ERC Updates for
ADP TotalSource^® Clients

Submitted ERC Claims:

We are in active communication with the IRS regarding the processing of our clients’ pending ERC returns. In addition, as outlined below, this remains an active topic with the Internal Revenue Service (IRS), managed both directly with ADP and in partnership with The National Association of Professional Employer Organizations (NAPEO). We continue to further advocate for the processing of these ERC returns while working directly with the National Taxpayer Advocate Service.

Addressing the IRS ERC Backlog:

On March 24, 2026, during a meeting with NAPEO, the IRS clarified that approximately 185 PEOs’ claims, representing roughly 950 quarters, have not yet been processed. These claims are part of a much broader inventory of 41,000 outstanding ERC claims. The IRS also stated that it recently added 20-30 additional examiners, effectively doubling the workforce dedicated to processing ERC claims, and indicated processing activity is expected to accelerate. We will continue to work closely with the IRS, Taxpayer Advocate Service, and NAPEO.

Additionally, the ERC backlog was referenced during the testimony of IRS CEO, Frank Bisignano, before the House Ways and Means Committee in early March 2026. Representative Kevin Hern (Okla.) flagged ongoing concerns about ERC processing delays and its impact on claimants. In response to this testimony, NAPEO’s President and CEO issued the following statement.

In January 2026, the National Taxpayer Advocate¹  issued the Annual Report to Congress. The Report cited Amended Returns as the #1 Most Serious Problem Encountered by Taxpayers, with the ERC claimed on 941-X filings contributing to the processing timeline and filing backlog.

Full report can be viewed here: https://www.taxpayeradvocate.irs.gov/reports/2025-annual-report-to-congress/full-report/

Changes to the Employee Retention Credit

A major tax bill was passed by Congress on July 3, 2025, and signed into law on July 4, 2025—commonly referred to as the “One Big Beautiful Bill” (referred to here as the “Act”)—which includes a provision that retroactively ends the ERC program for claims filed after January 31, 2024, that are related to Q3 2021 and Q4 2021.

While Q3 and Q4 2021 claims filed after that date will not be processed, claims from those quarters that were filed before January 31, 2024, are unaffected by the Act. Claims related to prior quarters are also unaffected by the Act.

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.
• ADP TotalSource will also return to your business all IRS calculated interest for your ERC claim.
• As soon as ADP TotalSource determines that it has received the ERC refund corresponding to your claim, our service team will contact you.

How We Have Been Supporting Our Clients:
Addressing the Expedited Processing of Outstanding Refunds

We continue our efforts with ongoing discussions with the IRS, engagement with an assigned Taxpayer Advocate, and partnership with NAPEO to advocate on behalf of our clients, to ensure processing of existing claims and expedite the processing of clients’ outstanding ERC refunds. 

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

FAQs

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 claim, we will initiate the process to distribute the funds to 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 a 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.

¹Among their list of responsibilities, the National Taxpayer Advocate is required by Congress to develop both administrative and legislative proposals that mitigate taxpayer problems.
https://www.taxpayeradvocate.irs.gov/wp-content/uploads/2020/08/tas03obj.pdf