The Internal Revenue Service (IRS) has not hidden the fact that it is backlogged in processing millions of tax returns, including payroll tax returns. Among the reasons for the backup is an unexpectedly high volume of Employee Retention Credit (ERC) refund requests. This has left many businesses waiting longer than expected for their refund.
As of November 17, 2021, the IRS had approximately 2.4 million unprocessed Forms 941 (ERC) and 400,000 unprocessed Forms 941-X (ERC refund requests). Additionally, the IRS advised that they will be processing all Forms 941 before they process any of the corresponding Forms 941-X. Keep in mind, too, that the IRS still has an unknown number of 2020 payroll refunds to process before getting to the 2021 requests.
Originally it was expected that after an amended payroll report was filed, the IRS would issue a refund within six weeks to six months. Even this wide window now seems optimistic. You should now plan for a turnaround time of nine to twelve months.
To check the status of your refund, you can call the IRS at (877) 777-4778. However, because of a shortage of agents available to field phone calls, your “on hold” time may be exceptionally long. It may be more productive to visit the IRS website for additional covid-19 newsroom updates.
For additional information about ERC credit refunds or other tax-related issues, please contact Gray, Gray & Gray at (781) 407-0300.