ERTC Processing Timeline: Here’s What You Should Know

Over the past few years, many small businesses have struggled to maintain their operations. It has been quite challenging to retain employees on payrolls when facing losses or significant profit drops. Luckily, the government noticed this struggle and found a way to help owners keep their businesses afloat, even temporarily, through various relief packages. It established an Employee Retention Credit (ERC), a refundable payroll tax credit for employees. 

On the page below, find the eligibility requirements for this tax refund:

https://www.experian.com/blogs/employer-services/who-qualifies-for-the-erc-tax-credit/

If you’ve already applied but didn’t get any money yet, you may have some doubts. It’s true that the IRS still receives many applications for tax refunds almost daily, plus thousands of them currently being processed. So the whole process can take longer than expected. If you have yet to apply for the ERC, it’s good to know what you can hope for.

How to Apply

If your business suffered a significant profit loss during the pandemic or was closed during that period, you’re eligible for ERC. If you have doubts about eligibility, you can contact a financial advisor to help with this tax refund. After gathering and processing your financial information, you’ll be sure whether you can apply at all.

The next step is to estimate how much refund you can get from the first quarter of 2020 to the third quarter of 2021. This is a job that you must entrust to an experienced accountant. It can take a few days or even weeks, depending on the size of your company, the number of employees, the way salaries are calculated, etc.

Of course, whatever the amount in question, you must confirm it with relevant documentation. This process can be a real hassle if you don’t have an existing system for tracking payroll expenses and financial statements or, at least, a good accountant. 

Fill a Claim

Once you gather all the documentation, it’s time to fill a claim. The process can take up to several weeks, considering that you have to amend some already-filed tax forms because the ERC is calculated only for certain quarters during 2020 and 2021. So you have to prepare separate forms for each qualifying quarter for which you claim this rebate.

The process of filling out a tax refund is quite simple, considering you can do it online. You can even submit all the necessary documentation in just a few steps. As seen here, what can be nerve-racking is the upcoming period when the IRS needs to check your application for each eligible quarter. It’s a multi-month waiting you should be ready for.

From time to time, you can check the status of your application by contacting the IRS and explaining the situation to their agents. Unfortunately, that won’t speed up the procedure, but it will at least help you know what you are in for. Be patient because delays are always possible, but if approved, you’ll get your tax refunds for sure.

Processing Time

Considering that many businesses are still recovering from the crisis, the deadline for amending their tax returns for the years of the pandemic has been extended until 2025. Due to the complex paperwork and the large number of scammers, the time required to obtain ERC has been significantly extended. 

At first, the time from the application to the final funding was a maximum of six months, although some requests were resolved in less than two months. Currently, the waiting time has been extended to almost a year. If you’ve asked for higher refund amounts, that period can be up to 16 months. The reason for this is the need for hand-processing applications to minimize the possibility of abuse.

One of the reasons for delays is the many checks necessary to determine the credibility and legality of applications. Not all companies are eligible, but they can be ERC scam victims if they decide to work with fraudsters who encourage ineligible businesses to apply for ERC. Of course, they charge for their “services” and do nothing. 

ERC is a valuable tool for businesses looking to keep their workers on payroll during challenging times. If your business is eligible for this tax refund, you can apply with ease but have patience as it can take a while until you receive these funds.

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