ERC DELAYS

Employee Retention Credit Refund Delays Due to IRS Backlog

The IRS is currently backlogged with millions of unprocessed payroll tax returns due to the changes in COVID-19 safety protocols and the volume of Employee Retention Credit (ERC) refund requests. Since the IRS required that the ERC be applied for on an Form 941-X, those ERC applications are sitting at the bottom of a huge pile of unprocessed mail.

The IRS posted last Friday (January 14, 2022) that there are about 7.1 million unprocessed returns. Per the IRS, there are 441,000 unprocessed Forms 941-X, which cannot be processed until the related 941s are processed. It is also rumored that the IRS may be processing 2020 payroll refunds before 2021 payroll refunds.

How long does it take to receive the ERC refund?

Previously, we expected that after the amended payroll reports have been filed, the IRS would issue refunds within six weeks to six months. We are now encouraging you to plan for a turnaround time of nine to twelve months if everything goes well.

How to check the status of your refund

Unfortunately, there is no way to check on the status of your refund until it has been processed into the IRS system. While calls to the IRS at (877) 777-4778 will likely go unanswered (they are only able to take about 3% of the calls that they are getting), you can call or write your representatives in Congress to voice your displeasure and request changes at the IRS.