Understanding State and Federal Payroll Tax Refunds

When a tax payment cannot be submitted or a tax adjustment is made after reconciliation, a refund may be issued to your business bank account. This article explains the scenarios that trigger refunds, how state and federal processes differ, and the steps to take if you have not received a credit. It is the employer’s responsibility to ensure all tax details are accurate to avoid filing failures.

Things to Know

• State tax payments fail if required information, such as a Tax ID, is missing or invalid.
• Federal tax refunds are not processed through 7shifts or Check; the IRS holds these funds in an unallocated account.
• Refunds are issued only after a full quarterly reconciliation is completed.
• Refiling a failed tax return through 7shifts Support incurs additional service fees.

Refund Scenarios and Requirements

The system triggers a refund under specific conditions related to filing errors or post-reconciliation adjustments.

State Tax Refunds

A refund is issued to your company if state payments cannot be filed due to missing information (e.g., Tax ID) or if a tax adjustment/overpayment is detected after the quarterly reconciliation. 7shifts Support can refile these for you upon request, though fees apply.

Federal Tax Refunds

Federal payments are remitted on a semiweekly schedule. If a federal payment fails, the funds are not returned automatically. The IRS holds the funds in an unallocated account until the employer contacts them directly to reassign the payment.

Tax Responsibility Comparison

The table below outlines the differences in management, funding purposes, and critical quarterly deadlines for Federal and State tax obligations.

Refund Processing Timeline

Refunds are not processed immediately because Check Technologies must first verify that all liabilities and filings for the quarter are reconciled and that no additional adjustments are pending. This delay allows employers time to request a refile before funds are returned.

Quarterly Refund Schedule

• Q1: Processed by May 15
• Q2: Processed by August 15
• Q3: Processed by November 15
• Q4: Processed by February 15 (following year)

Steps to Resolve a Missing Refund

If you have not received a refund by the dates listed in the processing timeline, follow these steps to investigate the status.

1. Confirm that your Tax IDs and Third Party Access (TPA) are currently active and accurate.
2. Search your bank statements for credits issued by "Check" or "7shifts."
3. Review your Reconciliation Recap Report to find specific refund references.
4. If the credit is still missing, contact 7shifts Support with a screenshot of the transaction and the associated bank code.

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