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ERC Updates for ADP TotalSource® Clients

Pending Legislation Could Accelerate The Employee Retention Credits Filing Due Date

ADP TotalSource® has remained diligent in keeping you updated on information related to the Employee Retention Tax Credit (ERC) and we have important, new details to share.

On January 31, 2024, the House voted to approve The Tax Relief for American Families and Workers Act of 2024 (the Act), which, among other things, would significantly move forward the deadline for the Employee Retention Credit (ERC) claim submissions retroactively to January 31, 2024. The Act remains pending in the Senate and as of today, has not been passed into law. If the Act, or other legislation is passed which includes an ERC claim submissions deadline, it is unclear whether the deadline will be retroactive to January 31, 2024, or whether another deadline in 2024 will become applicable.

We will continue to monitor this situation closely and work directly with our clients to help them navigate this change.

As the Act is currently drafted, any ERC claim that has already been processed through ADP TotalSource and previously transmitted to the IRS, prior to January 31, 2024, will not be impacted by the new deadline.

Note:

  • The timing of the issuance of refund checks related to previously filed claims also should not be impacted.
  • If the Act is passed, it will bar new claims that are filed after Jan. 31, 2024.
  • The Act does not impact any claims filed with the IRS prior to Jan. 31, 2024.

We will continue to monitor this situation closely and work directly with our clients to help them navigate this change.

Update on Previously Submitted Claims:

We are in active communication with the IRS to resume the processing of our clients’ previously submitted ERC returns. The IRS is actively working with our team of experts to continue the processing of existing claims and expedite the processing of clients’ outstanding ERC refunds.

Addressing the Moratorium:

  • In September 2023, the Internal Revenue Service (IRS) announced the issuance of a moratorium on the processing of new Form 941-X amended returns that contain Employee Retention Tax Credit (ERC).
  • The IRS stated that they would continue to process claims filed prior to the moratorium, but at a slower rate as a result of more thorough compliance reviews.
  • As this moratorium could have significant impact to our clients that are still waiting to receive their ERC, ADP is continuing to take multiple actions to advocate on behalf of our clients.
  • At this time, the IRS is actively working with our team of experts to continue the processing of existing claims that were filed prior to September 2023. On June 20, 2024 the IRS announced that the processing moratorium would remain in place and it remains unclear when they will begin processing returns that were filed after the moratorium.

Important To Know:

  • ADP TotalSource does not provide an advance to clients on their tax credit funds. Any claims that ADP or similar providers are obligated to provide the ERC funds to you prior to receipt of funding from the IRS are inaccurate.
  • ADP is not authorized to provide loans as we are not a licensed lending institution.
  • Once the IRS processes the ADP TotalSource Form 941-X that includes your ERC refund claims, they will proceed with crediting the ADP TotalSource tax account for the refund amount payable for that tax quarter.
  • As soon as ADP TotalSource determines that it has received the ERC refund corresponding to your company account, our service team will immediately contact you.

How We’re Supporting Our Clients:

ERC Legislative Update:

On January 31, 2024, the House voted to approve The Tax Relief for American Families and Workers Act of 2024 (the Act), which, among other things, would significantly move forward the deadline for the Employee Retention Credit (ERC) claim submissions retroactively to January 31, 2024. The Act is now with the Senate for consideration and as of today, has not been passed into law.

As the Act is currently drafted, any ERC claim that has already been processed through ADP TotalSource and previously transmitted to the IRS, prior to January 31, 2024, will not be impacted by the new deadline.

We will continue to monitor this situation closely and work directly with our clients to help them navigate this change.

Addressing the Expedited Processing of Outstanding Refunds

Our continued efforts to advocate on behalf of our clients to ensure processing of existing claims and expedite the processing of clients’ outstanding ERC refunds have included:

