Tax Credits

Employee Retention Credit (ERC) Refund Status & Processing Time (2023)

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The Employee Retention Credit (ERC) has provided valuable relief to employers, allowing them to retain their workforce and stay afloat moving into a post-pandemic landscape.

However, as businesses eagerly await their ERC refunds, the Internal Revenue Service (IRS) is facing a significant backlog in processing the thousands of applications received.

Below, we share how employers can currently track their refund status effectively. Plus, we answer the burning question on every business owner’s mind: How long does the ERC processing time take?

Where do I check the refund status of my ERC?

Checking ERC refund status by phone

The first step in tracking your Employee Retention Credit (ERC) refund is to confirm that the Internal Revenue Service (IRS) has received your application. To do this, you can call the IRS business helpline at (800) 829-4933. When you contact the IRS, make sure you have your Social Security number, employer identification number, and tax return information readily available.

Please note that due to a shortage of agents available to handle phone calls, you may experience longer-than-usual wait times. Moreover, speaking with an IRS agent will not expedite your refund. The IRS is currently dealing with a high volume of unprocessed payroll tax returns, which has affected the turnaround time.

After contacting the IRS, expect to receive a notification about your refund status in approximately four weeks.

Track ERC refund status online

If you prefer to check the status of your ERC refund online, the IRS provides a useful tool called “Where’s My Refund?” Simply follow the directions on the website and provide the necessary tax information for verification. Here are the timeframes for checking your refund status:

  • For tax year 2022 returns filed electronically: Within 24 hours after e-filing.
  • For tax year 2020 or 2021 returns filed electronically: Within 3 or 4 days after e-filing.
  • For paper-filed returns: After approximately 4 weeks.

Once your return is processed and your refund is approved, “Where’s My Refund?” will provide you with a personalized refund date. The tracker displays progress through three stages: Return Received, Refund Approved, and Refund Sent.

How long does it take to get your ERC refund?

When it comes to receiving your ERC refund, the processing time can vary depending on various factors. While the IRS typically issues refunds in less than 21 days for the majority of tax returns, the ERC refund may require additional review and take longer.

Initially, it took only around 4 to 6 weeks to receive your tax credit. However, due to the high volume of claims submitted to the IRS, the processing time has been extended by several months to a year.

Here are the key factors impacting the processing time of ERC refunds:

  • Procedural requirements: The ERC refund process involves using Form 941 and Form 941-X. Form 941 can be completed electronically, but filing amended documents like Form 941-X requires manual filling and mailing, which adds to the processing time.
  • COVID-19 impact: The IRS faced challenges in adapting to COVID-19 safety requirements, including remote work arrangements, which caused disruptions and delays in processing.
  • Fraud prevention: The IRS is taking extra precautions to review large ERC credit claims to minimize fraudulent activities, which involves additional processing time.

Considering these factors, employers should anticipate a longer processing time for their ERC refund. It is important to note that individual circumstances may vary, and these timelines are general estimates.

Being aware of the potential delays and understanding the complexities involved can help manage expectations during the refund process.

When is the deadline for ERC claims?

The ERC offers businesses a significant chance for financial assistance. However, it is crucial to meet the specified filing deadlines in order to fully benefit from this credit. To maintain compliance and qualify for the ERC, businesses need to adhere to the following filing deadlines:

ERC Claims Filing Deadlines:

  • For all quarters in 2020 (Q1-4): ERC claims must be filed by April 15, 2024.
  • For all quarters in 2021 (Q1-4): ERC claims must be filed by April 15, 2025.

You can read more about ERC claims deadlines as well as audit assessment periods in our ERC Deadlines primer.

Summary

As businesses continue to navigate the financial challenges brought on by the pandemic, the ERC offers a lifeline of support. However, understanding the refund status and processing time is crucial to ensure timely financial relief.

To check the refund status, businesses have two options: contacting the IRS via phone or utilizing the “Where’s My Refund” tool on the IRS website. Due to the backlog caused by the volume of claims, it’s important to note that refunds may take longer than expected, sometimes extending over several months.

To mitigate delays and secure the much-needed funds, it is highly recommended that businesses begin the application process for ERC claims as soon as possible. By staying proactive and staying informed about the refund status, businesses can navigate the challenges more effectively and access the financial relief they need.