It’s no secret that the IRS struggles to keep up with the millions of tax filings, tax reports, and applications. So has anyone received the ERC refund status? A tremendous backlog for Employee Retention Credit refunds contributes to the ongoing delays. Many businesses have not heard back from the IRS despite filing nine to twelve months ago.
The Reality of the IRS Employee Retention Credit Filing Status
Unfortunately, these delays are part of the ERC refund process, and once you’ve filed, it can take anywhere from 6 to 16 months for the IRS to get back to you, with some businesses waiting longer. Some people allege that the IRS offices may handle 2020 payroll refunds before handling the latest payroll refunds. So the ERC refund processing time could take even longer.
But while your application is in limbo, you can take a few steps to stay updated about your ERC refund status. Here’s what you should know.
What’s My IRS ERC Refund Status?
The first, arguably, easiest step is to call the IRS at (877) 777-4778. Unfortunately, the IRS is overwhelmed with calls from employers who want to check their ERC refund status. This means you may be put on hold for a long time. For some people, checking the IRS website may be a better use of their time.
It is worth mentioning that the IRS asks employers not to contact them to check their status. As far as the IRS is concerned, once you file for ERC, you should simply wait until you hear back from them and not take any further action.
It may be tempting to file second returns to claim the same refund – but the IRS advised against doing so because it would likely result in even longer delays as agents are caught up in duplicate investigations.
Frustrating Phone Tree and Extended Hold Time for Calls
Did we mention that the IRS is short on operators? On a good day, the average call hold time is 30 to 60 minutes. For some people, the average hold time may be even higher, depending on the time of day. You may contact the IRS at 8:00 AM to catch them early while everyone else hasn’t had a chance to call yet.
You can press 1 or 2 on the automated system to switch between English and Spanish. Once you get a hold of the IRS representative, you should explain to them that you are contacting them to learn about the status of your ERC application, specifically if you have filed 941-X forms for your amended claim.
The IRS agent will first verify your identity before divulging any details. You will have to provide them with your complete name, postal address, relationship to the organization, federal identification number, year of formation, and the type of tax returns you have filed for the firm (including 1120 and 1065).
Once you have contacted the IRS, you will likely receive an update within four weeks regarding your return status. If you didn’t receive any update, you might have to file Form 8849 (Claim for Refund of Excise Taxes).
It is worth noting that checking in with the IRS will not expedite the review process for your ERC claims or change the current status. However, doing so may give you more information about progress on your ERC refund status and possibly get a better idea of turnaround time.
Use the Refund Tool to Check the Status of Your Tax Credit
If you’re intimidated by the prospect of long waiting times, you can always use the Refund Status tool to keep track of your current status. Doing so may give you a progress report for your ERC refund faster.
An advantage of using the ERC Refund Status tool is that you can find mistakes you made that can be corrected so that the application is processed smoothly.
The IRS website updates its refund tool daily, so you can always check the status of your refund here. Simply enter your relevant details, and the IRS should give you a progress report.
Checking the Status of the 941-X Refund
It is possible to check the status of your 941-X refund by logging into your account on the IRS website online tool. You can then click on the “My Account” tab and select the “Payments” options.
This will take you to a dashboard that will show you a list of payments that the IRS has made to you. You will also see the status of refunds and checks you may have received. If your ERC refund was processed, it would appear as ‘paid’ on the list.
Remember, this won’t adjust the filing turnaround time or get your refund sooner.
Check-in on Internet Forums Like Reddit
You can also check internet forums like Reddit to see if other businesses are receiving their ERC refund checks. If they have started receiving their checks, it’s only a matter of time before you receive yours.
Many business owners are taking to internet forums to discuss the ERTC. These forums can also help you learn more about the process and avoid common mistakes.
The Processing Time Varies Depending on the Situation
If you claimed ERC on the original Form 941, the processing times might be less than one month. Paper filed original Form 941s may take anywhere from three to four months. If you haven’t heard back from the IRS after filing your original Form 941, then it’s time to reach out to the IRS or have someone review Form 941 for any potential errors you may have made on the claim.
If you claimed ERC on an amended returns Form 941 x, the processing times for the refund could take about five months. For example, your firm qualified for the ERC in the first three quarters of 2021.
The credits were $60,000 for Q1, $70,000 for Q2, and $50,000 for Q3. The total amount may be well over $100,000, but each quarter is less than $100,000, so you should receive them within five months.
Finally, if the ERC was claimed on an Amended Form 941 (more than $100,000 per quarter), then the IRS will take more than 8 to 10 months for the refund. If you filed your amended 941 forms a bit late, you might have to wait even longer. The IRS scrutinizes credits over $100,000 more carefully before issuing refunds, so delays are to be expected.
How Will Small Business Owners Get the ERC Refund?
Once you have filed form 941-X, you should receive a notice from the IRS stating that you have an overpayment on your account. This is a good thing because you will receive a refund of the credit by mail a week from now. The refund check will have a quarter listed on the memo (for example, 3/2020 denoting Q2 2020) and the interest paid on the refund.
You may also receive a letter from the IRS requesting additional information. You should contact your tax advisor to resolve this situation. In most cases, this is a minor issue that can be resolved quickly.
Why Does IRS Processing Times Take So Long?
So why does the IRS take so long to process the refund? The answer always boils down to paper returns. The IRS does not have an electronic portal for 941 access. This means requesting the ERC will entail a lot of paperwork. Someone at the IRS has to process all that paperwork by hand – which requires a lot of labor.
Another reason why ERC refunds take so long is because you won’t receive one large check for 2020 or 2021. Instead, you will receive a notification for each quarter you qualify for.
So, if you qualify for six quarters, you could receive up to six notices in the mail. Once again, this is a good sign because you will soon receive your check in a few weeks.
There have been quite substantial delays in getting an ERC refund status of your refund requests. Due to the higher demand it has been taking the Internal Revenue Service quite a bit more time to process an Employee Retention Credit refund.
It is worth mentioning that businesses expected to receive larger checks (over $200,000) will have to wait longer. The IRS can hold longer checks for over a year, and it can take a long time for businesses to receive the checks in the mail and there is no direct deposit option.
The IRS is more likely to send a lower amount in a shorter time than larger amounts. They prefer to do more due diligence before processing checks above $100,000 to make sure that all details are accurate. The good news is that the IRS is starting to send those larger checks to businesses.
Things to Avoid When Checking the Status of Your ERC Refund
Waiting for your refund check to arrive can be frustrating, especially if you really need the extra cash flow. Unfortunately, there isn’t much you can do to speed up the process.
Avoid the following mistakes to avoid further delays:
- Don’t submit another form because it would lead to longer delays.
- Don’t take out your frustration on the IRS employees because they are not making up the rules. Try to stay calm if you manage to get a hold of a live person.
- Don’t interrogate your accountant about the refund check; they’re as frustrated as you are about the timelines.
- Don’t lose hope. Even though it will take a long time for IRS to process your refund, you should eventually receive an update – whether good or bad depends on a number of factors.
FTCO ERC Assistance in Processing Employee Retention Credit
If you have not filed for Employee Retention Credit and are looking for some assistance we would be happy to help. In fact, using a ERC professional could help with the process because any errors on the amended filing would significantly increased the time to get your ERC refund.
If you want to get started or have any questions, please contact us through our original contact form. This will help us get an early assessment as to whether you qualify and how we can help
We offer complimentary pre-qualification checks and help you address any concerns you might have. There is no obligation to see if you are able to get your business the money waiting for you with this government stimulus.