How Has the Employee Retention Tax Credit Evolved in 2025?

The Employee Retention Tax Credit (ERTC) has been one of the most valuable relief tools for businesses navigating the financial impact of the COVID-19 pandemic. Initially introduced under the CARES Act in 2020, the credit has undergone several changes over the past few years. For businesses still navigating the credit, whether through amended filings, ongoing claims, or audits, it is critical to stay informed about the current regulatory environment and compliance expectations.

Increased IRS Scrutiny and Audits

The most significant change this year is the IRS's intensified focus on auditing ERTC claims. With billions of dollars disbursed through the program, the IRS is now actively reviewing applications and has initiated several enforcement actions against improper or fraudulent claims. Businesses that submitted ERTC claims should prepare for the possibility of review and ensure their documentation and eligibility criteria are well-supported.

Retroactive Claims Still Accepted (with Caution)

Although the ERTC is no longer available for current payroll periods, businesses may still file amended payroll tax returns to claim the credit retroactively. However, due to heightened scrutiny, these claims should only be filed if your business meets the strict qualification guidelines, such as experiencing a significant decline in gross receipts or being subject to full or partial government-mandated shutdowns during the eligible periods.

Clarified Qualification Standards

The IRS and Treasury have released additional guidance to help clarify what constitutes legitimate qualification. For instance, businesses relying on supply chain disruptions must now demonstrate specific and direct impacts rather than general economic downturns. This clarification has led many employers to reassess their claims, sometimes with legal guidance.

Growing Need for Legal Support

With the complexity of the ERTC program, businesses are increasingly turning to legal professionals to review claims, provide compliance support, and represent them during audits. Navigating the fine print of ERTC eligibility and substantiating your claim can be challenging without the right expertise.

How We Can Help

Whether you're considering a retroactive claim, facing an IRS audit, or unsure whether your ERTC claim was filed correctly, Coomber Law is here to guide you through every step of the process. Our team understands the intricacies of the ERTC and offers the legal insight needed to protect your business.

We work with you to:

• Assess ERTC eligibility based on the latest IRS guidance

• Review and validate existing claims

• Prepare documentation to support compliance

• Represent your business in the event of an audit

• Help you avoid costly penalties from improperly filed claims

We’re committed to providing clear, actionable information to help you make informed decisions and successfully navigate the ERTC landscape. Our goal is to achieve the best possible outcomes for your business, ensuring that you're protected and prepared in a shifting regulatory environment.

Get in Touch with Coomber Law

The evolution of the Employee Retention Tax Credit in 2025 emphasizes the importance of understanding your eligibility and staying compliant with updated IRS expectations. As audits become more common and the window for retroactive claims narrows, now is the time to act with confidence and clarity.

Reach out to Coomber Law to schedule a consultation and ensure your ERTC strategy is solid, compliant, and aligned with your business goals. Contact our office in Carlsbad, California, by calling (760) 205-3810 to book an appointment today.