Employee Retention Credit (ERC) Examinations Surge

The Internal Revenue Service has intensified its examination efforts related to Employee Retention Credit (ERC) filings, subjecting claims across the spectrum to heightened review and analysis.

Current statistics reveal examination letters are being issued at record levels. The IRS is scrutinizing issues ranging from overall analysis of whether the business qualifies for ERC to whether the business has the underlying records to substantiate each element of their ERC claims. Numerous businesses that pursued the credit legitimately years ago are now dealing with the unpleasant reality that they have to participate in an IRS examination.

Critical Recommendations for Businesses:

Compile and Organize Your Records: Compile complete wage documentation, financial statements, and materials validating your qualification criteria. The IRS may ask for proof that your revenue decreased, that your number of workers was within applicable limits, or that your business was partially or wholly suspended.

Verify Your Computations: Confirm your credit determinations are precise and adequately substantiated.

Meet Deadlines: IRS examination correspondence contains inflexible time limits. Failing to respond timely may trigger immediate tax determinations and relinquishment of pre-litigation avenues to justify the claim.

Seek Professional Guidance: ERC audits involve intricate legal and factual challenges that can ensnare even seasoned businesses.

Considering the substantial financial exposure and procedural intricacies of ERC audits, business owners should seriously evaluate retaining qualified and experienced representation. A skilled advocate can manage the examination proceedings efficiently, safeguard your interests, and possibly reduce unfavorable results.

If you have any questions about ERC issues or any other civil or criminal tax matters, please contact me at jglassman@meadowscollier.com or 214-749-2417.