Current Process Times
This is due to the IRS’s meticulous process of sorting, scanning and examining these paper-based forms before processing them into their system. Think of it as similar to the verification process on the blockchain where each transaction needs to be confirmed by multiple nodes before it gets added onto the chain.
Now in terms of ERC claims that are made using the original Form 941, chances are high that your business has already received its refund if you submitted an ERC claim when initially filing your taxes.
On the other hand, if you lodged a large ERC refund claim via Form 941-X and have yet to receive any updates after nine months or so, don’t fret. The IRS typically takes longer with larger claims as they exert extra efforts in ensuring no detail falls through before releasing a significant amount of funds.
ERC Refund Delays Explanation
A recent Treasury Inspector General for Tax Administration report shed some light on the issues at hand.
There have been several obstacles standing in the way of speedy ERC refunds. Firstly, the IRS was faced with a training and programming challenge. Outdated coding infrastructure and insufficient staff training meant that they couldn’t process ERC claims until an entire year after the legislation came into effect.
Additionally, when the system included Form 941-X, no extra training was provided to IRS workers, leading to additional processing delays.
Another stumbling block arose from guideline errors that led to a suspension of thousands of Form 941-X submissions. This issue lodged numerous forms within the IRS’s system for well over 200 days!
As of January 2022, almost all tentative ERC refund claims were delayed due to low prioritization.
Verification challenges emerged for Recovery Startup Businesses. The current IRS system lacks robust mechanisms to authenticate self-identified RSBs’ legitimacy.
Thankfully though, active steps are being taken by the IRS to rectify these issues. They’ve initiated a systematic approach towards handling ERC claims while also taking measures to reduce backlog like shifting employees’ focus solely onto paper returns and ramping up overtime hours.
Businesses can now attest their RSB status under penalties of perjury via their signed employment tax return – providing temporary relief till better verification processes are established.
Here’s where you can do something about your ERC refund status. You should also make use of the IRS’s online portal or their phone service to check the status of your business’s ERC refund regularly.
Despite delays, applying is still crucial because not only does qualifying put money back into your pocket eventually, it accrues interest over time too! So why miss out? Yes, endurance might be tested during these times, but knowing that good things come to those who wait can provide some solace. Patience certainly pays off when dealing with ERC refunds.
How Do I Track My ERC Refund?
Wondering where your Employee Retention Tax Credit is? Here’s a roadmap to help you get a handle on tracking it down.
- Ensure Delivery: The initial step in your ERC journey is confirming that your Form 941X has reached the IRS. Since digital filing isn’t permissible for this document, you need to physically mail it via USPS certified mail. Don’t just assume it arrived; verify its delivery status online.
- Confirm Receipt: Now that USPS has done its part, check with the IRS if they’ve received and logged your return. Call their business helpline at (800) 829-4933 armed with your EIN and tax return details.
- Patience Is Key: Brace yourself for potentially lengthy hold times due to agent shortages at the IRS end. Understand that even speaking directly with an agent won’t turbocharge your refund process owing to a backlog of unprocessed payroll tax returns.
- Contact Taxpayer Advocate Service: If delays are causing financial strain on your business, consider reaching out to the Office of the Taxpayer Advocate—an agency dedicated to helping taxpayers resolve issues outside normal channels.
