Once you’ve submitted your Employee Retention Credit application, the next step is eagerly waiting for the funds to be disbursed. During this time, you may find yourself wondering when exactly you can expect to receive the refund check.
This article guides how to check the status of your Employee Retention Credit and offers helpful tips to minimize any potential delays. Streamline and expedite your ERC filing process!
Make Sure You Qualify
Even if you’ve already sent your request for the Employee Retention Credit to the IRS, there’s a possibility that you may not receive any reimbursement. The government has established clear criteria to determine which businesses are eligible for a refund.
To qualify for a refund, your business must have met one of the following requirements:
- Due to the COVID-19 pandemic, your business had to temporarily shut down, either fully or partially, following a government mandate in your state
- Your company experienced a decrease in overall revenue
The government’s definition of “a decline in gross receipts” underwent a change from 2020 to 2021.
In 2020, for each quarter of the calendar year, a company had to experience a minimum 50% decrease in gross receipts compared to the same period in 2019 to be eligible for a refund. This refund was only applicable to companies with 100 full-time employees or less, excluding owners.
However, in 2021, businesses only needed to have a 20% drop in gross receipts per quarter compared to the numbers from 2019. The government extended eligibility to businesses with up to 500 full-time employees.
If your organization did not meet the requirements stated above during 2020 and 2021, the IRS will not be issuing a refund. However, you can utilize free questionnaires provided by ERC filing services like Bottom Line Concepts and ERC Assistant to determine if you qualify for a refund.
How to Check the Status of Your Employee Retention Credit
Businesses frequently experience a lack of communication from the IRS following the submission of Employee Retention Credit forms. However, there are methods available to inquire about the progress of your claim instead of simply waiting without any updates.
1. Check With Your ERC Filing Service
Utilizing an ERC filing service can significantly speed up the claim submission process. These companies possess a deep understanding of the process, enabling them to quickly calculate your precise refund amount and handle the necessary paperwork.
Their expertise often results in expediting the submission of your documentation to the IRS, leading to a faster refund. Additionally, their knowledge significantly reduces the chances of filing errors that could cause delays in the future.
Many ERC filing services maintain detailed records of each submission and can provide you with an estimate of when to expect your reimbursement. Feel free to contact the company you used to inquire about any relevant information they may have for you.
2. Call the IRS Directly
To inquire about your refund status, you have the option to directly contact the IRS. You can reach a live agent by dialing 877-777-4778.
During the call, you will be required to verify your identity. This may involve providing your legal name, social security number, business name, employer identification number, or other relevant information.
While speaking with an agent, feel free to ask any questions you have about your claim and inquire about the remaining wait time. Remember the IRS receives a large volume of calls daily, so it may take some time to connect with a representative.
Alternatively, you can conveniently check your refund status through the IRS’s online portal. This method offers a simpler way to keep track of your refund.
3. Use the IRS Refund Status Tool
Receiving an update on your reimbursement has never been easier than checking the IRS website. By using the IRS’s refund status tool, you can stay informed about the progress of your claim and when you can expect to receive your check.
To access your refund status, simply select the tax year you are inquiring about, either 2020 or 2021. If you’re eligible for reimbursement for both years, you will need to perform separate checks for each calendar year.
The refund status tool is updated daily, providing you with the most up-to-date information on your application. It can also notify you of any issues that may affect the timeline.
By addressing these issues proactively, you can avoid delays and keep the process on track. Don’t waste valuable time waiting for the IRS to contact you when you can take action yourself.
When Should You Expect Your Employee Retention Credit?
The IRS currently has over 300,000 unprocessed forms from businesses that have applied for the Employee Retention Credit. These forms are amendments to payroll paperwork that was processed during the COVID-19 pandemic, which means there is a lot of cross-checking required.
When the ERC process first started, businesses were receiving refunds within a month. Due to the large number of requests, it may now take between six months and a year for businesses to receive their money.
During the height of the COVID-19 pandemic, the IRS faced strict restrictions, shutdowns, and staff limitations. Many employees had to work remotely, which contributed to the delays we are experiencing now.
Additionally, the high volume of businesses submitting claims within the same time period has further slowed down the process. Each request undergoes a rigorous review to ensure that companies receive the correct amount owed to them. Any errors in the applications only serve to further delay the process.
Is There a Way to Speed Up the Process?
Previously, businesses could use Form 7200 to request advance payment for their ERC credit from the IRS. However, starting January 2022, this form is no longer available.
Unfortunately, there’s no way to speed up the refund process once you have submitted your claim. Once you click the submit button, you will have to wait for the IRS to process your claim patiently.
If you have not yet submitted your claim, it’s important to carefully review all the information on your Form 941-X to ensure its accuracy. Submitting complete and correct information initially will greatly help the process.
To stay informed about the progress of your claim, you can periodically check its status. This will allow you to identify and address any issues that may have arisen during processing, helping to get your submission back on track with minimal delays.
