The State of the Employee Retention Credit (ERC) Program


The State of the Employee Retention Credit (ERC) Program

May 14, 2024  |  5 min read

What is the status of the legislation that seeks to terminate the ERC?

On January 31, 2024, the House of Representatives passed The Tax Relief for American Families and Workers Act (the “Tax Bill”), which proposed to move the deadline to file an ERC claim up to January 31, 2024. However, as of today, the Senate refuses to send the Tax Bill to the floor for vote and there is a growing consensus that the Tax Bill will not become law either because the Senate will continue to refuse to send it for vote, or, if a vote does materialize, the Tax Bill simply lacks the votes to pass the Senate in its current form.

What is the latest from the IRS regarding the ERC?

On September 14, 2023, the IRS enacted a moratorium on processing new ERC claims received on or after such date, which the IRS said was necessary due to an increase in ERC scams and fraud. While the moratorium was initially effective until at least December 31, 2023, it has been extended into the spring of 2024. According to Tax Notes, Daniel Werfel, the IRS commissioner, informed reporters after a recent hearing in front of the House Ways and Means Committee that “[t]he IRS is aiming to end the moratorium on new ERC claims…by April or May [of 2024].”

This messaging is consistent with comments made by Werfel in February 2024 where he stated that the IRS is currently utilizing substantial resources to electronically scan all post-moratorium ERC claims into their system, which he estimated would take until April of 2024. The IRS further corroborated this timing in a March 22, 2024 announcement, noting it anticipates that they will resume ERC processing sometime in late spring of this year.

What is the timeline left to file?

The ability to claim the 2020 portion of the ERC expired on April 15, 2024 (as a matter of current law) and can no longer be claimed. Since the Tax Bill has not been enacted into law, the deadline to claim the ERC for 2021 remains April 15, 2025, unless modified as part of the Tax Bill or other legislation yet to be introduced.

I have already filed, where is my ERC refund?

If you’re eagerly awaiting your ERC refund, you’re not alone. Following the IRS moratorium announcement on September 14, 2023, ERC processing has slowed significantly, leaving many businesses uncertain about when and whether their refunds are coming. According to the IRS, as of December 9, 2023, there were over 1 million unprocessed Forms 941-X. The IRS continues to state that it is processing ERC claims submitted prior to September 14, 2023; however, we have not seen any meaningful progress on these pre-moratorium ERC filings. While the overall ERC processing timeline remains uncertain, the only meaningful way to understand what stage your ERC application is in is to have a tax professional pull and analyze your IRS transcript.

I’d like to know more about my ERC refund status.

Sagemont Advisors has teamed up with TaxNow, a cutting-edge IRS transcript monitoring and alerts service, to offer a suite of services designed to provide transparency into ERC refund processing.

Sagemont offers a clear update on your ERC refund progress and can let you know which of the following stages your ERC refund application is in:

  • Amended return confirmed received by the IRS;
  • Amended return or claim forwarded for processing;
  • ERC refund approved for payment; or
  • ERC refund payment sent.

In addition to ERC refund tracking, Sagemont can analyze your transcript and notify you of potential delays or rejections by the IRS. Common red flags include:

  • Form(s) 941-X (amended returns) not received or posted to account;
  • Original Form(s) 941 not received or posted to account;
  • Processing was delayed due to non-ERC-related penalties or other delinquencies;
  • Processing was delayed due to an IRS audit (including a “30-Day Notice” through Letter 6612);
  • ERC claim was rejected due to an incorrect bifurcation of refundable ERC and non-refundable ERC amounts on the Form 941-X;
  • ERC claim was rejected due to improper signature, signatory title, or use of unapproved electronic signature; and/or
  • ERC claim was rejected or reduced due to an IRS agent improperly keying in the Form 941-X information into the IRS system.

Sagemont’s team of CPAs will review your IRS transcripts to identify any red flags. To the extent certain issues are identified, our team of professionals can assist with remediation.

Sagemont’s team of experienced CPAs and tax attorneys are well-versed in ERC regulations and can assist with any of your ERC needs, including robust audit defense for business undergoing ERC examinations.

Learn more about how we can help your business today.

Facebook LinkedIn