Are you a business owner struggling to receive your Employee Retention Tax Credit (ERC) refund? You’re not alone. The COVID-19 pandemic has caused a surge in ERC claims, resulting in a backlog of unprocessed payroll tax returns and fraudulent filings. As a result, many businesses have reported waiting up to twelve months for their refunds. Despite these delays, the ERC can provide critical financial relief for struggling businesses that are trying to retain employees during these challenging times. In this article, we’ll explore the causes of ERC refund delays and offer guidance on how your business can navigate the filing process.
We’ll start by providing an overview of the ERC and its qualification requirements before delving into the impact of PPP loans on eligibility. We’ll then examine common causes of delay in processing ERC claims and offer solutions and resources to help expedite your refund.
Finally, we’ll discuss the benefits of claiming the ERC, despite potential delays, and why it’s still worth pursuing if you’re eligible.
ERC Overview
You already know that the Employee Retention Tax Credit (ERC) is a valuable tool for businesses facing financial hardships during the pandemic, but it’s important to understand the ERC overview, including what it is and how it works.
The ERC is a quarterly payroll tax credit against certain payroll taxes and wages paid to each employee. Essentially, this means that eligible employers can claim up to 70% of qualified wages paid to employees as a refundable tax credit.
To qualify for the ERC, businesses must meet certain requirements, including experiencing a decline in gross receipts or being subject to government-mandated shutdowns due to COVID-19. Even if your business received Paycheck Protection Program (PPP) loans, you may still be able to qualify for the ERC.
Additionally, the amount of credit available varies depending on different factors such as eligible wages paid per quarter and number of full-time employees.
The purpose of the ERC is twofold: first, it helps qualified businesses offset the impact of retaining employees during the pandemic; secondly, it helps these companies continue operating and competing in a global economy.
Despite some recent delays in processing refunds related to fraudulent claims and unprocessed payroll tax returns, claiming the ERC is worth it because of its potential financial benefits for your business.
Qualification Requirements
If your business experienced government-mandated shutdowns or a significant decline in gross receipts, you may be eligible for the Employee Retention Tax Credit (ERC) to help offset hardships incurred during the COVID-19 pandemic. To qualify for ERC, businesses must meet certain requirements:
- The business must have been fully or partially suspended due to government orders or experienced a significant decline in gross receipts.
- The business must have had an average of 500 employees or less in 2019.
- Wages paid to each employee between March 12, 2020 and January 1, 2021, are eligible for ERC.
- Businesses that received Paycheck Protection Program (PPP) loans can still qualify for ERC.
It’s important to note that qualifying businesses can receive up to $5,000 per employee per quarter in ERC money. This refundable tax credit doesn’t need to be paid back, making it an attractive option for struggling businesses.
StenTam can help businesses determine their eligibility for ERC and guide them through the filing process. It’s crucial for businesses to act quickly before the window to retroactively file closes. Despite some delays in processing due to high volume and fraudulent claims, claiming the ERC is worth it as it can provide much-needed relief during these challenging times.
Impact of PPP Loans
For those who’ve secured PPP loans, it’s important to note that they can still qualify for the Employee Retention Tax Credit (ERC) and receive up to $5,000 per employee per quarter in tax credits against certain payroll taxes and wages paid.
The ERC can provide additional financial relief to businesses struggling due to the pandemic, even if they have already received PPP funds.
To qualify for the ERC while also receiving a PPP loan, businesses must ensure that payroll expenses used for PPP loan forgiveness do not overlap with payroll expenses claimed for the ERC.
This means that if an employer uses payroll costs towards their forgivable amount under the PPP loan program, they cannot use those same wages when calculating their ERC claim.
Despite these additional requirements, many businesses may still benefit from claiming both the PPP loan and ERC.
In fact, companies that were ineligible for full forgiveness of their PPP loans due to insufficient payroll costs may be able to recoup some of those losses through claiming the ERC.
Overall, careful accounting practices are crucial in order to maximize benefits from both programs while avoiding any potential conflicts or errors.
Processing Timeframe
Unfortunately, businesses filing for the Employee Retention Tax Credit have experienced long wait times for their refunds due to a backlog of payroll tax returns at the IRS. The high volume of 941-X forms submitted by businesses seeking to claim ERC has caused significant delays in processing and approval. As a result, some companies have been waiting for four to twelve months for their refunds.
