Many business owners continue to search for information about COVID tax refunds and pandemic-related tax relief. During the COVID-19 pandemic, the U.S. government introduced several programs to support businesses and employees facing financial challenges. One of the most widely discussed programs was the Employee Retention Credit (ERC).
If you are a business owner researching a COVID tax refund, it is important to understand how the Employee Retention Credit worked, who may have qualified, and why businesses should be cautious about refund promises.
In this guide, we explain COVID-related tax refunds, ERC eligibility, IRS deadlines, potential scams, and how accurate bookkeeping can support your business’s financial records.
What Is a COVID Tax Refund?
A COVID tax refund can refer to different types of pandemic-related tax relief. For businesses, the term is often used when discussing the Employee Retention Credit, also known as ERC or ERTC.
The Employee Retention Credit was a refundable employment tax credit designed to support eligible employers that continued paying employees during certain periods of the COVID-19 pandemic.
Unlike a standard individual income tax refund, ERC was intended for eligible employers. Businesses needed to meet specific requirements involving qualified wages, eligible periods, and applicable IRS rules.
Not every business qualified for the credit. Eligibility depended on the employer’s circumstances and the requirements in effect for the relevant tax period.
Business owners should understand that a COVID tax refund is not automatically available simply because a business experienced financial difficulties during the pandemic.
What Was the Employee Retention Credit (ERC)?
The Employee Retention Credit was introduced as part of COVID-19 economic relief measures. It provided eligible employers with a refundable tax credit based on qualified wages paid during specified periods in 2020 and 2021.
Some employers could qualify if their operations were fully or partially suspended because of a qualifying government order. Other businesses could qualify through specific gross-receipts decline requirements.
The rules for 2020 and 2021 were different, so businesses needed to review the requirements for each applicable period.
The ERC was designed to support employers that continued paying employees during challenging economic conditions. However, the credit was subject to detailed eligibility rules, wage limitations, and filing requirements.
Businesses considering an ERC claim should review official IRS guidance and consult a qualified tax professional before making decisions.
Who May Have Qualified for a COVID Tax Refund?
Eligibility for the Employee Retention Credit depended on several factors. Below are some of the circumstances that may have applied to qualifying employers.
1. Businesses Affected by Government Orders
Some employers may have qualified if a government order related to COVID-19 fully or partially suspended their business operations.
The suspension had to meet the applicable IRS requirements. A business being generally affected by the pandemic or experiencing a reduction in customer demand did not automatically establish eligibility.
Businesses should maintain documentation showing how a relevant government order affected their operations.
2. Businesses That Experienced a Decline in Gross Receipts
Certain employers could qualify based on a required decline in gross receipts during eligible quarters.
The applicable requirements differed between 2020 and 2021. Therefore, businesses should not assume that the same revenue threshold applies to all periods.
Financial statements, sales records, and other accounting documents may help businesses review their historical revenue information.
3. Recovery Startup Businesses
Specific provisions were available for qualifying recovery startup businesses during certain periods in 2021.
These businesses were subject to their own requirements and credit limitations. Meeting the definition of a new business alone did not guarantee eligibility.
Because ERC rules are detailed, business owners should seek professional guidance before relying on a potential claim.
Can You Still Claim a COVID Tax Refund in 2026?
Many business owners want to know whether they can still claim a COVID tax refund in 2026.
The general ERC filing deadlines established by the IRS were April 15, 2024, for 2020 tax periods and April 15, 2025, for 2021 tax periods.
As a result, businesses should not assume that they can file a new standard ERC claim in 2026.
The situation may be different for businesses that previously submitted claims, received IRS notices, or need to address an incorrect claim. The appropriate next steps depend on the specific circumstances.
The IRS has also issued guidance concerning ERC claims, including incorrect claims and claim withdrawal procedures.
If your business has an existing ERC claim, review its status and consult a qualified tax professional about your options.
Always check the official IRS website for the latest information before taking action.
How to Check Your COVID Tax Refund Eligibility
If you are researching whether your business qualified for COVID-related tax relief, the following steps can help you organize your review.
Step 1: Gather Your Financial Records
Start by collecting your payroll records, financial statements, gross receipts, employment tax returns, and relevant business documentation.
These records may help you and your tax professional review your business activities during the applicable periods.
Step 2: Identify the Relevant Tax Year
Determine whether your potential claim relates to 2020 or 2021.
The ERC rules were different for each year, so identifying the correct period is an important part of the review.
Step 3: Review the Eligibility Requirements
Check whether your business met the relevant requirements for government-order suspensions, gross-receipts declines, or other qualifying provisions.
Do not assume that another business’s eligibility means your business qualifies.
