ERC Refund Backlog: 1.2M Claims Unprocessed, Businesses Struggle
As of October 26, 2024, over 1.2 million Employee Retention Credit (ERC) claims remain unprocessed nationwide, leaving businesses in limbo and some unable to retire or expand due to unpaid refunds. The IRS, facing budget cuts, is struggling to keep up with the backlog, with traditional resolution methods proving ineffective.
The ERC, introduced in 2020, was designed to encourage businesses to retain employees during the COVID-19 pandemic. However, the IRS's processing time has been significantly extended, with many businesses still waiting for their refunds. Some clients of local law and accounting firms are facing dire situations. One client is unable to retire until receiving a million-dollar ERC refund to pay off a COVID-era bank loan, while another in the bourbon industry is under pressure from tariffs and needs the refund to stay afloat.
With the IRS overwhelmed, many businesses are turning to legal action as the fastest path to resolution. Taxpayers can sue the IRS for ERC refunds if six months have passed since filing without a substantive response, or if the claim has been formally denied. However, this option is not without risks, as it can be costly and time-consuming. Meanwhile, traditional methods such as contacting the Taxpayer Advocate Service or Congressional representatives are proving ineffective due to lack of resources and authority.
The backlog of unprocessed ERC claims is causing significant hardship for businesses nationwide. With the IRS struggling to keep up due to budget cuts and traditional resolution methods proving ineffective, many businesses are turning to legal action as a last resort. As of now, there is no public information indicating that traditional payment methods for ERC reimbursements are no longer effective in the USA.
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