Initially passed as part of the CARES Act in March 2020, the Employee Retention Tax Credit (ERTC) is a refundable payroll tax credit available to companies who meet specified criteria. Many companies, particularly restaurants, were able to benefit from this refundable credit due to capacity restrictions that had a significant impact on the dine-in segment. However, over two years after filing the refund claims, some companies still have not received their refunds. Numerous factors have led to the delay in refunds, including required paper processing of the refund claims, staffing shortages at the IRS, and additional scrutiny being applied to high dollar claims (often any claim in excess of seven figures). These factors have led to many restaurants waiting over two years for refund claims which they originally believed they would receive six to nine months after filing.

In a small portion of cases, the IRS has begun active audits of ERTC refund claims. Most of the audits have revolved around qualification for the credit versus the credit calculation itself. It is important to note that the IRS having a second level of review of the claims prior to issuing a refund is not considered an audit, and having a refund claim subject to a second level of review is a normal procedure for the IRS to follow prior to issuance of a refund claim.

Unfortunately, there is little recourse for taxpayers to speed up the refund process. Taxpayers can inquire with the IRS on the status of their ERTC claim by calling the IRS Business Problem Resolution line at 800-829-0015. Additionally, the preparer of the amended 941 or the taxpayer’s CPA can call the IRS to determine the status of a Power of Attorney is completed and on file with the IRS.

When the refund claim is approved by the IRS, the IRS will send a Notice CP210, which explains the amount of the credit being refunded along with any interest which will be paid on the refund. Approximately one week after processing Notice CP210, the taxpayer will receive a paper check in the mail to the address on file for the payroll tax return. It should be noted that a separate check will be mailed for each amended Form 941 filed.

If you have a question about the refund process for your ERTC claim or have not yet explored its benefits and qualifications, please contact Ryan Kilpatrick or a member of your GBQ service team.


Article written by:
Ryan Kilpatrick, CPA
Director, Tax & Business Advisory Services

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