Getting your Employee Retention Credit Claims Processed

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Getting your Employee Retention Credit Claims Processed

Now that the shutdown is over, companies are starting to wonder how they can get their Employee Retention Credit (ERC) claims processed with the IRS. “With the government opening back up, the IRS is beginning to start processing the ERC claims again. Knowing the process is crucial to stay on top of your claims,” says tax attorney Michael March of Whiteford Tax Defense. Here is a breakdown on how you can get these claims sent through.

If Your Claim Was Denied

If your claim was denied, you have two years from the date of denial to file a refund suit in federal court through an IRS Letter 105-C.

If You Haven’t Heard Back

If it’s been six months or greater and you haven’t heard about your claim, you have three years from the time that you filed the amended employment tax return to bring a refund suit in federal court. 

Statute of Limitations

The government shutdown does not extend the time that you have to file your claim. If you don’t file by the deadline, you won’t be entitled to any funding.

The Internal Revenue Code sets both the deadline for filing a refund claim and the time period for initiating a lawsuit if the IRS does not act on that claim.

For the Employee Retention Credit (ERC), taxpayers submitted claims by filing an amended employment tax return on Form 941-X. Under 26 U.S.C. (IRC) § 6511, an administrative refund claim must be filed within specific statutory time limits, and IRC § 7422 requires that a timely administrative claim be filed before a taxpayer may bring a refund suit.

IRC § 6532(a) governs when a taxpayer may file suit in either a United States District Court or the Court of Federal Claims. A lawsuit may be filed after six months have passed without IRS action on the claim, or sooner if the IRS issues a formal notice of disallowance. After a disallowance, the taxpayer generally has two years from the date of that notice to file suit. In addition, 28 U.S.C. § 1346(a)(1) grants jurisdiction to the district courts and the Court of Federal Claims over properly filed tax refund actions.

With the number of un-processed claims due to the shutdown, you should aim to file as soon as possible.

Administrative Remedies

Before any claim is filed, an expert in ERC claims should review it to identify if it is advantageous to submit the claim. For taxpayers who want to exhaust all remedies before they file, you could still work with Taxpayer Advocate Services (TAS) to request the processing of an ERC claim. In order to do this, you should fill out an IRS Form 911.

If you want to utilize these remedies, beware as the large quantity of claims could make it difficult for the TAS to process your claim. 

Filing in Federal Court

There are two routes for ERC funding:

1. A Decline in Gross Receipts: Claims that can be substantiated with the DOJ may be able to be settled without tons of discovery, motions, or a trial
2. Government ordinances that resulted in a substantial shutdown of business operations

With this, you must submit additional documentation and context alongside your amended Form 941 for the service to fully understand your situation and your claim.

After the claim is filed, you will be assigned an attorney and from then on that is who you will have primary contact with throughout the duration of your claim. 

The Bottom Line

If you have an ERC claim, you have to decide whether or not it is worth it for you to file due to the backlog the government shutdown has caused. Ensure that you submit your claim on time to have a shot at compensation.