The IRS has posted a new set of frequently asked questions on the Employee Retention Credit (ERC) covering how to handle the pandemic-era credit on tax returns under various scenarios. 

The ERC was designed to help certain businesses continue paying employees during the COVID-19 pandemic while their operations were either fully or partially suspended due to a government order or when they had a significant decline in gross receipts during the eligibility periods. It was generally available to eligible businesses from March 31, 2020, to Sept. 30, 2021, and to Dec. 31, 2021, for recovery startup businesses. 

April 15 is the deadline for filing 2021 ERC claims. 

The FAQs, added March 20, cover: 

• Does the ERC affect an income tax return? 

• Should a taxpayer have reduced the wage expense on their income tax return when filing for the ERC? 

• What do taxpayers do when they claimed the ERC but did not reduce wage expenses on the income tax return, and the ERC claim was paid in a subsequent year? 

• What can taxpayers do if the ERC claim was disallowed but they had already reduced the wage expense on their income tax return by the amount of the ERC they expected? 

• How does someone report ERC fraud?