Step 4: Review Previously Filed Claims
If you already filed an ERC claim, check whether it is pending, approved, paid, withdrawn, or disallowed.
Keep copies of IRS correspondence and supporting documents.
Step 5: Consult a Tax Professional
A qualified tax professional can help you review your circumstances, understand applicable requirements, and address potential errors.
Bookkeeping records can support this review, but bookkeeping alone does not establish eligibility for a tax credit.
Beware of COVID Tax Refund and ERC Scams
The IRS has warned businesses about misleading Employee Retention Credit promotions and inaccurate claims.
Some promoters may advertise large refunds or suggest that almost every business qualifies. Business owners should be cautious when evaluating these offers.
Potential warning signs include:
- Promises of guaranteed tax refunds.
- Pressure to submit a claim immediately.
- Claims that eligibility can be confirmed without reviewing business records.
- High upfront fees.
- Fees based on a percentage of the refund.
- Limited explanation of the actual eligibility requirements.
Submitting an incorrect ERC claim may result in repayment obligations, penalties, and interest.
Before working with a refund promoter, verify the services being offered and ensure that any claim is supported by accurate information.
If you have concerns about a previously filed claim, seek professional advice and review IRS guidance.
Why Accurate Bookkeeping Matters for Tax-Related Questions
Accurate bookkeeping plays an important role in helping businesses maintain organized financial records.
When a business reviews historical tax matters, reliable records may help identify revenue, payroll expenses, bank transactions, and other financial information.
Important bookkeeping practices include:
- Regular bank reconciliations.
- Accurate categorization of income and expenses.
- Organized payroll records.
- Monthly financial reporting.
- Documentation of business transactions.
- Consistent review of financial statements.
Well-maintained records can help business owners communicate more effectively with their accountants and tax professionals.
At Giesler-Tran Bookkeeping, we focus on helping businesses maintain organized and reconciled financial records. Our services are designed to support better financial visibility and ongoing bookkeeping needs.
How Giesler-Tran Bookkeeping Supports Small Businesses
Managing financial records can be challenging, especially for business owners who are focused on daily operations, employees, and customers.
Giesler-Tran Bookkeeping provides bookkeeping support for medical offices and service-based businesses in Vancouver, Washington, Portland, Oregon, and nationwide.
Our approach focuses on accurate bookkeeping, financial organization, and audit-ready records.
Whether you need help with ongoing bookkeeping or want to improve your financial reporting process, maintaining consistent records can support better business decision-making.
You can learn more about our Strategic Bookkeeping Services and explore how organized financial reporting can support your business.
If you would like to discuss your bookkeeping needs, contact our team to learn more about available services.
Frequently Asked Questions About COVID Tax Refunds
1. What is a COVID tax refund?
A COVID tax refund can refer to different pandemic-related tax relief programs. For businesses, the term commonly refers to the Employee Retention Credit, which was available to eligible employers under specific requirements.
2. Can individuals claim the Employee Retention Credit?
The ERC is an employer-focused tax credit. It is not a general individual tax refund program for everyone who experienced financial hardship during COVID-19.
3. Can I claim ERC in 2026?
The general IRS deadlines for 2020 and 2021 ERC periods have passed. Businesses should review their specific circumstances and official IRS guidance rather than assume a new claim can be filed.
4. What if my business already received an incorrect ERC refund?
The appropriate steps depend on your claim and circumstances. The IRS provides guidance concerning incorrect claims, and you should consult a qualified tax professional for advice.
5. Can bookkeeping help with tax-related questions?
Organized bookkeeping can help businesses locate financial information, maintain accurate records, and support discussions with tax professionals. However, bookkeeping does not guarantee eligibility for any tax credit.
Final Thoughts on COVID Tax Refunds
COVID tax refunds and the Employee Retention Credit remain important topics for business owners reviewing their historical financial records.
However, businesses should understand the eligibility requirements, filing deadlines, and risks associated with inaccurate claims before taking action.
The general ERC filing deadlines for 2020 and 2021 periods have passed, so businesses should review official IRS guidance for information relevant to their situation.
Maintaining accurate and reconciled bookkeeping records can help support financial organization and informed discussions with accounting professionals.
If your business needs reliable bookkeeping support, Giesler-Tran Bookkeeping can help you explore solutions designed to improve financial clarity and recordkeeping.
Contact Giesler-Tran Bookkeeping today to learn more about our bookkeeping services.
Disclaimer
This article is provided for general informational purposes only and does not constitute tax, legal, or accounting advice. Tax rules and individual circumstances may vary. Consult a qualified tax professional and review official IRS guidance for advice about your specific situation.