BAD NEWS FOR PEOPLE WAITING FOR REFUNDS

The IRS is currently backlogged with millions of unprocessed payroll tax returns due to COVID-19 restrictions and the volume of Employee Retention Tax Credit (ERTC) refund requests.

As of January 12, 2022, the IRS posted that there are about 1.1 million unprocessed quarterly Forms 941 and approximately 441,000 unprocessed Forms 941-X.  Additionally, the IRS advised that they will be processing all Forms 941 before they process the 941-X.  The backlog is being worked on in the Cincinnati and Ogden offices.  (Ogden handles ACA filing so that may be why ACA audits have decreased)

Each quarter of payroll tax returns must be filed separately.  Most of our clients have six quarters of credits available.  That means the IRS will be processing the original 941 and six 941-X for every business filing for refunds.

Previously, it was expected that after the amended payroll reports have been filed, the IRS would issue refunds within six weeks to six months.  We are now encouraging you to plan for a longer wait – possibly up to twelve months. 

Based on the experiences of some of our clients, refunds are trickling out but not at the rate we should expect.

In previous newsletters, I editorialized that the lawmakers who wrote the law regarding the ERTC had no idea the size and impact this unprecedented law would have.  Kallas was one of the first accounting firms to apply for these generous credits so we anticipate that as others catch on and start filing the IRS will be backlogged even more.

As a reminder:  to help our client’s cash flow during these difficult times, Kallas deferred it’s fee until such time as you receive that first refund check.  So we are waiting just like you.

To check the status of your refunds you can call the IRS at 877-777-4778.  Expect a long wait time.