ERC Updates for ADP TotalSource® Clients

Pending Legislation Could Accelerate The Employee Retention Credit Deadline

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

On Wednesday, May 14, 2025, the House Ways and Means Committee passed a pending tax reform bill that includes a retroactive cutoff of the ERC program as of 01/31/2024 (excerpt below):

  RETROACTIVE ERTC 1/31/24 CUTOFF
(h) LIMITATION ON CREDIT AND REFUND OF COVID-RELATED EMPLOYEE RETENTION TAX CREDITS.—Notwithstanding section 6511 of the Internal Revenue Code of 1986 or any other provision of law, no credit or refund of any COVID-related employee retention tax credit shall be allowed or made after the date of the enactment of this Act, unless a claim for such credit or refund is filed by the taxpayer on or before January 31, 2024

We will continue to closely monitor the status of this tax bill as it progresses through the House and Senate for consideration and vote. We will work directly with our clients to help them navigate this legislation should it be adopted into law as currently drafted.

ERC: Deadline for Submissions has Passed

ADP TotalSource® is no longer accepting any new ERC claims. The final deadline for submission of 2020 claims through ADP TotalSource was November 1, 2023, and for submitting 2021 claims through ADP TotalSource was November 1, 2024.

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 we continue to further advocate for the processing of these ERC returns through Congressional visits and working directly with the National Taxpayer Advocate Service.

March 2025 - Addressing the IRS ERC Backlog:

ADP has had discussions with the IRS and with the National Taxpayer Advocate Service to stress the importance of the IRS’ continued processing of the amended returns that include ERC claims for ADP TotalSource clients. In December 2024 ADP TotalSource began another outreach effort to the National Taxpayer Advocate Service due to the occurrence of a significant slowdown in the IRS’ processing of the ERC claims. In February 2025 , ADP TotalSource, in partnership with NAPEO and other PEO companies, visited Washington, D.C. to meet with several Congressional offices. Throughout these meetings, ADP TotalSource emphasized the significant burden that has been placed on businesses that continue to wait for ERC funds. ADP TotalSource will also participate along with NAPEO and other PEO companies in additional Congressional visits scheduled to take place in May 2025 where the pending ERC claims will be discussed. On December 6, 2024, Senate Majority Leader Schumer (D-NY), House Democratic Leader Jeffries (D-NY), and ten other Democratic NY members of Congress sent a letter to IRS Commissioner Werfel regarding the ongoing Employee Retention Credit (ERC) backlog. The letter urges swift resolution of the backlog (prioritizing low risk claims and “early submissions”) and requests enhanced transparency regarding claim statuses. It also highlights the impact on businesses working with Professional Employer Organizations (PEOs):

“Additionally, many of our constituents applied for the ERC through IRS-certified Professional Employer Organizations (PEOs), which file a single consolidated ERC claim Form 941-X on behalf of dozens, if not hundreds, of small businesses. According to the National Association of Professional Employer Organizations (NAPEO): ‘As of October 26, 2024, the number of unprocessed Forms 941-X was approximately 1,200,000.’ Given that forms submitted by IRS-certified PEOs are already subject to additional layers of scrutiny to ensure accuracy and eligibility and that a single form filed by a PEO could represent hundreds of legitimate small businesses, we encourage the agency to expedite processing these claims as a low-risk step to rapidly clear the ERC backlog.”

Full content of the letter can be read here.

Additionally, the National Taxpayer Advocate1 with Taxpayer Advocate Service (TAS) recently reported that ERC is the number one most pressing problem for taxpayers.

Taxpayer Advocate Service is an independent organization within the Internal Revenue Service (IRS) tasked with making sure every taxpayer is treated fairly and understands their rights, helping taxpayers resolve problems with the IRS, and recommending changes that will prevent the problems.

Full report can be viewed here: 2024 Annual Report to Congress.

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

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 PEOs 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)2.
    • 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 have continued to take multiple actions alongside the National Association of Professional Employer Organizations (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.
    • 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 the Treasury/IRS addressing the issue and proposing potential solutions.

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

2The IRS does not endorse any particular certified professional employer organization. For more information on certified professional employer organizations, go to www.irs.gov.