  • Ongoing discussions with the IRS, including writing to the IRS Commissioner and ongoing direct communications with senior IRS officials to further stress the importance of promptly resuming the processing of amended returns that include ERC claims for ADP TotalSource clients.
    • ADP TotalSource was one of the first PEO’s to obtain certification from the IRS in 2017, and must continue to meet rigorous background, financial, and IRS reporting requirements to remain a Certified Professional Employer Organization (CPEO)1.
    • We believe that ADP’s long history of working with the IRS as a trusted partner and ADP TotalSource’s CPEO status clearly distinguishes us from aggressive ERC promoters and have requested that the IRS allow for the processing of the existing outstanding returns to resume and for future returns to be processed without delay.
  • We met with the National Taxpayer Advocate to request support in advocating within the IRS the importance of the IRS promptly resuming the processing of outstanding ERC claims without further delay. We have also taken multiple actions alongside the National Association of Professional Employer Organization (NAPEO) – a national organization that supports the PEO industry. These include:
    • Actively partnering with and engaging in ongoing discussions with members of the IRS, members of Congress and congressional staff to encourage the IRS to promptly resume processing of ERC claims, its impact and areas of potential resolution.
    • Working to ensure the ERC backlog, and its impact on small businesses nationwide, is raised during key congressional hearings and other public policy meetings.
    • Supporting members of Congress who have sent numerous letters to the Treasury/IRS requesting immediate attention to reduce the backlog and supporting NAPEO with its submission of a series of letters to Treasury/IRS addressing the issue and proposing potential solutions, including an October 3, 2023 letter from the House Ways and Means Committee to IRS Commissioner Daniel Werfel requesting a plan from the IRS on what is being done to address the increasing backlog of ERC claims following the September moratorium.

For more information about this matter and how ADP is supporting its clients, please reach out to your ADP TotalSource representative.

FAQs

Has the deadline to submit Employee Retention Credit (ERC) claims changed?

On January 31, 2024, the House voted to approve The Tax Relief for American Families and Workers Act of 2024 (the Act), which, among other things, would significantly move forward the deadline for the Employee Retention Credit (ERC) claim submissions retroactively to January 31, 2024. The Act is now with the Senate for consideration and as of today, has not been passed into law. If the Act, or other legislation, is passed which includes an ERC claim submissions deadline, it is unclear whether such deadline will be retroactive to January 31, 2024, or whether another deadline in 2024 will become applicable.

As the Act is currently drafted, any ERC claim that has already been processed through ADP TotalSource and previously transmitted to the IRS, prior to January 31, 2024, will not be impacted by the new deadline.

We will continue to monitor this situation closely and work directly with our clients to help them navigate this change.

Has the IRS resumed processing ADP clients’ ERC refunds?

Yes, as of December 2023, the IRS has indicated processing of our claims submitted prior to the IRS moratorium date has resumed. The IRS is actively working with our team of experts to continue the processing of existing claims that were filed prior to the IRS moratorium date and expedite the processing of clients’ outstanding ERC refunds.

When can I expect to receive my ERC refund?

Once the IRS finalizes its review of each Form 941-X that includes ERC refund claims, they will proceed with crediting the ADP TotalSource tax account for the refund amount payable for that tax quarter.

What happens when ADP receives my ERC refund?

Once ADP TotalSource determines that it has received the ERC refund corresponding to your company account, your service team will immediately contact you. Prior to ADP issuing your funds, you must submit supporting documentation corresponding to your ERC claim. To help us expedite the process of issuing your funds, please submit copies of all supporting documentation as soon as possible. ADP TotalSource will keep the supporting documentation in its records in the event of a future IRS audit.

You can find a list of the supporting documentation needed and how to submit it here. As soon as we validate that the required supporting documentation was received, the credit will be processed as follows:

  • Active ADP TotalSource clients will see the ERC refund appear on the payroll invoice with the description of “CARES Wage Retention Credit.”
  • If you have terminated your relationship with ADP TotalSource, the ERC refund will be processed as a check and sent via UPS.

If you have additional questions, please reach out to your ADP TotalSource service team at 844-448-0325 and we’d be happy to help.

Can ADP TotalSource provide a status update on my ERC refund?

While we are not able to provide a specific timeline for the IRS' processing of the ERC refunds, ADP continues to communicate with the IRS in an effort to get these returns processed as expeditiously as possible.

Can ADP TotalSource advance my ERC monies ahead of receiving the funds from the IRS?

No, ADP is not authorized to provide loans as we are not a licensed lending institution.

Will ADP TotalSource continue to accept and process ERC claims related to the 2021 taxable year?

Yes, ADP TotalSource will continue to accept and process any ERC claims related to the 2021 taxable year while the current statutory deadline of April 15, 2025, remains applicable. Prior to contacting us to file any ERC claims on your behalf, we encourage you to carefully consider any potential claim in relation to the applicable IRS guidance and to consult with a tax professional. Taxpayers who improperly claim ERC may be required to reimburse the IRS not only the erroneously claimed ERC amount, but additional tax liabilities and penalties. Criminal penalties may also apply if the IRS determines that ERC has been improperly claimed.

 

1The IRS does not endorse any particular certified professional employer organization. For more information on certified professional employer organizations, go to www.irs.gov.