Updated: Jul 25
If you are a small business that provided wages to employees during the 2020 tax year, you may be eligible for the Employee Retention Credit, a refundable tax credit established under the CARES Act. The goal of this act was to help businesses who kept staff employed during the COVID-19 lockdown and government restrictions from COVID-19 between March 12, 2020 and January 1, 2021. In 2021 alone, over $1 billion was credited through the Employee Retention Tax Credit, with the claim amounts being anywhere from a few thousand to over $1 million.
Delays Impacting ERC Claims
While there is still plenty of time before the deadline, the IRS has been experiencing delays in approving and refunding ERC claim credits. The best way to avoid delays impacting ERC claims is by hiring an ERC consultant to guide you through the process and put your application in front of the IRS faster.
As of October 2022, the IRS is experiencing application delays of between four to six months. To expedite that process, an ERC consultant can ensure that you are filling out your application efficiently to avoid any issues that might lead to a delay when they review yours.
ERC Application Deadline
The IRS will continue accepting applications for the ERC tax credit through April 15, 2024 for the 2020 tax year. For this tax year, employers qualified under these rules:
The business showed a significant decline in gross receipts (more than 50%) in 2020 compared to the same quarter in 2019.
The business experienced a full or partial closure during any calendar quarter between March 12, 2020 and January 1, 2021 due to COVID-19 government restrictions and regulations.
The business had 100 employees or fewer with wages paid during the impacted quarters of 2020.
The IRS will continue accepting applications of the ERC tax credit through April 15, 2025 for the 2021 tax year. For the 2021 tax year, businesses were eligible under these rules:
The business showed a significant decline in gross receipts (more than 80%) in 2021 compared to the same quarter in 2019.
The business experienced a full or partial closure during any calendar quarter between March 12, 2020 and January 1, 2021 due to COVID-19 government restrictions and regulations, same as the rule for the 2020 tax year.
The business had 500 employees or fewer with wages paid during the impacted quarters of 2021.
Although you still have time until the deadline, it is best to file the application as soon as possible. The IRS has already notified applicants of significant delays in approving claims. By hiring an ERC consultant to help you with the filing process, you will be put in line with the IRS faster to expedite the claims process. You don’t want to be stuck waiting for an indefinite period of time to receive the credit.
Why You Should Hire an ERC Specialist
ERC specialists have experience handling the IRS’s claims process for your industry, whether you are in hospitality and retail, food service, or another industry. They will guide you through the process from start to finish, making sure you understand where your application stands with the IRS each step of the way. Most importantly, they can put you in line with the IRS faster.
Our firm, ERC Consulting Experts, is a small business (not a huge processing center) that is helping other small businesses. We understand the value of your time and the importance of service. We have helped many submit their claims quickly, efficiently, and with peace of mind.
Employee Retention Credit Refund Timeline
Although the deadline for amending your 2020 tax return is April 15, 2024, you should file your ERC tax credit application as soon as possible to receive your claim. Delays with the IRS as well as the volume of applications they receive could result in months of waiting for your claim. With that being said, here is an overview of what to expect from the ERC process:
Step 1: Check if you qualify
Step 2: Find an experienced ERC specialist
Step 3: Calculate your ERC tax credit
Step 4: Determine which quarters of the 2020 tax year and 2021 tax year you qualify for
Step 5: Have your ERC consultant help you complete your application
Step 6: Send your ERC
If you have any questions about the ERC tax credit application process, visit our FAQ page to see the most frequently asked questions.
How to Check Your ERC Refund Status
If you have completed your ERC application, it could take months before you receive your refund. The IRS has experienced delays in the ERC tax refund process. Because of this, as well as high demand, you may not hear a quick response from the IRS about your refund. To check your ERC refund status, call the IRS at 877-777-4778.
Alternatively, you can check the IRS website for any updates notifying of further delays to their process. You can also check for new information that they provide in regards to ERC applications. Having an ERC consultant help you with the process means that they will guide you through every step until you receive your claim. This can be helpful when understanding the wait times for receiving your credit, and they can also help you get in line with the IRS faster.