How Long Does It Take to Get an ERC Refund?

The Employee Retention Credit (ERC) emerged as a government initiative to support businesses during the COVID-19 pandemic by incentivizing eligible employers to retain employees. This refundable tax credit offered financial relief, making understanding the refund timeline important for businesses. The process involves several stages and various influencing factors.

Current Processing Timelines

Businesses often ask about the timeframe for receiving their Employee Retention Credit refunds. The Internal Revenue Service (IRS) processes these claims, typically filed using Form 941-X. Current processing times have significantly lengthened due to high submission volume and increased scrutiny.

As of late 2024 and early 2025, businesses should anticipate a waiting period of several months to over a year for ERC refunds. Processing times are reported to be nine to fourteen months, with earlier claims generally having shorter waits. The IRS has resumed processing ERC claims after a temporary pause, with approximately 400,000 claims totaling $10 billion currently under review.

The refund process begins with the IRS receiving the amended tax return. Claims are then reviewed for accuracy and eligibility; some may be selected for further examination or audit. Once approved, the IRS typically issues refunds via direct deposit or a paper check. Businesses should recognize these timelines are estimates, and actual processing can vary based on claim complexities and IRS operations.

Factors Influencing Refund Delays

Several factors contribute to prolonged waiting periods for Employee Retention Credit refunds. A primary cause is the high volume of claims submitted to the IRS, creating a substantial backlog. As of October 2024, the IRS reported about 1.2 million unprocessed ERC claims, many pending for over a year.

Errors or inaccuracies on filed forms, such as Form 941-X, can significantly delay a refund. Missing information, calculation mistakes, or incorrect Employer Identification Numbers (EINs) often flag claims for manual review, halting progress. The IRS requires all documentation to be complete and accurate before processing a claim.

Some ERC applications are selected for closer scrutiny or audit, which can prolong the refund timeline. Triggers for reviews include large refund amounts, unusual claims compared to industry averages, or inconsistent tax credit calculations. The IRS implemented a moratorium on processing new ERC claims filed after September 14, 2023, extended to January 31, 2024, due to fraud concerns, further impacting speeds. New IRS initiatives, like enhanced fraud prevention and stricter review processes, also extend processing times as the agency distinguishes legitimate claims from improper ones.

Monitoring Your Refund Status

Businesses awaiting ERC refunds can monitor their claim status. The IRS does not offer a direct online “Where’s My Refund?” tool for ERC claims, unlike individual income tax refunds. However, businesses can verify Form 941-X receipt through their IRS online account or the Electronic Federal Tax Payment System (EFTPS) if filed electronically.

For specific ERC refund inquiries, contact the IRS Business and Specialty Tax Line at 800-829-4933, available Monday through Friday, 7 a.m. to 7 p.m. local time. When calling, have your business name, Employer Identification Number (EIN), specific quarters, submitted forms, and submission dates ready to assist the IRS representative.

The Taxpayer Advocate Service (TAS) is an independent IRS organization that assists taxpayers with significant problems or financial hardship due to IRS actions or delays. If a refund is significantly delayed, especially if it causes economic hardship, TAS may intervene to help expedite the review. Businesses should also consistently check their mail for IRS correspondence, as notices or requests for additional information are typically sent via postal service.

Addressing Prolonged Delays

If an ERC refund experiences prolonged delays, businesses can take specific actions. Promptly respond to any IRS notices or letters. These communications might request additional information, indicate a discrepancy, or signal an audit. A timely response can prevent further delays or potential disallowance of the claim.

For complex delays, especially those involving an audit or significant financial hardship, consulting a tax professional (e.g., a Certified Public Accountant or tax attorney) is advisable. These professionals can help navigate IRS procedures, respond to inquiries, or represent the business during an audit. They can also assist in formally requesting assistance from the Taxpayer Advocate Service.

If a refund is delayed beyond a certain period, the IRS may be required to pay interest on the overpayment. Under Internal Revenue Code (IRC) Section 6611, interest accrues on overpayments not refunded within 45 days of the later of the tax return’s due date or its filing date. Maintaining thorough records of the ERC claim, including eligibility documentation, payroll records, and all IRS communications, is important for substantiating the claim and addressing any issues.