IRS to double rate of processing tax credits, reimburse Virginia small businesses

IRS Commissioner Danny Werfel has committed to doubling the rate of processing Employee Retention Tax Credit (ERTC) claims.

Werfel, who took office as the 50^th commissioner on March 9, said that the IRS currently processes 20,000 ERTC claims per week, but will commit to 40,000, with the oldest claims as priority.

The commitment came after U.S. Sen. Mark R. Warner of Virginia pushed Werfel accelerate the process and catch up on a backlog of ERTC claims. Processing the claims will help Virginia businesses get money owed to them by the IRS.

The ERTC was created to incentivize employers to keep employees on their payrolls and off unemployment during the height of the COVID-19 pandemic. Small businesses in Virginia kept their promises, but years have passed and the IRS keeps them waiting to get their money.

In a Senate Finance Committee hearing today, Warner raised the issue again with the IRS and pressed Werfel to commit to doubling the rate.

“As I shared with you, you know, there are a number of businesses in Virginia, and I imagine this is probably the case in other states as well, where there’s been a backlog. They can’t get clarity. They’re not getting these tax credits, which I think they did deserve. And since these are businesses that did, from a policy standpoint, what I think we all thought was the right thing by keeping folks employed during that period,” Warner said during the hearing.

Werfel said that the tax filing season has ended, so the IRS can redeploy staff off the phones and to managing claims.

“Like every resource, it’s an all-hands-on-deck situation post this filing season. Now that we can reset the staff, I think we can maybe double per week the amount of refund of credits that we’re processing. So that’s the action that we’re taking. And in particular, I want to make sure and I’ve talked to the team about making sure that we go with the older ones first, like those that have been waiting the longest. So, you know, really focus on if it was received in 2022 or prior because they’re still coming in, and under the law they can come in until 2025. So this is a filing that we’re going to be dealing with for years, but I think we’re going to make progress,” Werfel said.