ERC Refund Delays Frustrate Companies Awaiting Funds
The Employee Retention Tax Credit (ERTC/ERC) is a refundable tax credit established to provide financial assistance to businesses that were impacted at the height of the COVID-19 pandemic. Unfortunately, many businesses that may really need the funds they’re entitled to have been left waiting for the money thanks to ERC refund delays, and even the US Congress Ways and Means Committee has gotten involved in asking about the holdup.
ERC Refund Delays – Why the Wait?
In March 2023, 15 members of Congress from the Ways and Means Committee sent a joint letter to the Commissioner of the IRS asking for an investigation into ERC refund delays.
“We have received numerous inquiries and constituent complaints about the lengthy delays in processing the ERTC, and the lack of information being provided to those waiting on resolution of their claims,” the letter read. “Unfortunately, many businesses that tried to take advantage of the ERTC are still waiting for their refunds.”
So, what’s causing these ERC refund delays? One reason is the sheer volume of returns the IRS has received. The number of 941-X forms specifically the IRS agency has received has resulted in delays for the ERC program in particular.
“As of June 7, 2023, our total inventory of unprocessed Forms 941-X was approximately 642,000, some of which cannot be processed until the related 941s are processed,” the IRS reported in guidance updated on June 9, 2023.
But there is hope – the agency noted that some staff members have been trained to help with returns that might involve ERC refunds. “While not all of these returns involve a COVID-19 credit, the inventory is being worked at two sites (Cincinnati and Ogden) that have trained staff to work possible COVID-19 credits,” the IRS revealed.
Unfortunately, since some 941-X forms can’t be processed until 941 forms are taken care of, there might still be a bit of a wait to get all the eligible refunds to businesses. “As of June 8, 2023, we had 1.4 million unprocessed Forms 941,” the IRS reported. “These tax returns are processed in the order received.”
Sadly, some companies acting in bad faith to scam business owners into claiming tax credits that they are not eligible for may also be slowing down the process. Recently, IRS Commissioner Danny Werfel said, “While the credit has provided a financial lifeline to millions of businesses, there are promoters misleading people and businesses into thinking they can claim these credits.”
“We urge honest taxpayers not to be caught up in these schemes.”
Since the IRS has to work out which ERC claims may not be legitimate, businesses that did the right thing in applying – and legitimate ERC assistance companies and tax professionals that helped – are left with ERC refund delays.
Status of ERC Refunds
You can check on the status of your ERC refund or look for updates on your refund status by calling the IRS at 1-877-777-4778.
Reputable ERC tax professionals, like those at Dayes Law Firm, can also help you stay up to date on the status of your refund if you worked with a tax attorney or ERC team to apply for the tax credit in the first place. They can check for updates on ERC processing times or regarding ERC refund delays, so you can focus on your business instead.
Dayes Law Firm and our partners have been in business for years and we have a record of success when it comes to managing ERC applications. If you have questions about the ERC – or if you think your business might be eligible to apply before the deadline for the Employee Retention Credit arrives, but you need assistance in making your claim – please contact us to see how our team can help.