ERC Claims in 2026: The January 31, 2024 Cutoff, Withdrawals and the Six-Year Assessment Period

Section 70605(d) of Public Law 119-21 stops the IRS from allowing or refunding any Employee Retention Credit under section 3134 unless the claim was filed on or before January 31, 2024. The IRS applies the rule to the third and fourth quarters of 2021. It reaches credits and refunds allowed or made after July 4, 2025, the date of enactment. A second change in the same section stretches the time the IRS has to assess back ERC amounts to six years. A CPA firm with clients that filed ERC claims needs to sort each claim into one of a few buckets, because the bucket decides whether the credit survives and how long the exposure runs.

What exactly did section 70605(d) change?

The text provides that no credit under section 3134 "shall be allowed," and no refund made, unless a claim for the credit or refund was filed by the taxpayer on or before January 31, 2024. Section 70605(g)(2) makes the subsection apply to credits and refunds allowed or made after the date of enactment, July 4, 2025.

The IRS FAQ guidance narrows the practical effect to claims for the third and fourth quarters of 2021 filed after January 31, 2024. Section 3134(n) explains why only those quarters matter: it limits the credit to wages paid after June 30, 2021, and before October 1, 2021, with the end date moved to January 1, 2022 for recovery startup businesses. In practice, a late-filed Q3 2021 claim is barred for any employer, and a late-filed Q4 2021 claim is barred for a recovery startup business.

The bar applies even when the employer met every eligibility test. The IRS states that a taxpayer that missed the deadline cannot cure it.

When does a claim count as filed on time?

An original or amended return claiming the credit is treated as filed on time if it was postmarked and properly mailed, or submitted to the appropriate IRS office, by January 31, 2024. The file therefore needs proof of the mailing or submission date: a certified mail receipt, a postmark, or a delivery confirmation. If the credit is one of several items on a larger return, the IRS can continue to process the other items.

What about claims that were refunded, withdrawn or never paid?

The IRS FAQs give three answers:

• Refunded or credited before July 4, 2025. Section 70605(d) does not apply to the late-filed claim. The IRS still says other compliance activity can lead to an adjustment or a bill, so a refunded claim is not closed.
• Claimed on or before January 31, 2024 and withdrawn later. If an amended return filed after that date withdraws the claim for the same period, section 70605(d) does not apply and the IRS processes the withdrawal.
• Not yet paid. The IRS claim withdrawal program lets an employer that submitted an ineligible claim withdraw it, if the credit has not been paid or a check has not been cashed or deposited. The IRS says this avoids audits, repayment, penalties and interest. An employer that has received Letter 105-C for the period cannot use the program for that period.

How did the assessment period change?

Section 3134(l)(1) now says the period for assessing any amount attributable to the credit does not expire before the date that is 6 years after the latest of three events:

1. The original return for the calendar quarter was filed.
2. That return was treated as filed under section 6501(b)(2).
3. A claim for credit or refund for the credit was made.

Before the 2025 amendment, the period ran 5 years from the later of the filing date or the treated-as-filed date, and the claim date was not a trigger. Section 70605(g)(3) applies the change to assessments made after enactment. Section 3134(l)(2) adds a matching rule: the period for a refund or credit tied to a deduction for improperly claimed ERC wages cannot expire before the assessment period ends.

What does the timing look like for three clients?

Take three calendar-year clients. Under the 941-X instructions, a Form 941 filed before April 15 of the following year is treated as filed on April 15, so a Q3 2021 return is treated as filed April 15, 2022.

Client C shows why the amendment matters. The extra period applies to claims that were already paid and long forgotten.

What should the tax file hold?

1. A claim register. Quarter, date filed, method of filing, proof of filing date, amount claimed, amount received, and status (paid, pending, disallowed, withdrawn).
2. Proof of timeliness for every Q3 and Q4 2021 claim, kept with the return copy.
3. The wage deduction adjustment. The IRS ERC page says that for 2021 quarters the employer must reduce its wage deduction by the amount of the credit for the same tax period, which can require an amended income tax return.
4. Retention. The 941-X instructions say records for qualified wages paid after June 30, 2021 and before January 1, 2022 should be kept for at least 7 years. With a six-year assessment period running from the latest trigger, the file should be held past the claim date, not the return date.
5. A contingency analysis for paid claims the client cannot support. See ASC 450 loss contingencies for the recognition and disclosure framework that applies to a liability for repayment.

What about promoters?

Section 70605 also imposes a penalty of $1,000 for each failure by a COVID-ERTC promoter to meet the required due diligence standards for determining eligibility for, or the amount of, the credit. It applies to aid provided after July 4, 2025. A firm that prepared or reviewed ERC claims for clients should decide whether its own procedures meet the due diligence standard before it touches a new engagement involving the credit.

For the notice and response side, see the Letter 105-C response workflow and, for the mechanics of amending payroll returns, Form 941-X corrections. For how this fits with other 2026 client conversations, see the business tax changes checklist.

CORAA prepares ready-to-review audit files for US CPA firms; see /us.

Sources

• IRS, Frequently asked questions about the ERC compliance provisions of the One, Big, Beautiful Bill (FS-2025-07): https://www.irs.gov/newsroom/irs-frequently-asked-questions-faqs-address-employee-retention-credits-under-erc-compliance-provisions-of-the-one-big-beautiful-bill
• Cornell Law School Legal Information Institute, 26 U.S.C. 3134 (text and notes on section 70605 of Public Law 119-21): https://www.law.cornell.edu/uscode/text/26/3134
• IRS, Employee Retention Credit page (claim withdrawal program, wage deduction rule): https://www.irs.gov/coronavirus/employee-retention-credit
• IRS, Understanding Letter 105-C, Disallowance of the Employee Retention Credit: https://www.irs.gov/coronavirus/understanding-letter-105-c-disallowance-of-the-employee-retention-credit
• IRS, Instructions for Form 941-X (treated-as-filed rule and ERC notes): https://www.irs.gov/instructions/i941x

AU-C references are to AICPA Professional Standards, paraphrased here; read the standard itself before relying on a requirement. This page is guidance, not professional advice. Report an error