IRS Commissioner Recognizes Delay in Employee Retention Credit Refunds

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March 22, 2021 – The House Ways and Means Subcommittee on Oversight held a hearing with IRS Commissioner Charles Rettig on March 18 to discuss the challenges the IRS has faced when implementing the various programs enacted to respond to the COVID-19 pandemic. In his opening remarks, Representative Mike Kelly (R-PA), the top Republican on the Subcommittee raised his concern regarding the delay taxpayers are experiencing in receiving refund related to the employee retention tax credit. He said:

“I have concerns about the employee retention tax credit and whether money is actually reaching the business owners it was intended to help. It’s my understanding that millions of business owners filed the forms required for this credit and are still waiting for their refunds. Some of these forms date back to April of 2020. These folks can’t wait that long.”

User Clip: Rep. Kelly’s Remarks About ERC | C-SPAN.org (c-span.org)

Later in the hearing, Congressman Drew Ferguson (R-GA) also raised the issue of the ERC with Commissioner Rettig. In the following transcript of that exchange, Commissioner Rettig is only able to acknowledge the problem without offering any clear direction for a solution.

Congressman Ferguson: Back in 2020, Congress allowed those businesses that took the PPP loans to also claim the employee retention tax credit. That was the right thing for Congress to do to continue to support the small business community, and that was a real help to them. So, when these businesses found out about it, they were pleasantly surprised. However, it’s come out that the IRS has said that they’ve got to file a paper form 941-X to go back and claim this. Now, obviously we’ve had a lot of discussion talking about the backlogs that you have right now, and, unfortunately, I think this is going to make these small businesses wait a very long time to get this much needed money in a very, very difficult time. A couple of questions here: Do you think the IRS is capable of moving these quarterly employment [tax] returns to the front of the line, and process them more quickly so that we can help to these small businesses?

Commissioner Rettig: I am familiar with the issue. We are looking into it in consideration to see what we can do, whether it’s to try to accelerate the process we have, or doing a different process. We’re not there yet, but we are looking at it, and I am sensitive to it.

Congressman Ferguson: Do you think we might have the businesses hold employment taxes as they did when the tax credit was created?

Commissioner Rettig: We’re trying our best, and we’ll make an announcement if we can change it, or if we can’t. Like I said, there’s enormous challenges to our organization that did not get lessened during 2020. But we will give it our best. I have full confidence in our employees.

Congressman Ferguson: We want to make sure that those businesses get that relief.

Commissioner Rettig: We’re with you on that.

Congressman Ferguson: It’s vitally important, so anything that we can help you with …

Commissioner Rettig: A lot of our employees come from small business families, and we get it.

Congressman Ferguson: Thank you.

User Clip: Prioritizing 941-X For ERC | C-SPAN.org (c-span.org)

Learn more about the Employee Retention Credit (ERC).

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