As we move further and further away from the pandemic, many business owners find themselves wondering just how much time they have to apply to the ERC. No one wants to get left out and not receive the tax credit they deserve. Fortunately, for business owners who have been dragging their feet, there is no ERC deadline in 2023. However, there is not unlimited time to apply for the ERC, and there are some things business owners who haven’t applied yet should be aware of.
Applying for the ERC Programs in 2023
Applying for the ERC is the same as it has been for the entirety of its existence. One must simply submit an adjusted employment tax return for the quarters for which they would like to claim the ERC. It is important to remember that the ERC can only be claimed for quarters 2-4 of 2020, and quarters 1-3 of 2021. Additionally, recovery startup businesses can claim the ERC for quarter 4 of 2021.
Before applying for the ERC, it’s of the utmost importance to be certain you qualify to receive it. Trying to claim the ERC when ineligible can have dire consequences, including being audited by the IRS. For Employee Retention Credit 2023 eligibility, your business must pass one of two tests, the first being the gross receipts test. To pass this test for 2020, your gross receipts for any quarter must be less than 50% of what they were for the same quarter in 2019. For 2021, it is the same, but your gross receipts must only fall below 80% of their 2019 counterparts. The second way to qualify is through the suspension test. To pass this test, you must prove that your business was subject to a governmental order which had a nominal impact on business operations. As long as your business passes one of these tests, you are safe to apply for the ERC.
Receiving the ERC can be a huge financial help to any business, so you should be careful not to miss out on it by missing the deadlines to apply. The ERTC filing deadline is different depending on if it is for 2020 or 2021. To receive the ERC for 2020, you must submit your claim before April 15, 2024. For 2021, the deadline is April 15, 2025. The IRS has made it abundantly clear that under no circumstances will ERC claims submitted after these dates be accepted. For this reason, it is important to apply for the ERC as soon as possible, even if these deadlines seem a ways off. It is too easy to leave it until the last minute and then miss the deadline, resulting in your business potentially losing out on thousands of dollars.
IRS ERC Updates in 2023
Recently, the IRS has updated how ERC claims will be processed. They have said that they will currently not be processing any new claims. Many people upon hearing this think it means that they can no longer apply to receive the ERC. Fortunately, this is not at all the case. You are still able to submit your ERC claim, it just may take a little while before it is processed. The IRS decided to make this change in order to give themselves time to combat the rampant fraud that has plagued the ERC program since its inception. This includes both fraudulent claims from businesses not actually eligible for the ERC and ERC scammers trying to take advantage of small businesses. As long as you are eligible for the ERC, you should still submit your claim.
Has Anyone Received an ERC Refund in 2023?
While the aforementioned moratorium on processing new claims has made it unlikely that any new claims will be fulfilled by the end of the year, this is not the case for claims that were already submitted. Businesses who applied prior to the moratorium have, in fact, received their claims in 2023. All legitimate ERC claims will eventually result in a refund, it is just a matter of time.
ERC Refund Timeline for 2023
So exactly how long does it take to receive your ERC refund after submission? Unfortunately, there is no one-size-fits all answer to this question. For businesses who applied prior to the current moratorium on processing new claims, they can expect to receive their refund within nine months of submitting their claim. It could take substantially less time than this or slightly more. It all depends on how much backlog and manpower the IRS has at any given time, as the actual processing by the IRS is by far the most time consuming component of the entire process. For businesses who have yet to submit their ERC claim, it will likely take slightly longer due to the increased scrutiny being applied to try and weed out fraudulent claims. This wait should not deter a business from applying, as thousands of dollars nine months from now is still a lot more than none at all.