Would you do it if you knew you could collect $26,000 per employee by gathering some data and completing a tax form? Almost any employer would say emphatically “Yes!” in response to this query.
Some firms have been able to use the Employee Retention Tax Credit to make up for the difficulties brought on by whole or partial government shutdowns or a drop in revenue. It is a quarterly payroll tax credit known as the Employee Retention Credit (ERC) that is applied to each employee’s compensation as well as the employer’s portion of certain payroll taxes. This ERC funding does not require repayment because it is a refundable tax credit rather than a loan. The ERC’s goal is to assist qualifying firms in reducing the cost of keeping on staff during the COVID-19 pandemic. The ERC was open to enterprises that had taken out Paycheck Protection Program (PPP) loans.
If your business requested an Employee Retention Credit refund, you might still be waiting for it and want to know the status of your ERC refund. If so, you are not by yourself.
How Do I Track My ERC Refund?
The next question you’ll have after filing is, “Where is my ERTC check?” Verifying that your ERC refund was delivered to the IRS is the first step in tracking it. Because the IRS prohibits businesses from filing Form 941X (amended payroll tax return) electronically, Form 941X must be mailed to the appropriate IRS service center. The most effective method is to send the corrected returns certified USPS mail with a return receipt. Although most individuals presume delivery, the best course of action is to check the package’s status online and verify that USPS actually delivered it to the IRS.
Verifying that the IRS received the return and entered it into the system is the second step. Call the business helpline of the Internal Revenue Service at (800) 829-4933 to verify receipt. Have your federal employee identification number (EIN) and tax return details on hand before calling the IRS for a status update.
Be advised, however, that your wait time may be extraordinarily long due to a lack of agents available to answer phone calls. You should be aware that there’s no 100% assurance you’ll get all the information you need concerning the status of your return from an IRS person. Additionally, speaking with an IRS representative won’t make your IRS ERC refund status appear any sooner. The IRS has a large backlog of unprocessed payroll tax returns, which has impacted how quickly ERC refunds are processed.
You have the option of getting in touch with the Office of the Taxpayer Advocate, commonly known as the Taxpayer Advocate Service, if the delay of your Employee Retention Tax Credit is possibly causing financial harm to your company. This IRS division aids taxpayers in resolving issues that cannot be handled through standard means.
Many ERC filers are uncertain about how they will get their refunds, specifically whether they would receive paper checks in the mail. They have two options for receiving their money: direct deposit or a check that is mailed to them. The filer may make such decision.
How Long Does It Take To Get My ERC Refund?
We regretfully don’t have much good news to share with you in this regard. The initial wait time of six to eight weeks is no longer realistic due to the huge volume of Employee Retention Credits applications and the small number of IRS employees available to review these applications. There is a backlog of unprocessed payroll tax returns and an increase in the average processing time for ERC refunds.
Some companies who submitted Employee Retention Tax Credit applications said they had to wait four to twelve months to receive their returns. In certain circumstances, the wait for their anticipated refund was considerably longer. The IRS typically processes and authorizes smaller refund sums more quickly than it does bigger refund amounts.
Why Are ERC Refunds Taking So Long?
The high number of 941-X forms the IRS has received is one factor contributing to the lengthy ERC refund delays encountered by so many qualified firms. The agency reports that as of August 2, 2023, there were roughly 511,000 unprocessed Forms 941-X in its entire stockpile. Some of these forms, according to the IRS, can’t be handled until the associated 941s are completed.
Fraudulent claims cause a further delay in the processing of the Employee Retention Credit. Due to the IRS evaluating big ERC credit claims – at least twice – before awarding them, there are noticeable delays. Following a referral from the Treasury Inspector General for Tax Administration (TIGTA), the procedure got underway. Naturally, minimizing and reducing false claims is the aim.
On October 19, 2022, the IRS published a news release on the IRS website urging companies to be aware of third parties advising them to claim the Employee Retention Credit (ERC) when they may not qualify in an effort to counteract these fraudulent ERC claims. According to the IRS, taxpayers who incorrectly claim the ERC may be asked to pay back the credit plus penalties and interest.
The manual processing necessary for Form 941-X will cause yet another delay in the refund status of ERC-eligible Businesses. Why? The 941-X form cannot be electronically filed with the IRS.
How Do I Contact The IRS About My ERC?
Call the IRS helpdesk at (800) 829-4933 to find out the details of the time it will take to complete your ERC refund. You also have the choice of getting in touch with the IRS’ Taxpayer Advocate Service, which aids taxpayers in finding solutions to issues that cannot be handled through standard channels, as was previously discussed in this blog.
Even more challenging than changing Form 941 to claim the Employee Retention Credit is checking the status of your Employee Retention Credit return. Few people are eager to phone the IRS! Even with those numerous ERC refund delays, obtaining the credit is still worth it.
Before the window to retroactively file closes, get in touch with one of our representatives if you haven’t already utilized the ERC refund to see if your company is eligible.