Yes, the IRS is still processing Employee Retention Credit refunds, but the queue is deep and moving slowly. The moratorium the agency imposed on new ERC claim processing in September 2023 has been lifted, and claims are being worked through a risk-based scoring model rather than in the order they were filed. As of early April 2025, more than 597,000 claims were still sitting in inventory, and roughly 84,000 partial or full disallowance letters had gone out.1Taxpayer Advocate Service. The ERC Claim Period Has Closed If you filed an amended Form 941-X in 2023 or 2024 and have heard nothing, you are not alone.
Where ERC Processing Stands Now
The credit began under Section 2301 of the CARES Act for wages paid from March 13, 2020, through December 31, 2020,2Internal Revenue Service. Notice 2021-20 – Guidance on the Employee Retention Credit Under Section 2301 of the CARES Act and was later extended through 26 U.S.C. ยง 3134 for the third and fourth quarters of 2021.3Office of the Law Revision Counsel. 26 US Code 3134 – Employee Retention Credit for Employers Subject to Closure Due to COVID-19 Because businesses claimed it retroactively on amended payroll returns, the IRS received a volume of filings it was never staffed to handle.
On September 14, 2023, the agency issued IR-2023-169 and paused processing of new claims while it built analytics to separate legitimate filings from the wave of promoter-driven ones. By late 2024, the IRS had worked through roughly 400,000 claims or had them staged for processing, including about 28,000 disallowances and 50,000 approvals it had begun paying.4Taxpayer Advocate Service. Annual Report to Congress 2024 – Most Serious Problem 1 Employee Retention Credit Hundreds of thousands remained untouched. The National Taxpayer Advocate urged the IRS to commit to finishing the entire inventory by the end of 2025.1Taxpayer Advocate Service. The ERC Claim Period Has Closed Whether it did is unclear, and the trajectory points to many claims still being resolved into 2026.
Why Some Claims Move and Others Don’t
The IRS is not working through the inventory first-in, first-out. Every claim runs through an automated risk-scoring model that assigns it to one of three tiers.
- Low-risk claims, where the numbers reconcile cleanly with prior income tax and payroll filings, are moving fastest. These went into the approval queue first after the moratorium lifted.
- Moderate-risk claims sit in a holding pattern. Minor discrepancies, missing documentation, or a revenue-decline calculation the agency can’t immediately verify will land a filing here, and silence can stretch for many months.
- High-risk claims are routed to compliance for manual audit. Suspicious payroll figures, entities that appear not to have operated during the pandemic, and patterns tied to aggressive promoters all flag a claim into this tier.
The IRS has not published the scoring criteria. One trigger it has confirmed is overlap between wages counted for ERC and wages counted for Paycheck Protection Program loan forgiveness. Federal rules prohibit double-counting the same payroll dollars, and a 941-X that overlaps a forgiven PPP period draws extra scrutiny.5Internal Revenue Service. Revenue Procedure 2021-33
How to Check the Status of Your Claim
The IRS does not offer a dedicated online tracker for ERC filings. Before you make any inquiry, pull together three items: your Employer Identification Number exactly as it appears on your original Form 941, the specific quarters you amended, and the exact refundable and nonrefundable credit amounts you claimed for each quarter. Each quarter is tracked separately, so one may be approved while another is under review.6Internal Revenue Service. Instructions for Form 941-X IRS representatives use the claimed amount as a verification step and will end the call if the numbers don’t match.
Pulling a Tax Account Transcript
A tax account transcript is the most informative status tool available to you. It lists every transaction code the IRS has posted for a given tax period. You can request one through the IRS online account system, by calling 800-908-9946, or by submitting Form 4506-T.7Internal Revenue Service. About Form 4506-T, Request for Transcript of Tax Return
Two codes matter most. Transaction Code 810 is a refund freeze, usually placed because compliance flagged the return for further review.8Internal Revenue Service. IRM 21.5.6 Freeze Codes If TC 810 is on your account, the claim is not moving until the freeze is lifted. Transaction Code 811 reverses the freeze and, if nothing else is holding the account, lets the refund proceed.9Internal Revenue Service. Section 8A Master File Codes A transcript that shows a refund amount but no issuance date usually means the payment is queued at Treasury for disbursement.
