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NAPEO Intensifies Campaign to Clear IRS Backlog Harming Small Businesses

| 3/17/2023

March 17, 2022, Alexandria, VA – The National Association of Professional Employer Organizations (NAPEO) has intensified its campaign to clear the IRS’ growing tax credit backlog, warning Congress the inaction threatens small and mid-sized businesses across the country.

NAPEO’s grassroots effort urges Congress to push the IRS to process hundreds of thousands of Employee Retention Credit (ERTC) applications from small and mid-sized businesses, many of whom have been waiting years to receive these funds that are critical to their survival.

A stagnation in processing applications for millions of dollars earmarked for small businesses has developed at the IRS. What began as a moderate accumulation last year has now ballooned to nearly 750,000 outstanding claims - a 455% increase since August. 

NAPEO and its members have sent more than 700 letters to members of Congress, including leaders of the House and Senate Small Business committees, highlighting the problems caused by the delay in processing ERTC applications. In addition, small and mid-sized businesses have sent scores of letters to federal lawmakers.

“This administrative logjam is avoidable, unacceptable, and downright cruel to small and mid-sized businesses,” said NAPEO President and CEO Pat Cleary. “These funds are the difference between life or death for many of these companies. It is not an issue for the IRS or Congress to take lightly.” 

Dozens of companies across a number of vital industries including construction and technology have warned of employee layoffs, additional loans, and closure should these funds not arrive.

“We have exceeded all of our borrowing amounts,” a Utah-based energy company told lawmakers. “Within weeks we will have to close the doors.”

A Wisconsin-based software firm has waited more than 14 months for its claims to be reviewed.

“As a result, we are struggling to meet our financial obligations and maintain our workforce,” the company said.

Without the ERTC funds, a sales and marketing firm cautioned they are “on the brink of losing our company and laying off our remaining employees.”

A sampling of 15% of NAPEO members found that 13,631 small business PEO clients are waiting for the IRS to approve roughly $3 billion worth of ERTC credits. Some companies have waited more than two years for that needed money to arrive.

“We have many small businesses that are counting on these funds to pay their employees and recover from the COVID-19 pandemic, " one PEO company told Congress. “The delay in payment is affecting our relationship with them as well.”

PEOs provide payroll, benefits, and other HR services to hundreds of thousands of primarily small and mid-size businesses employing 4 million people. Through a PEO, the employees of small businesses gain access to employee benefits such as 401(k) plans; health, dental, life, and other insurance; dependent care; and other benefits typically provided by large companies. More than 15 percent of all employers with 10 to 99 employees partner with a PEO.



The National Association of Professional Employer Organizations (NAPEO) is The Voice of the PEO IndustryTM. NAPEO’s 250 PEO members provide payroll, benefits, workers’ comp, regulatory compliance assistance, and other HR services to more than 173,000 small and mid-size businesses employing 4 million people. Our members account for more than 90 percent of the industry’s $254 billion in revenue. An additional 250 companies that provide services to PEOs are associate members of NAPEO. For more information, please visit

Media Contact

Kerry Carruthers