for each quarter of 2021. This credit is available to businesses that experienced a significant decline in gross receipts or were subject to government-mandated shutdowns.
However, the timing for when employers can claim this credit has been a topic of discussion and confusion. Until recently, there was uncertainty surrounding the deadline for claiming the credit, which created uncertainty for many businesses. The IRS had previously stated that the deadline for claiming the credit was the same as the general three-year statute of limitations for filing a claim for refund.
However, in a recent announcement, the IRS revealed that the deadline for claiming the credit may be extended even further. According to the IRS, employers may have up to five years to claim the employee retention credit. This means that businesses may have an extended window of opportunity to reap the financial benefits of this credit, providing potential relief for those who were previously under the impression that they had missed the deadline.
This development has significant implications for employers who may have missed out on claiming the credit in the past, as well as those who were unaware of the extension. By uncovering the clock and shedding light on this potential timeline for claiming the credit, the IRS has provided businesses with an additional opportunity to take advantage of this valuable financial resource.
For businesses that have not yet claimed the credit, it is important to review their eligibility and consider taking advantage of this extended timeline to claim the credit. Employers should consult with tax professionals to ensure that they meet the eligibility requirements and maximize their potential refund.
Overall, the recent revelation about the extended timeline for claiming the employee retention credit is a significant development for businesses affected by the pandemic. By uncovering the clock and providing clarity on the potential window for claiming the credit, the IRS has offered businesses an opportunity to maximize their financial resources during these challenging times. With this extended timeline, employers have the chance to take advantage of the employee retention credit and alleviate some of the financial burdens brought on by the COVID-19 pandemic.