Employee Retention Credit Compliance: Analysis of IRS Guidance under the One, Big, Beautiful Bill Act
This advisory draws upon the guidance provided by the Internal Revenue Service (IRS) in its Frequently Asked Questions (FAQs) released as FS-2025-07 on October 22, 2025, announced via IR-2025-106. These FAQs specifically address the stringent compliance and limitation provisions affecting the Employee Retention Credit (ERC) as enacted by the One, Big, Beautiful Bill Act (OBBBA). While this guidance is intended to provide general information to tax professionals as expeditiously as possible, it is important to remember that these FAQs have not been published in the Internal Revenue Bulletin and will not be relied upon by the IRS to resolve a specific case; the underlying tax law controls the taxpayer’s liability. Nonetheless, a taxpayer who reasonably and in good faith relies on these FAQs may be shielded from penalties, such as negligence or other accuracy-related penalties, to the extent such reliance results in an underpayment of tax, provided the reasonable cause standard for relief is met.
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