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Sen. Gillibrand Demands IRS Action on Outstanding ERC Claims

S.J. Steinhardt
Published Date:
May 8, 2023

Almost one million New York businesses are still owed an employee retention credit (ERC) for keeping workers on staff during the first two years of the pandemic, and Sen. Kirsten Gillibrand (D-N.Y.) has asked IRS Commissioner Daniel Werfel to work more quickly through the agency's backlog, The Watertown Daily Times reported.  

The ERC is a refundable tax credit for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020 to Dec. 31, 2021, according to the IRS. Eligible employers can claim the ERC on an original or adjusted employment tax return for a period within those dates.

“At the height of the pandemic, thousands of small businesses did the right thing and kept their employees on payroll,” the Times reported Gillibrand saying at a virtual press conference. “They were promised reimbursement, but years after the fact, they still haven’t received it. I am calling on the IRS to speed up its processing to fix this problem as soon as possible and get our hard-working small business owners the refunds they deserve.”

“I have continued to hear from New York businesses that have yet to receive their tax refunds for claims filed during the 2021 and 2022 tax seasons,” Gillibrand wrote in a May 4 letter to Werfel.  “As I stated in my prior letter to then-Commissioner Rettig on January 26, 2022, I understand that the backlog is caused in part because the 941-X form—which some taxpayers must file in order to claim this refund after overpaying estimated payroll taxes—must be submitted manually rather than electronically. I also recognize that chronic underfunding has left the IRS understaffed and reliant on outdated technology.”

She asked Werfel to provide state-by-state numbers of ERC backlogs, the agency’s plans for electronic filing of Form 941-X, and its progress in resolving the unprocessed ERC claims.

There is no available data on the value of the refunds owed to the businesses, but the ERC offered employers up to $21,000 per employee per year, covering up to 70 percent of qualifying wages, the Times reported.

The IRS has issued multiple warnings about third parties aggressively promoting fraudulent ERC schemes on radio and online.


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