The IRS processes and approves small refund amounts faster than larger refund amounts. This means that businesses with smaller claims may receive their ERC refunds sooner than those with larger claims. In addition, fraudulent claims have also contributed to delays in processing timeframes.
Despite the multiple ERC refund delays, claiming this tax credit is worth it for eligible businesses impacted by COVID-19. To expedite the process and ensure eligibility requirements are met, companies should consider reaching out to StenTam. They offer webinars on the filing process and can help businesses determine which tax credits they qualify for before the window to retroactively file closes.
Common Causes of Delay
One thing to keep in mind is that fraudulent claims and a high volume of 941-X forms are among the common causes of delay when it comes to processing ERC filings. The IRS has reported significant delays in processing ERC refunds due to an increase in fraudulent claims, which require additional review and verification.
In addition, the large number of businesses filing 941-X forms has caused a backlog, leading to longer wait times for those seeking their refunds. To further compound the issue, the IRS does not accept eFile for the 941-X form, causing manual processing delays. This means that each form must be manually reviewed and processed by an IRS employee, which can take considerable time depending on the size of the refund being claimed.
As a result, businesses should expect longer turnaround times when filing for ERC refunds and plan accordingly. Despite these challenges, claiming the ERC is still worth it as it can provide much-needed relief for struggling businesses during these uncertain times.
If you’re experiencing difficulties with your ERC refund or have questions about your eligibility for this tax credit, consider reaching out to StenTam. They offer webinars and guidance on navigating the filing process and can help you determine which tax credits you qualify for before the window to retroactively file closes.
Solutions and Resources
You can find solutions and resources to help you navigate the ERC filing process and determine your eligibility for tax credits by reaching out to StenTam. As experts in tax credit consulting, StenTam can provide guidance on the necessary paperwork and documentation required to file for ERC. They can also assist in identifying other tax credits that businesses may be eligible for.
In addition to StenTam, there are several other resources available to help businesses with ERC refund delays. The IRS Taxpayer Advocate Service is a resource provided by the IRS to help taxpayers resolve problems that haven’t been resolved through normal channels. Businesses can also contact their local IRS office or reach out to their tax professional for assistance.
To prevent future ERC refund delays, it’s important for businesses to ensure they are properly documenting all payroll taxes and wages paid to each employee. This includes keeping accurate records of any government-mandated shutdowns or declines in gross receipts that impacted their business operations. By staying up-to-date on these documents and working with experienced professionals like StenTam, businesses can improve their chances of receiving timely ERC refunds in the future.
Benefits of Claiming ERC
Don’t miss out on the opportunity to claim the Employee Retention Tax Credit (ERC) and receive financial relief for retaining your employees during these unprecedented times. The ERC is a valuable tax credit that can help offset the impact of COVID-19 on your business.
By claiming this credit, you can reduce your payroll taxes and potentially receive a refundable tax credit that doesn’t need to be paid back. The benefits of claiming the ERC are numerous. If you qualify, you can receive up to $5,000 per eligible employee in payroll tax credits each year.
This money can be used to cover wages, health care benefits, and other qualified expenses related to retaining employees during the pandemic. Even if you received PPP loans, you may still be eligible for the ERC. Despite some delays in processing ERC refunds due to high demand and fraudulent claims, it’s still worth it for businesses to claim this tax credit.
StenTam can help businesses determine their eligibility for the ERC and provide guidance on how to file for this credit retroactively before time runs out. Don’t miss out on this valuable opportunity to receive financial relief during these challenging times.
Conclusion
Congratulations! You’ve reached the end of this article on ERC refund delays. By now, you should have a solid understanding of the ERC program, its qualification requirements, and how PPP loans impact your eligibility.
Additionally, you should be aware of the common causes of delay and solutions to mitigate them. Despite the significant delays in processing ERC refunds due to unprocessed payroll tax returns and fraudulent claims, claiming the ERC is still worth it for businesses struggling during these unprecedented times.
StenTam is here to help navigate the filing process and ensure that eligible businesses receive their refunds as soon as possible. Don’t miss out on this lifeline; reach out to StenTam today to learn about your eligibility before the retroactive filing window closes.
Remember that every dollar counts when it comes to keeping your business afloat during these challenging times, so don’t hesitate any longer!