The Employee Retention Tax Credit (ERTC) was created by the Coronavirus Aid, Relief and Economic Security (CARES) act and signed into law in March 2020 as a way to incentivize businesses around the country to keep their employees on payroll during the pandemic. Eligible employers could take advantage of this refundable tax credit against federal employment taxes via qualified wages paid to their employees from March 2020 – December 2021. To claim the credit, businesses filed either a Form 941, Form 941-X, or Form 7200 depending on when the claim was filed.
As of December 15, 2021, the IRS reported 2.8 million unprocessed Forms 941 and around 427,000 Forms 941-X that had also not been processed due to the delay of the Forms 941 processing. The delay has become so severe that Congress wrote a letter to the IRS Commissioner, Charles Rettig, on January 26, 2022 urging it to “take immediate action towards clearing the backlog of unprocessed ERTC payments”.
The National Association of Professional Employer Organizations (NAPEO) sent out a recent update to its members, including Applied Business Solutions, detailing the efforts it has taken to help speed up the ERTC processing. Since 2021 NAPEO as written multiple letters and had multiple meetings with the IRS to raise concerns about the processing delays and to offer potential suggestions for changes and improvements. The organization has also utilized an outside tax counsel who has been working tirelessly on the issue, and is preparing to hire an additional lobbying firm which will help provide more resources to advocate at the IRS.
Want to know what you can do to help?
NAPEO suggests each company contacts its member of Congress to let them know the Forms 941 and 941-X processing delays are a problem for your business and your clients, and urge them to put pressure on the IRS. You can find the contact information for your representative here.