Justworks Advocacy: Employee Retention Tax Credit (ERTC) Delays

Imagine you're a small business owner weathering the storm of the pandemic, trying to keep your team together against all odds. The Employee Retention Tax Credit (ERTC) was designed to support just that.

So, after learning about the program, you do your part. You step up and keep your people on payroll during an uncertain time—expecting to receive the ERTC funds you filed for timely. Quarter after quarter, you run your business budgeting to get tens of thousands of dollars (or more) in credits to bolster your operations, rebuild your reserves, and continue to retain your employees long-term.

The reality, however, has been different. Amid an influx of fraudulent claims, the IRS issued a moratorium on ERTC processing in 2023. While the agency’s intent was to protect taxpayer resources from bad actors, this abrupt move left you—and countless other legitimate small businesses—on the hook as well.

Now, with the moratorium lifted, persistent delays in processing the backlog of legitimate claims are threatening the small business recovery. While some companies have admirably reached deep to keep their teams together, many more have had to cut back on investments in growth. Others, including some of our own customers, have just now had to make their first layoffs—despite keeping their teams intact all through the pandemic. It becomes clearer by the day: ERTC’s legacy is at stake.

What’s at Stake

Over the past three years, Justworks has helped thousands of eligible small businesses on our platform file ERTC claims with the IRS. While we’ve seen close to $300 million in ERTC relief disbursed successfully, we have nearly 1,000 customers still awaiting funds totaling about $145 million. On average, each of these small businesses employs 12 people and is owed approximately $159,000. 

To put the impact of these delays into perspective, consider that 58% of small businesses launch with less than $25,000. Now imagine the impact of $159,000 that you budgeted for never showing up—with no timeline for when you might receive it. As if it wasn’t hard enough to run a small business!

Advocating for Our Customers

The Justworks team recently traveled to Washington, D.C., with seven of our customers in this exact situation, to meet with staff from eight different Congressional offices. In these meetings, our customers took center stage and shared their stories, emphasizing how the continued delays in receiving the ERTC funds owed to them were impacting their ability to plan for the future, survive, and compete. 

Fortunately, we found many lawmakers receptive to our cause. Their staff were well-versed in the ERTC program—in part thanks to the National Association of Professional Employer Organizations’ (NAPEO) engagement on this issue. To summarize our meetings on Capitol Hill: we proposed that actions to root out fraud, waste, and abuse within the ERTC program shouldn’t be in conflict with distinguishing and expediting legitimate claims. We also made clear that our goal was not to seek additional funds or extensions but to ensure that all small businesses receive what they are rightfully owed.

We're now working closely with some of these legislators' staff to:    

• Ensure the IRS processes the remaining ERTC claims for Justworks customers. Every day, we see the tough decisions people have to make without access to these funds.

• Support transparency and communication. All small businesses deserve to know the status of the ERTC program and a clear IRS timeline for processing claims so they can make informed decisions and plan for the future. 

Just recently, the IRS announced that it is accelerating work on ERTC claims. It is currently processing 400,000 backlogged claims worth about $10 billion.

What’s Next

To our customers still awaiting what’s owed to them under the ERTC program, we remain committed to advocating on your behalf, providing updates, and supporting you however we can. It's a source of great pride for Justworks to be in a position to help make sure your voices are heard in Washington, D.C., and we’re optimistic about the impact of our recent meetings and the path ahead. 

It would be a shame to see a hugely impactful COVID-era program like ERTC hamstring honorable small businesses by not delivering what it promised in its final phase. Its legacy doesn’t have to end this way—and we will do everything in our power to make sure it doesn’t.