When Will I Get My ERC Refund? Timelines and Status

The Employee Retention Credit (ERC) was a temporary government program providing refundable tax credits to businesses that retained employees during the COVID-19 pandemic. Eligible employers experienced a significant decline in gross receipts or faced full or partial suspension of operations due to government orders. Many businesses filed for this credit, leading to a large volume of refund claims submitted to the Internal Revenue Service (IRS). Numerous businesses are now awaiting their ERC refunds.

The ERC Refund Journey and Expected Timelines

Businesses typically claim the ERC by filing an amended payroll tax return, Form 941-X, for each qualifying quarter in 2020 and 2021. Form 941-X cannot be electronically filed and must be submitted to the IRS via mail. Using a method that provides delivery confirmation is advisable.

The IRS processes each quarterly Form 941-X individually, verifying the information. Historically, refunds were expected within six weeks to six months. However, due to high claim volume, current processing times frequently extend beyond nine to twelve months, and in some instances, even longer.

The IRS has a substantial backlog of millions of unprocessed Forms 941-X. This extended timeline reflects the agency’s need to manage the sheer volume of submissions while also dedicating resources to fraud prevention and compliance. Understanding these timelines helps businesses manage their financial planning.

Influences on ERC Refund Processing

Several factors can significantly impact and often prolong ERC refund processing. Incomplete or erroneous applications are a common reason for delays. Missing information, incorrect calculations, or insufficient documentation, such as payroll records or proof of government orders, can halt a claim. The IRS requires all necessary details to be accurate before a claim can proceed.

The sheer volume of claims received by the IRS also contributes to the overall backlog and processing delays. Additionally, the IRS implemented a moratorium on processing most new ERC claims filed after September 14, 2023, to address concerns about fraudulent submissions. This moratorium, alongside an intentional slowdown in processing existing claims, allows the IRS to enhance its fraud detection measures and conduct more thorough reviews.

Claims flagged for additional scrutiny or audit represent another significant cause of delay. The IRS may flag claims due to discrepancies, suspected association with aggressive marketing promoters, or simply for further verification. Larger refund requests, particularly those exceeding $500,000, are often routed to specialized review teams and may undergo more intense scrutiny, leading to even longer delays. The manual processing requirement for Form 941-X further adds to the time needed for review compared to electronically filed returns.

Tracking Your ERC Refund

The IRS does not provide an online tool for tracking ERC refunds, unlike the “Where’s My Refund” tool for individual income tax returns. This means businesses cannot check their ERC refund status through an online portal.

Contacting the IRS business helpline is the most direct method to inquire about an ERC refund’s status. Call 800-829-4933 or 877-777-4778. Have specific information ready: Employer Identification Number (EIN), tax quarters for which amended returns were filed, mail date of Form 941-X, and expected refund amount. Wait times can be extensive due to high call volumes.

For a more personalized interaction, a business may also consider visiting a local IRS office, though this typically requires an appointment. Alternatively, if a third-party tax professional or firm assisted in preparing and filing the ERC claim, contacting them directly can be a viable option for status updates. While these methods may not expedite the processing of the refund itself, they provide the available avenues for checking its current status.

Addressing IRS Inquiries About Your ERC Refund

Businesses awaiting an ERC refund may receive communications from the IRS that require a timely and informed response. These communications can include requests for additional information, notices indicating an audit, or letters regarding the disallowance of a claim. For instance, IRS Notice 6612 indicates that the agency is auditing the ERC claim and typically includes Form 4564, an Information Document Request (IDR), outlining the specific documents needed. Responding to an IDR usually requires action within 30 days.

If the IRS disallows a claim, either fully or partially, notices such as 105C or 106C are issued, explaining the reasons for the disallowance. In such cases, taxpayers generally have 30 days to respond to preserve their appeal rights, though they may have up to two years to file an appeal through formal channels. Another communication, Letter 6577-C, relates to the recapture of previously paid ERC amounts, often requiring a response within 21 days to avoid further penalties. It is crucial to carefully review any notice received, understand its implications, and gather all requested documentation promptly.

For claims experiencing severe and prolonged delays, especially if financial hardship is a factor, businesses may consider contacting the Taxpayer Advocate Service (TAS). TAS is an independent organization within the IRS that assists taxpayers in resolving issues that cannot be cleared through normal channels. While TAS cannot guarantee a refund, it can intervene to expedite the review and resolution process, and taxpayers can initiate this by submitting Form 911. Seeking professional advice from a tax attorney or qualified accountant is often advisable when responding to IRS inquiries or navigating significant delays, ensuring all actions are compliant and support the claim.