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Government Relief for COVID-19 Hit Employers: Unlocking ERC Benefits

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Businesses spent two years leaving federal relief money on the table, and a wave of contingency-fee firms showed up to help them collect it.

The Employee Retention Credit was written into the CARES Act in March 2020 as a payroll tax break to keep workers on the books during COVID-19 shutdowns. Nearly four years later, it has become something else entirely: a retroactive refund program worth up to $26,000 per employee that spawned an entire advisory industry built around chasing it down. Firms like Bottom Line Concepts, founded by Josh Fox, built a business model around amending old payroll returns for employers who never knew they qualified.

• Eligible employers can claim up to $5,000 per employee for 2020 and up to $21,000 per employee across the first three quarters of 2021, a combined maximum of $26,000 per worker.
• Contingency firms such as Bottom Line Concepts charge no upfront fee but typically keep 15% to 30% (commonly around 20%) of whatever the IRS refund check turns out to be.
• The IRS imposed a moratorium on processing new ERC claims on September 14, 2023, and opened a Voluntary Disclosure Program in late December 2023 for employers to return improper payouts.

Calculation of Total Tax Credits

The math changed significantly between the credit’s original form and its later expansions under the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021. For wages paid in 2020, employers could recover 50% of up to $10,000 in qualified wages per employee for the entire year — a $5,000 ceiling per worker. Starting in 2021, the credit jumped to 70% of up to $10,000 in qualified wages per employee per quarter, through the first three quarters of the year, pushing the potential payout to $21,000 per employee for 2021 alone.

Eligibility Criteria for Tax Credits

Eligibility hinges on two separate tests, and a business only needs to clear one of them. The first is a full or partial suspension of operations tied directly to a government COVID-19 order. The second is a revenue test: for 2020 claims, a business needed gross receipts down more than 50% compared to the same quarter in 2019; for 2021 claims, the bar dropped to a decline of more than 20%. Wages qualify if they were paid between March 13, 2020, and September 30, 2021.

The Contingency Model Behind the Advisory Boom

Because the ERC required amending quarterly payroll filings (Form 941-X) rather than a current-year return, most small and midsize employers had no internal process for calculating eligible wages retroactively. That gap is what firms like Bottom Line Concepts were built to fill — running the eligibility analysis, preparing the amended filings, and getting paid only if the IRS actually cuts a check.

Bottom Line Concepts and similar contingency firms typically keep 15% to 30% — commonly around 20% — of the gross refund the IRS sends back.

That fee structure is exactly what made the program attractive to businesses with no cash to spend on filing help, but it’s also what drew regulatory scrutiny once volume exploded. Employers weighing whether to use a third-party filer versus handling amended returns in-house should treat it the same as any other outsourced compliance decision — worth reviewing alongside broader guidance on navigating small business regulations before signing a contingency agreement.

The IRS Response to Predatory Marketing

The flood of aggressive advertising and questionable claims eventually forced the IRS’s hand. On September 14, 2023, the agency froze processing of newly submitted ERC claims through at least the end of the year, citing the volume of promoter-driven filings that didn’t hold up under review. In late December 2023, the IRS opened a Voluntary Disclosure Program specifically so employers who’d been steered into improper claims by a promoter could return the money rather than face the standard penalty structure. Any business currently sitting on an ERC refund it isn’t fully confident in should treat that review the same way it treats any other tax obligation audit — before, not after, the IRS comes calling.

For employers who haven’t filed yet and are confident they qualify, the clock hasn’t stopped: amended returns claiming the 2020 credit are due by April 15, 2024, and 2021 claims remain open until April 15, 2025. The moratorium slowed new processing, but it didn’t erase the statute of limitations — which is exactly the window firms like Bottom Line Concepts are still working against.