The Internal Revenue Service (IRS) has not disputed the fact that it is backlogged when it comes to processing millions of tax returns, which includes payroll tax returns. The backup comes as there has been a major increase in volume concerning refund requests for the wildly lucrative Employee Retention Credit (ERC). Worth up to $26,000 per employee that was on an employer's payroll in 2020/2021, it is a no-brainer as to why there has been a high volume of ERC refund requests. While good news for employers from a monetary standpoint, this high volume has left many employers waiting much longer than expected for their cash refund.
As of November 17, 2021, it was reported that the IRS had nearly 2.5 million unprocessed Form 941s and around 400,000 unprocessed 941-Xs (ERC refund requests). Moreover, the IRS indicated that original Form 941s will be processed before any of the corresponding Form 941-X are processed. To add fuel to the fire, the IRS made it clear that they were going to process 2020 cash refunds before getting to the 2021 requests. This puts employers who only submitted 2021 941-X refund requests and not 2020 amended returns in a tough spot. Fortunately, the money is coming; the million-dollar question is when?
Originally, it was expected that when an employer sent in their 941-X, the IRS would issue a refund within 6-20 weeks. That window quickly ballooned and today, that window is pointing closer to nine to twelve months. As the IRS continues to hire more staff, this number is expected to go down. However, employers should not actively bank on ERC cash refunds for the interim as the processing times are reaching new heights.
In order to check on the status of your refund, you can call the IRS at (800) 829-4933. Press 1 for English or 2 for Español. Once your language preference is selected, press 3 for Employment Tax. You will now be in line to talk to an IRS agent. Because of the shortage of agents available to field phone calls, your hold time is expected to be between 30-60 minutes. Dependent on the time of the day, your hold time may be exceptionally longer. In an effort to save time, it is best to call the IRS at 8:00 AM ET. When you connect with an agent, you will want to tell them that you are calling to check on the status of your Employee Retention Credit and notably, if your 941-X (amended returns) have been processed for all affected quarters. Be advised that the IRS will have to verify your identity and will ask for your full name, relationship to the company, federal identification number, mailing address, year of incorporation, and what type of tax return is submitted for the entity (1120, 1120-S, 1065, etc.).
ERT Credit has calculated the ERC credit for hundreds of employers across the country and continues to actively process both computations and amended returns for employers. We can answer your questions and assist you with the employer retention credit, CARES Act, tax consulting, and filing options. Do not hesitate — contact us to make sure you receive all credits your business qualifies for. Click here to reach out to us for more information.