Issues That Could Delay Your Employee Retention Credit
Despite the backlog of IRS applications, there are several factors that may cause a delay in receiving your Employee Retention Credit. Let’s explore some of the issues that can hinder the process.
Miscalculating Your ERC Refund Totals
When going through Form 941-X to make changes to your payroll taxes for 2020 and 2021, accuracy is crucial. Even a small mistake like a decimal place or forgetting to carry over a number can result in incorrect totals.
For the year 2020, you can claim up to $5,000 per employee, and for 2021, the limit is $21,000 per employee. The IRS sets a maximum of $10,000 for qualifying wages when calculating the Employee Retention Credit, regardless of how much each employee actually earns.
While it’s possible to skip some sections on Form 941-X when filing an amendment, the form can still be confusing. To ensure you haven’t missed any important steps, refer to our guide on Employee Retention Credit.
If there are any errors, you will have to wait for the IRS to identify them before you can make the necessary corrections.
Missing Information on Form 941-X
In addition to numerical information, Form 941-X also requires details about you and your business. It’s crucial to provide all the necessary data to avoid any delays.
As you go through the form, make sure to mark the appropriate boxes to clearly communicate the purpose of your request to the IRS. Any confusion in your submission may result in the rejection of your refund.
Keep in mind that you will need a separate Form 941-X for each quarter that you need to correct for the two years when the Employee Retention Credit was available. This means you may have to fill out a total of four forms if you are seeking funds for 2020 and the first three quarters of 2021.
Large ERC Refunds
It’s expected that the process of issuing larger ERC refunds may cause delays in the system. Please note that for the year 2020, your company must have fewer than 100 full-time employees in order to be eligible for a refund. However, for requests made in 2021, companies with up to 500 team members can apply.
Getting Money in the Meantime
If your business is struggling due to the extended waiting periods in the ERC refund process, there are several alternatives you can explore to ensure your company’s survival.
ERC Bridge Loans
Several ERC filing services, such as Omega Accounting Solutions and Lendio, offer bridge loans as part of their services. These companies handle all the complexities of your claim while providing immediate funds to bridge the gap between filing and payment.
Typically, you can expect to have the additional funds deposited into your bank account within a few business days of making the request. This is significantly faster compared to traditional loans, allowing you to get back on track more quickly.
It’s important to note that interest rates and repayment requirements may vary depending on the provider. To determine your monthly payments and loan duration, you will need to work directly with the company.
Your business bank account might be open to providing you with a loan if you have established a good relationship with them. The loan amount and terms will primarily depend on your financial transactions and how well you have maintained your credit score.
Some banks have limits on the loan amounts they offer, while others may only provide loans for specific business purposes. It’s essential to carefully review your options before making a decision.
Consider the long-term cost of repaying the loan. You want to avoid ending up in a worse financial situation in the future because you borrowed too much or agreed to unfavorable terms.
It’s Not Too Late to File Your Claim
If your company qualifies for the Employee Retention Credit, there’s still time to file a claim. You have the option to revise your 2020 or 2021 payroll tax forms (Form 941) using Form 941-X within a span of three years.
For the 2020 Employee Retention Credit, you can submit a request until April 15, 2024. If you’re seeking a refund for any of the first three quarters of 2021, you have until April 15, 2025, to submit the necessary documentation.
How to Check the Status of Your Employee Retention Credit – Frequently Asked Questions (FAQs)
Do you still have queries regarding the Employee Retention Credit? These FAQs might provide the answers you seek.
How Is ERC Paid Out?
Once the IRS gives the green light to your Employee Retention Credit, you can expect to receive a check via mail. Rest assured, you won’t be required to repay this sum, allowing you to promptly allocate it towards any business-related costs.
How Much ERC Will I Get?
Under the government’s regulations, businesses can now receive 50% of their employees’ qualified wages for the entirety of 2020, and 70% per quarter in 2021. The maximum amount that can be claimed for each employee is $26,000, with qualified wages being capped at $10,000.
How Long Do You Have to Claim the ERC Credit?
For the tax year 2020, you have until April 15, 2024, to submit your claim. Similarly, for the 2021 tax filing year, you have until April 15, 2025, to do so.
Will ERC Be Audited?
The IRS has explicitly stated that it has the authority and intention to audit ERC claims. It’s essential to be prepared and not caught off guard if your business is requested to provide evidence of the legitimacy of your filing.
It’s crucial to retain all forms, including any amendments, for a number of years in case the government decides to investigate.
Bottom Line on How To Check the Status of Your Employee Retention Credit
The process of obtaining Employee Retention Credit can be quite challenging. It may take businesses up to a year to receive any payments, which can strain their existing funds. Complications with filing can also cause further delays.
To expedite the process and increase the likelihood of receiving the credit quickly, it’s recommended to utilize an ERC filing service. Visit Bottom Line Concepts today for a reliable and efficient ERC filing solution.