ERC Refund Processing Time – Why so Long

How long it takes to get an Employee Retention Credit refund status can vary. When the ERTC program first came out the ERC refunds were processed rather quickly, most employers were paid in about 2-4 weeks. 

But due to the large number of amended filings the Internal Revenue Service has had a very difficult time keeping up with the demand. The refund could now take up to 6 months with some businesses not getting their refunds for over a year. 

Because of this it is imperative that the complicated filing process be done correctly. This would help with delays or even a potential audit.

Employee Retention Credit Refund Timeline

The bill approved by Congress was introduced on November 5, 2020, that extended the revocation of the credit to October 1, 2019 instead of January 1, 2022.

The time frame for Employee Retention Credit to refund is such that the IRS originally planned on refunds within six weeks of filing the updated payroll report.

You could expect the project to be completed within six or twelve months. Although this number can vary greatly.

How Long Does It Take to Get Employee Retention Credit?

It is difficult to estimate when backlogs will disappear. There have been some additional estimates as to how long the ERC refund process was fulfilled in a timely manner.

The IRS has said it expects the refund requests to be paid within 10 months after a new Form 941 was filed. Many employers have filed for refunds in the past 12 months.

There is even talk of businesses may wait at least 16 months. Large refunds over $1m are subject to further delays because they need to undergo additional examination before they are issued.

What is ERC?

For those unfamiliar with the ERC (Employee Retention Credit), it is a relief program established by the U.S government in response to the global pandemic, aimed at supporting businesses affected by the business shutdowns. 

If the company has seen a large drop in sales and lost revenue, the program can offer eligible companies a payroll tax credit for keeping their staff and paying them wages.

The ERTC program was initiated March 13, 2020, to December 31, 2021. Each employee’s first $10,000 in qualified pay can be claimed by employers who qualify for the program as a tax credit worth up to 50% of that amount. 

This could add up to substantial refund checks.

The tax credit can be claimed and subtracted from payroll tax obligations on the employer’s quarterly payroll tax return.

Where Is My ERC Refund? Check the Status of Your Employee Retention Tax Credit in 2023

Did you file your ERC refund and have no idea where it stands?

Did a company do a filing for you and are not giving you any answers?

We understand that this money is helpful to you and the return from the ERC helps pay business expenses.

 

Despite this delay, refunds can pose significant financial challenges, especially for businesses trying to recover from the pandemic.

Usually, refunds are delayed by several months due to an unprocessed payroll tax returns backlog. It can cause serious hardship for those who struggle to survive. These delays can often result in business debt and even closure.

ERC Refund Delays from the Tax Administration

This is refundable employment tax allows business owners the chance to receive their refund if they’ve redeemed taxes with an amended claim. Although most companies have not received refunded funds immediately, they have encountered problems.

The IRS says delays are due to a large amount of ERTCC cases and the complexity of credit applications. Most businesses have experienced delays waiting for a refund.

In the first Quarter of 2023, the Employee Retention Credit is still a hot topic in business tax refunds. The return for many companies who benefited from this profitable credit is still pending.

The Internal Revenue Service (IRS) continues to require assistance processing the sizable number of credit refunds that have already been submitted due to the great demand for this credit opportunity.

The IRS stated that as of November 30, 2022, roughly 303,000 unprocessed Form 941 X filings were sitting in the unprocessed pile. This number will continue to rise to over a few million by the middle of 2023.

Making a Payroll Tax Return Claim for the ERTC

If an employer makes a payroll tax return claim for the ERTC, the tax credit will be recorded on the employer’s subsequent payroll tax return.

Payroll refund status can take anywhere from two to four weeks to process, on average, before the employer can even check on ERC refund delays. Still, as previously mentioned, it has certainly been taking much longer.

Employee Retention Credit Payment Status

As reported by the IRS, a total of 2.4 million Form 941s were processed in 2021. The IRS also says that Form 941 will need processing before filing Form 941X.

This is the IRS form for amended returns. To complete this one also needs W-3 for 2019, payroll journal, Form 941’s for all quarters (Q2 2020 to Q3 2021), and 2020 and 2021 2020 – PPP1 and PPP2 Forgiveness Application – Form 3508 / 3508S / 3508EZ (if PPP loans were taken).

How to get my ERC refund faster

Before 2022, companies can request a credit through a Form 7200 request. The ERCC will be reimbursed for unused ERTC wages in the future if the company files Form 77001. This can just be another way to speed up an employment retention credit claim.

As a result of a lack of these forms, it is best for many business owners to contact an ERC lender to offer you a business loan depending on your eligibility for the ERC.

How to Check ERC Refund Status & Processing Time Delays

The filing status of your refund can be checked on the IRS App, the Refund Tool, or a call to an IRS agent.

IRS Employee Retention Credit Phone Number

You may check your IRS ERC refund status by phone from the NIH Office. Be sure to be in a quiet place with no distractions when you’re ready to contact IRS representatives.

You’ll probably experience long wait times of about 30-45 minutes because of the limited number of IRS agents available. Your wait time can vary greatly depending on the time of day and you will have to follow the prompts for the automated system.

Phone calls are taken Monday to Friday from 7 a.m. to 10 p.m.; on Saturday from 9 a.m. to 5 p.m. You can call IRS offices at 877-777-4778. When you contact the IRS, have your Social Security number, employer identification number, and tax returns information ready.

Visit the IRS website to check on Employee Retention Credit Refunds

The IRS website has a special webpage dedicated to the employee retention credit ERC and includes links to a number that answers specific questions regarding the credit.

The IRS can get back to you with ERC questions but it could take some time. The IRS is continually releasing downloadable information about credit eligibility on its website.

Remember, the IRS, like many other businesses in the United States, has been hit by COVID-19, which has caused service delays.

As a result, many businesses registered for the ERC refund have been waiting longer than expected. There has been talk of hiring a bunch more agents but we haven’t seen this yet.

Check out the Refund Status tool

The IRS provides you with a handy app for analyzing your refund history. It is easy to use and keeps track of your refunds. If your employees are repaid, you could possibly retain the credit more quickly.

Furthermore, the refund tool can assist in resending your items in order to ensure the entire refund is completed as quickly as possible. The refund tool is updated daily, so you can always check on the status of your refund.

ERC and Federal Tax Credits Org.

Hope this article gave you a better understanding of how long it takes to get an ERC refund.

In short, the procedure utilized to claim the tax credit and how quickly the employer’s payroll tax return is processed affects how long it takes to get the ERTC refund. 

Employers who submitted a payroll tax return and claim the ERC can anticipate a bit of a wait or the filing can get lost in the shuffle and take as long as a year.

Having the forms filled out properly can help expedite the process and give you peace of mind. Don’t stress over possibly getting audited because of red flags.

 

We are here to help. FTCO ERC has helped many businesses get maximum returns. We understand what the IRS is looking for and take the right steps to keep them happy.

Trust us to get you a fair and legal return.

Contact us if you have any questions, want our services, or even get a complimentary pre-qualification check. Fill out the form below to get in touch with us. It just covers some basic, noninvasive information about your business.