Calling the IRS
The main line for ERC inquiries is the Business and Specialty Tax Line at 800-829-4933, Monday through Friday, 7 a.m. to 7 p.m. local time.10Internal Revenue Service. Telephone Assistance Contacts for Business Customers Choose the employment tax options. Wait times are long. Once you reach an agent and clear security, they can tell you whether the claim is pending, under audit, or denied, though the level of detail varies.
Escalating Through the Taxpayer Advocate Service
If the delay is causing genuine financial hardship, such as missed payroll or the threat of losing your business location, the Taxpayer Advocate Service can sometimes push a case forward. File Form 911 to request assistance.11Taxpayer Advocate Service. Submit a Request for Assistance According to the most recent data available, the IRS had processed about 64% of ERC claims routed through TAS, better than the overall rate but not a guarantee.1Taxpayer Advocate Service. The ERC Claim Period Has Closed
Interest Owed on the Delay
When a refund is finally approved, the IRS owes interest on the overpayment from the date it was due through the date it’s paid. The rate for non-corporate overpayments was 7% for the first quarter of 2026, compounded daily.12Internal Revenue Service. Quarterly Interest Rates The rate resets each quarter based on the federal short-term rate.13Internal Revenue Service. Interest For a claim that has been pending since 2023, the interest can be significant. Note that interest on a refund is taxable income in the year you receive it. Approval also does not mean the money is on its way that week; Treasury handles the actual disbursement, which adds several weeks, and most ERC refunds arrive by paper check.
A Hard Cutoff for Late 2021 Claims
One boundary matters here even though it isn’t about processing speed. If you filed an ERC claim for the third or fourth quarter of 2021 after January 31, 2024, the money is almost certainly gone. Section 70605(d) of the One, Big, Beautiful Bill, effective July 4, 2025, bars the IRS from allowing or refunding those late-filed claims regardless of whether the business would otherwise have qualified.14Internal Revenue Service. IRS FAQs Address Employee Retention Credits Under ERC Compliance Provisions of the One Big Beautiful Bill Claims for 2020 quarters and the first two quarters of 2021 aren’t affected by that provision, though the ordinary statute of limitations for amending those returns has generally closed.
Plan for the Tax Bill Before the Check Arrives
Many businesses treat an incoming ERC refund as a windfall and get an unpleasant surprise the following spring. Federal law requires you to reduce your wage deduction on your income tax return by the amount of ERC you claim.15Office of the Law Revision Counsel. 26 US Code 280C – Certain Expenses for Which Credits Are Allowable Claim $200,000 in ERC and your deductible wages drop by $200,000 for the same period, which raises your taxable income.
If you already filed the income tax return without making that adjustment, the IRS has said you can either amend the income tax return for the year the wages were paid, or include the overstated wage amount as gross income on the return for the year you receive the ERC refund.16Internal Revenue Service. Frequently Asked Questions About the Employee Retention Credit Either way, tax is owed. Set aside a portion of any incoming refund for that liability rather than spending the full amount.
If Your Claim Is Denied
Roughly 84,000 disallowance letters have gone out so far, and the number will grow as the IRS moves through the remaining inventory.1Taxpayer Advocate Service. The ERC Claim Period Has Closed A denial letter states the specific reason and explains your appeal rights.
You generally have 30 days from the date on the letter to file a written protest with the IRS Independent Office of Appeals. The protest goes to the IRS address printed on the denial letter, not directly to Appeals.17Internal Revenue Service. Preparing a Request for Appeals The examination team that issued the denial reviews the protest first and can sometimes resolve the issue before it reaches Appeals. Missing that 30-day window narrows your options considerably but doesn’t close them entirely.
If Appeals cannot resolve the case, you can file a refund suit in federal district court or the U.S. Court of Federal Claims. You have two years from the date the IRS mails a formal notice of disallowance to bring that suit, and you cannot sue until at least six months after the claim was filed unless the IRS acts first.18Office of the Law Revision Counsel. 26 US Code 6532 – Periods of Limitation on Suits Refund litigation is expensive and slow, and most businesses should work the administrative appeal fully before considering it.