The Internal Revenue Service in late July updated its Frequently Asked Questions resource on claiming the Employee Retention Credit (ERC). While many of the updates clarify points that have already been covered by experts on the LeadingAge ERC webinars, a few key new items are worth mentioning.

(1) The IRS clarifies that in order for an organization to claim ERC funds due to a supply chain disruption, three criteria must be met: the organization’s supplier must have suspended services due to a government order, the organization must not have been able to find alternate supplies to full the need for supplies, and these two factors must be proven to have fully or partially suspended the organization’s operations during that same period of time.

(2) There is emphasis that if an organization has discovered that it inappropriately claimed and received ERC funds, it may face penalties and interest fees on top of the repayment amount.

(3) If ERC funds are received, the organization should be sure to adjust its wage deduction on its income tax return filing as well, to avoid future tax filing issues.

(4) The IRS offers extensive ‘warning signs’ to help organizations know when they are being taken advantage of by an “ERC Mill” and how to alert the IRS to such ‘bad actor’ firms.

(5) A new question-and-answer details documentation and recordkeeping that organizations that receive the ERC funds need to support their eligibility.

For further detail, visit the official IRS ERC website, and stay tuned for an upcoming LeadingAge QuickCast that will summarize news and updates on the ERC.