When Can I Expect My ERC Refund Payment?

The Employee Retention Credit (ERC) was established as a refundable tax credit to support businesses that maintained their payroll during the economic challenges of the COVID-19 pandemic. Businesses that submitted claims are now awaiting their refunds, often for substantial amounts, making the timing of these payments a significant concern for their ongoing operations.

Current Processing Timelines

Businesses awaiting their Employee Retention Credit refunds often face an extended waiting period due to the substantial volume of claims submitted to the Internal Revenue Service (IRS). Historically, initial processing estimates for these refunds were around six to eight weeks. However, current processing times are considerably longer, with many businesses reporting waits anywhere from four to twelve months.

The IRS has been working through a significant backlog of these claims. The agency has stated an aim to process all Employee Retention Credit claims by the end of 2025. This extended timeline reflects the sheer number of applications the IRS has received, which has strained its processing capacity.

Factors Influencing Refund Delivery

Several elements influence how long it takes for an Employee Retention Credit refund to be delivered. The method of filing, particularly for amended payroll tax returns like Form 941-X, plays a substantial role. These forms, used to claim the credit, must often be paper-filed and then manually processed by IRS staff, which slows down the review process compared to electronic submissions. The sheer volume of such paper forms has created a substantial backlog.

The accuracy and completeness of the original application are also important. Claims with incorrect or missing information can lead to delays, as the IRS may need to request additional documentation or clarification from the business. Furthermore, the IRS has increased its scrutiny of Employee Retention Credit claims to prevent fraud, which means many applications, including legitimate ones, are subject to more rigorous and time-consuming reviews. This heightened review process involves examining claims multiple times before a refund is issued.

The IRS implemented a moratorium on processing new Employee Retention Credit claims starting September 14, 2023, in response to the overwhelming volume and concerns about fraudulent submissions. While this moratorium paused the processing of many claims, the IRS announced in August 2024 that it would begin processing some high- and low-risk claims that were filed during the moratorium period, specifically those submitted between September 14, 2023, and January 31, 2024. However, claims filed after January 31, 2024, are unlikely to be processed in the near future, and staffing levels within the IRS also contribute to the overall processing speed, as the agency faces challenges in securing qualified personnel.

Monitoring Your Refund Status

Businesses can monitor the status of their Employee Retention Credit refund. Unlike individual income tax refunds, there is no direct online tool similar to the “Where’s My Refund?” service specifically for Employee Retention Credit claims. However, businesses can verify that their forms were received by using their IRS online account or the Electronic Federal Tax Payment System (EFTPS) if they filed electronically.

The primary method for inquiring about an Employee Retention Credit refund status involves contacting the IRS directly. Businesses can call the IRS Business and Specialty Tax Line at 800-829-4933. When making this call, it is helpful to have identifying information readily available, including the business name, Employer Identification Number (EIN), the specific tax quarter(s) in question, and the dates the forms were submitted. Businesses should anticipate long wait times when calling due to the high volume of inquiries. If a tax professional assisted with the claim, they may also be able to check for updates on behalf of the business.

Actions for Delayed Refunds

If an Employee Retention Credit refund is significantly delayed, businesses have several avenues for recourse. Contact the IRS Business and Specialty Tax Line at 800-829-4933 to inquire about the claim’s status. Respond promptly to any requests for documentation from the IRS, as delays in providing information can prolong the refund process.

For prolonged delays, especially if causing significant financial hardship, contacting the Taxpayer Advocate Service (TAS) may be appropriate. The Taxpayer Advocate Service is an independent organization within the IRS dedicated to helping taxpayers resolve problems that have not been addressed through normal channels. They can advocate for the taxpayer and may prioritize claims in cases of financial hardship. Consulting with a tax professional can also provide valuable guidance.