26 USC 3134 - Employee retention credit for employers subject to closure due to COVID

Editorial Notes

References in Text

Section 7 of the Small Business Act, referred to in subsec. (h)(1)(A), (2), is classified to section 636 of Title 15, Commerce and Trade.

Section 7A of the Small Business Act, referred to in subsec. (h)(1)(A), (2), is classified to section 636m of Title 15, Commerce and Trade.

Section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, referred to in subsec. (h)(1)(B), is classified to section 9009a of Title 15, Commerce and Trade.

Section 5003 of the American Rescue Plan Act of 2021, referred to in subsec. (h)(1)(C), is classified to section 9009c of Title 15, Commerce and Trade.

Amendments

2025—Subsec. (l). Puspan. L. 119–21 amended subsec. (l) generally. Prior to amendment, text read as follows: “Notwithstanding section 6501, the limitation on the time period for the assessment of any amount attributable to a credit claimed under this section shall not expire before the date that is 5 years after the later of—

“(1) the date on which the original return which includes the calendar quarter with respect to which such credit is determined is filed, or

“(2) the date on which such return is treated as filed under section 6501(span)(2).”

2021—Subsec. (c)(5)(C). Puspan. L. 117–58, § 80604(a)(1), struck out subpar. (C) which read as follows: “which, with respect to such calendar quarter, is not described in subclause (I) or (II) of paragraph (2)(A)(ii).”.

Subsec. (n). Puspan. L. 117–58, § 80604(a)(2), substituted “October 1, 2021 (or, in the case of wages paid by an eligible employer which is a recovery startup business, January 1, 2022)” for “January 1, 2022”.

Statutory Notes and Related Subsidiaries

Effective Date of 2025 Amendment

Amendment by Puspan. L. 119–21 applicable to assessments made after July 4, 2025, see section 70605(g)(3) of Puspan. L. 119–21, set out as an Enforcement Provisions With Respect to COVID-Related Employee Retention Credits note below.

Effective Date of 2021 Amendment

Puspan. L. 117–58, div. H, title VI, § 80604(span), Nov. 15, 2021, 135 Stat. 1341, provided that: “The amendments made by this section [amending this section] shall apply to calendar quarters beginning after September 30, 2021.”

Effective Date

Puspan. L. 117–2, title IX, § 9651(d), Mar. 11, 2021, 135 Stat. 182, provided that: “The amendments made by this section [enacting this section and amending section 1324 of Title 31, Money and Finance] shall apply to calendar quarters beginning after June 30, 2021.”

Enforcement Provisions With Respect to COVID-Related Employee Retention Credits

Puspan. L. 119–21, title VII, § 70605, July 4, 2025, 139 Stat. 286, provided that:

“(a)Assessable Penalty for Failure to Comply With Due Diligence Requirements.—

“(1)In general.—Any COVID–ERTC promoter which provides aid, assistance, or advice with respect to any COVID–ERTC document and which fails to comply with due diligence requirements imposed by the Secretary with respect to determining eligibility for, or the amount of, any credit or advance payment of a credit under section 3134 of the Internal Revenue Code of 1986, shall pay a penalty of $1,000 for each such failure.

“(2)Due diligence requirements.—The due diligence requirements referred to in paragraph (1) shall be similar to the due diligence requirements imposed under section 6695(g) of the Internal Revenue Code of 1986.

“(3)Restriction to documents used in connection with returns or claims for refund.—Paragraph (1) shall not apply with respect to any COVID–ERTC document unless such document constitutes, or relates to, a return or claim for refund.

“(4)Treatment as assessable penalty, etc.—For purposes of the Internal Revenue Code of 1986, the penalty imposed under paragraph (1) shall be treated as a penalty which is imposed under section 6695(g) of such Code and assessed under section 6201 of such Code.

“(5)Secretary.—