The Employee Retention Tax Credit (ERC) provides significant financial support to businesses who were most impacted by the COVID-19 pandemic in 2020 and 2021. Because of this, waiting on your refund from the tax credit can feel like a long process. In itself, the processing time after submitting your application can be months. After that, you will only receive a refunded amount if the amount you were approved for exceeds what you owe in taxes for the given tax year.
Initial ERC Processing Time by the IRS
Processing time for the ERC tax credit fluctuates based on a variety of factors. The average estimated time to receive your ERC refund in 4-9 months. However, staffing issues at the IRS, questions about your application’s information, or a heavy influx of applications received by the IRS can all change the waiting time for your refund. Working with an ERC expert consultant can help you get in line with the IRS faster to ensure you are getting the fastest approval possible for your application.
Factors Impacting ERC Refund Timeline
Processing time for the ERC tax credit has been plagued by delays. Your application for the ERC tax credit is reviewed by the IRS staff trained in handling ERC-specific applications. In addition, the IRS has received a large number of applications for the ERC tax credit. Being understaffed or receiving too many applications are both the main reasons why your ERC tax credit might be delayed.
This is another reason that you should apply for the ERC tax credit as soon as possible if you are eligible to do so. You do not want to wait to receive financial relief that could help your business recover post-pandemic.
Retroactive Claims and Amended Returns
Although taxes have already been filed for the 2020 and 2021 tax years, you still have time to apply for the ERC tax credit. The deadline for the ERC tax credit for 2020 tax year eligibility is not until April 15, 2024. For applying for the 2021 tax year, the deadline is not until April 15, 2025. What this means is that you will need to file an amended tax return in order to apply for the ERC tax credit.
The ERC tax credit requires taxpayers to use Form 941-X to file their amended tax return for each quarter in which a business paid qualified wages to employees. Form 941-X can be used to amend your tax return for up to three years after the original payroll taxes were due. However, due to the amount of time it takes the IRS to approve claims, the sooner you apply for the ERC tax credit the better.
Expediting ERC Verification
There is no way to expedite your ERC refund once it is in the hands of the IRS for approval. However, there are ways you can expedite the overall process of applying for the ERC tax credit. Get in line with the IRS faster by contacting an ERC consultant from Five Star ERC Experts for help. Not only will they help you complete your application efficiently, but they can ensure that you have everything you need for efficient approval from the IRS.
Five Star ERC Experts consists of certified tax attorneys and tax consultants with experience handling applications to the IRS. Their knowledge of the application process helps you avoid mistakes on your application that could lead to either denial or delay because the IRS needs more information from you.
Check ERC Refund Status Online
To check the status of an ERC refund, you can either contact your ERC consultant or contact the IRS. The IRS has a helpline available for checking the status of your ERC application at 1-877-777-4778. For those who do not wish to or are unable to talk on the phone, you can also check the status of your ERC tax credit refund on the IRS website.
When you are checking the status of your ERC refund, make sure that you have your Social Security Number, filing status, and important application information readily available for your call.
Watch Out for ERC Verification Scam Calls
The IRS will not call you. For ERC verification, you would need to receive official notice from the IRS via mail. According to IRS reports, scams are trying to solicit personal information from taxpayers over the phone by claiming to be the IRS. Unless you are calling them, do not give out your personal information over the phone.
There are also ERC mills that try to scam businesses who do not qualify into applying for the ERC tax credit. Make sure you are fully eligible by calculating your ERC tax credit before applying. Through an experienced and reputable ERC tax consultant, you can avoid the pitfalls of ERC scams when submitting your application.