ERC Refund Delays and Denials: What Florida Small Businesses Should Know
The Employee Retention Credit (ERC) provided critical financial support for businesses affected by the COVID-19 disruptions. While many employers have received their refunds, others are still waiting as the IRS continues reviewing their claims. As of July 2026, the IRS reported approximately 20,000 remaining ERC claims in various stages of processing, review, appeals, or litigation. If you are a small business counting on these funds, delays and denials can create significant financial pressure. In this article, we explain the reasons behind these issues and what options are available.
Why Are ERC Refunds Taking So Long?
Many Florida businesses expected ERC refunds to provide financial relief after meeting the program’s eligibility requirements. However, there have been significant delays in processing claims. Some of the reasons include:
- Increased Fraud Prevention Reviews: The IRS attributes the delays to increased scrutiny to identify fraudulent or inaccurate ERC claims.
- IRS Resource Limitations: Limited resources have also contributed to ERC processing delays. For small businesses, this means uncertainty about when expected funds will arrive and difficulty making business decisions.
- Refund Theft Issues: Some businesses have also experienced refund theft, where expected ERC payments are intercepted or improperly received by another party. Resolving these issues can create additional delays because businesses must navigate the IRS process to address them and request replacement funds.
What Florida Businesses Can Do While Waiting
While you wait for your business to receive ERC funds, here are the steps you should consider taking
Keep Detailed Records
Maintain organized documentation supporting your business’s ERC claims. Important records may include:
- Payroll records
- Health insurance expense records
- Quarterly payroll tax filings
- Financial statements
- Evidence supporting eligibility calculations
Having these records can help your business respond quickly if the IRS requests additional information
Review Denial Letters Carefully
If the IRS denies your ERC claim, you should carefully examine the reason for the denial. Some denials may be due to eligibility, documentation, wage calculations, or other issues.
Monitor Your Claim Status
Stay informed about your claim status and respond properly to IRS communications. Ignoring notices or missing deadlines can create additional complications.
Should Your Business Consider ERC Litigation?
While waiting for the IRS review process may be reasonable for some businesses, for others, especially if you are a small business banking on ERC funds for your operations, pursuing legal action may be worth considering.
Some factors that may influence litigation include:
- How urgently the business needs the funds
- Whether the business has other sources of capital
- The strength of the ERC claim
A business litigation attorney can review your claim, evaluate available options, gather supporting evidence, and determine whether filing a lawsuit is the right move.
Documents Needed for ERC Litigation
If you are considering ERC litigation, you should gather documentation supporting your eligibility and communication with the IRS.
Common documents you may need include:
- Payroll records, including payroll registers, W-2 forms, and Forms 941
- IRS notices, denial letters, and correspondence
- Employee and contractor agreements
- Records showing qualified wages and business impact related to COVID-19
Note that this list is not exhaustive. The exact documents needed will depend on the circumstances of your claim.
Contact Us Today for Legal Help
If your ERC claim has been delayed, denied, or placed under review, contact our Miami Business litigation lawyer at Valero Law today by calling 305-607-7011 as soon as possible. We serve clients in Davie, Broward County, Coconut Grove, and Miami-Dade County.
Source:
irs.gov/coronavirus/employee-retention-credit
