In most cases, the ERC for calendar year 2020 was applied for after the filing of the 2020 income tax return. Another common misconception is that in order to qualify, an enterprise must experience both a reduction in gross receipts AND suffer from a partial disruption due to state mandates. The agency, which started accepting tax returns for the 2022 tax year on Jan. 23, said it has received almost 19 million filings through Feb. 3. 3. This includes your procedures being limited by commerce, lack of ability to take a trip or restrictions of team meetings Gross invoice reduction requirements is various for 2020 as well as 2021, however is determined versus the existing quarter as compared to 2019 pre-COVID quantities If you received a refund check for the Employee Retention Credit (ERC), record it by creating a bank deposit. Did the full or partial suspension of business operations have more than a nominal effect on the taxpayers business? Reason #1: You Received an Identity Verification Letter from the IRS. Powered and implemented by FactSet. Huh? The notice also clarifies a timing issue related to adjusting wage expenses for the ERC. The benefit of the gross receipts test is that it is objective taxpayers need only show a decline in gross receipts of more than 50% in any calendar quarter in 2020, or more than 20% in any of the first three calendar quarters in 2021. Things have improved somewhat, but not enough. Everyone may want to wait to amend 2020 until the ERC money is received. Another nice thing about the gross receipts test if that if it is met for a particular calendar quarter, then the taxpayer can include in the ERC calculation wages and health plan expenses paid during the entire calendar quarter, and in some cases the taxpayer can automatically qualify for a second quarter as well. WASHINGTON The Department of the Treasury and the Internal Revenue Service have received requests from taxpayers and their advisors for relief from penalties arising when additional income tax is owed because the deduction for qualified wages is reduced by the amount of a retroactively claimed employee retention tax credit (ERTC), but the taxpayer is unable to pay the additional income tax because the ERTC refund payment has not yet been received. Q: Has anyone received their ERC refund? 2023 Tax Deadline: Tuesday, April 18, 2023. Slow processing of amended returns has meant significant delays in business owners and charities getting much-needed relief checks in their hand. Has anyone filed for the ERC (Employee Retention Credit) for their company and actually received the credit? Wealth Management. However, because of a shortage of agents available to field phone calls, your "on hold" time may be exceptionally long. If you file your return electronically, your refund should be issued in less than three weeks, even faster when you use direct deposit. That spending comes after millions of taxpayers suffered delays in processing their returns during the pandemic, with the IRS struggling to keep up due to staffing issues and a lack of modern equipment to scan and process paper returns. Click the Banking menu, then select Make deposit. Those that are just filing now or have filed recently may be waiting to see a refund for up to 16 months or more. Click here to reach out to us for more information. This is yet another injection of cash for businesses across the country, similar to the Paycheck Protection Program (PPP) loans you may have received in 2020 and/or 2021. If YES, what was your timeframe? Recall also that this calculation is different from the full-time equivalent calculation for the PPP. 2023 Plante & Moran, PLLC. As a result, many businesses that registered for the ERC refund have been waiting longer than expected. The phone service is overwhelmed with wait times in the hours and hundreds of thousands of pieces of unopened mail, leaving taxpayers in the dark about when refunds will be received. 7,805 talking about this. Privacy Policy. Did the taxpayer ensure it did not use wages in the ERC calculation that were used for the PPP, i.e., it did not double dip the wages? Wave sent all employers opted into the ERC in Wave and enrolled in Payroll Tax Service an email on November 11, 2021, outlining next steps for payments that are due retroactively. Im sure these lengty delays are not what Congress intended when they issued the press releases cheering the passage of ERC. 15. The overall impact is that taxpayers arent realizing the benefits of ERC in a timely manner. Through Feb. 3, the IRS had received 19 million filings, about 2.3 million more than the same period a year ago. By using this site you agree to our use of cookies. The notice provides examples of businesses that qualify as severely distressed and sets forth a process for those businesses to treat all wages paid to employees during that quarter as qualified wages for purposes of calculating the ERC. They can file a Form 941X (Adjusted Employer's Quarterly Federal Tax. Opinions expressed by Forbes Contributors are their own. Our article from November 2021has an in-depth discussion of the ERC expiration and how retroactive claims will work. IRS filing statistics Get your Max Tax Refund. However, the impact of the difficulties of administration of ERC and processing of amended returns requesting ERC funds should serve as a great caution to Congress given that it provides a window to the problems for small and medium businesses when there is not a focus on tax administration and providing top taxpayer service. Some claim to have