WASHINGTON – US Sen. Mark R. Warner (D-VA) IRS Commissioner Danny Werfel to expedite the processing of the backlog of Employee Retention Tax Credit (ERTC) claims. Commissioner Werfel stated that the IRS currently processes 20,000 ERTC claims per week, but after further questioning by Sen. Warner, committed to doubling the rate to 40,000 per week, with priority given to the oldest claims.
The ERTC was created in response to COVID-19 to incentivize employers to keep their employees on the payroll and out of work during the height of the pandemic. Small businesses in Virginia have kept promises to keep their workers, but years later, due to IRS processing delays, many are still waiting to receive the tax credits they need.
Sen. Warner has repeatedly raised this issue with the IRS, and now in a Senate Finance Committee hearing, he is pressuring Commissioner Werfel to commit to doubling the rate at which these credits are processed:
Sen. Warner asked, “I want to drill down on two issues… The first is, and this is the call we had in late March, the Employee Retention Tax Credit (ERTC). And one of the things that we put in during the COVID period, again, is a bipartisan piece of legislation, which I think is well-intended to make sure that employers keep people during the COVID period instead of put them out of work. As I shared with you, you know, there are a lot of businesses in Virginia, and I think that’s probably the case in other states as well, where there’s a backlog. They can’t get an explanation. They don’t get these tax credits, which I think they deserve. And because these are the businesses that are doing, from a policy point of view, what I think we all do the right thing by keeping people working at that time. Can you update us on the overall backlog of the ERTC and where we stand?
Commissioner Werfel explained the factors that make it difficult to process ERTC claims, then said, “The action is that now that the filing season is over, we now expect fewer calls to come in, because most people have submitted their taxes. And we can redeploy people from phones and reset them so we can handle the paper. Now, before this move to move people off the phones, we were solving about 20,000 of these Employee Retention Credits a week and using overtime and any downtime where the phones aren’t out, prompts people to do this. As with 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 double every week the refund amount of the credits we process. That’s the action we took. And especially, I want to make sure and I talked to the team about making sure that we go with the elderly first, as those who have been waiting the longest. So, you know, really focus on whether it was received in 2022 or before 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 will improve.”
Sen. Warner said, “That’s a good answer, and I also take the fact that you double every week… How much of the backlog is taken care of every week at this point?”
Commissioner Werfel responded, “20,000 a week.”
Strengthened by Sen. Warner answered and asked, “So we can watch 40,000 a week.”
Commissioner Werfel responded, “That’s the hope.”
Sen. Warner, “You just said it on the record, so I’ll get back to you!”
Separately, Sen. Commissioner Werfel warned today’s hearing to maximize knowledge of tax benefits done by his bipartisan Employer Participation in Repayment Act, which allows employers to contribute up to $5,250 tax-free toward their employees’ student loans. The credit was extended until 2025 and is now available to help owners retain talent while borrowers pay off their debt.
While asking Commissioner Werfel, Sen. Warner said, “You know, Section 127 of the code has something that’s been bipartisan again, supported for years, that basically, as you know, allows an employer to go ahead and send a employee back to school to get additional education. And that additional education is up to $5,250 a year employee tax-free, great retention tools, great ability to get additional skills. One of the things and the my friend John Thune and I put together a bill that got broad bipartisan support… that said… can’t we also allow employees with student loan debt to continue to qualify and… pay that $5,250 a year , tax-free. We put it in for a year. It’s extended until 2025. It seems like a no-brainer. The take-up rate is not good. What can we do to help further development? And this is an area where , no matter how we feel about student debt, you know, all kinds of everything, and it’s a great tool to keep going.
Sen. Warner has consistently pushed for faster processing of outstanding ERTC claims, including during a direct call to Commissioner Werfel in March, and has supported law to expand the program. He is also a tireless advocate to improve IRS customer service and speed up return times. Sen. Warner strongly supported the Inflation Reduction Act — legislation that provides funding to reform IRS systems and improve customer service when paying taxes. This will help ensure the IRS has the resources it needs to process tax returns quickly, get rebates to taxpayers faster, and address the challenges Virginians have when filing taxes . These investments have increased IRS response rates this tax season from answering two out of every 10 calls to answering nine out of every 10 calls.
In addition, Sen. Warner calls on the IRS to address pandemic-related processing delays over the years. Sen. Warner first raised concerns about IRS backlogs in February 2021, while millions of Americans are waiting for delayed stimulus payments and processing of their tax returns. In January 2022, when the tax filing season opens, Sen. Warner again called of Treasury Secretary Janet Yellen and then-Commissioner Rettig to quickly address reports of unprocessed tax returns for the 2020 filing period. Later that month, Sen. Warner called to the IRS to provide relief for taxpayers amid backlogs – a request he repeated in a bipartisan and bicameral March letter.
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