received special training from the IRS (they have not) and others claim to have special knowledge regarding the law for one reason or another (they do not detailed information about the ERC is available to anyone with an internet connection). The company received a partial refund of $180,000 from the employee-retention tax credit but is waiting for more. Recovery startup businesses become eligible for the ERC and severely distressed employers get to expand the amount of wages that they include in the ERC calculation. Taxpayers have reported waiting anywhere from 10-12 months, and in some cases longer, for their ERC refunds. While the IRS has made strides in recent years when it comes to online tracking and access to information for taxpayers, those systems dont provide any information about the processing time for ERC refund claims on amended payroll tax returns. 11. From our experience, the size of the credit appears to be the best determinant on when your company will receive the refund check. 8. If you can get the ERTC info added to your original 941 prior to filing, you'll get the refund a LOT faster. If there is a full or partial suspension of business operations, then the taxpayer generally can include in the ERC calculation only those wages and health plan expenses paid during the period of the suspension. There is no description of the facts and no analysis of the factors in IRS Notice 2021-20, Q&As 11-22 (the ERC claims at issue were all predicated on a partial suspension of business operations). Please contact your ERC advisor . While our clients used to receive ERC. The IRS states that taxpayers shouldn't file second returns claiming the same refund, as that will likely result in even longer delays while the duplicate claims are investigated. However, if you wait and the IRS doesnt allow an exception, we will have to extend your corporate and personal income tax returns for 2021 as we will need time to prepare the 2020 amended tax returns first. Sadly, there are not many great answers for when you can expect your ERC refund checks. This includes your operations being restricted by business, inability to take a trip or constraints of group conferences. This occurred at the same time that Congresspassed legislationto shut down the ERC for most businesses on September 30. Well deliver accounting insights and advice straight to your inbox. With the many changes to original guidelines and regulations, the credit has become intimidating and confusing for many. The ERTC retroactive period's original deadline of January 1, 2022, changed to October 1, 2021. All rights reserved. Up to $26,000 per worker. Some of them take an extremely broad interpretation of that test and use its subjectivity as a sword. Thus, a taxpayer with an ERC for calendar year 2020 must file an amended income tax return for tax year 2020. 18. One possible reason, Bank of America analysts said in a report: "We believe individuals are filing their returns sooner this year to get refunds faster given the tougher economic environment.". It added that the IRS has also whittled down its backlog of unprocessed returns. Please read our Privacy Policy for more information on the cookies we use. 2. Remember, this is a refund on payroll taxes that you already paid to the Federal Government, plus any calculated surplus in credit. One of the most common misconceptions concerning the Employee Retention Credit (ERC) is that you are not eligible for the ERC if you received a Paycheck Protection Loan (PPP). The suspension of operations test is a subjective test. For example, if a credit is taken in 2020 prior to the 2020 income tax return being filed, all adjustments will be made on the timely filed 2020 income tax return. As of October 2022, we're still seeing an ERC refund processing time of roughly five to six months that were able to file a form 941-x in April or May. Maryland OL Transfer Mason Lunsford To Visit LSU This Weekend, Brian Kelly Adds Eddie Hicks To Staff As Defensive Analyst, Gavin Dugas 3-Run Home Run Leads LSU To Victory Over Texas, Watch: Gavin Dugas Hits Game Winning 3-Run Homer vs. Texas, LSU Football Opens Spring Practice On March 9; Here's The Full Schedule, NFL Inside Jay Glazer Shows Off Girlfriend While On Vacation, Kliff Kingsbury's Girlfriend Is Back At It With New Swimsuit Photos, 8 Players Ejected During SEC Women's Tournament Basketball Game, Texas A&M Coach Jim Schlossnagle Furious With Team's Home Fans, Here's What The Titans Did With Taylor Lewan's Stuff After He Was Cut. Amended returns will be necessary for businesses that didnt include adjustments on their 2020 returns. 17. Has anyone filed for the ERC (Employee Retention Credit) for their company and actually received the credit? Name, Image And Likeness: After The Gold Rush, 8 Lessons For George Harrisons 80th Birthday, 1854 Shipwrecked Whisky May Bring MillionsAnd IRS Taxes It, How Alex Murdaugh Opened The Door For Convictions On Financial And Tax Crime Charges, Name, Image And Likeness: Notice 2021-49 provides that some businesses may qualify as severely distressed employers in the third and fourth quarters of 2021 if they experience a 90% decline in gross receipts compared to 2019 (see below for subsequent expiration of fourth quarter). We're currently working with about 120 employers to receive the Employee Retention Credit (ERC). I have called the IRS numerous times on the topic of ERC, and even the IRS agents don't seem to know the magic number, but my best guess is $200,000. 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