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ABGI immediately recognized how much ERC promoters were muddying the ERC waters and as a result, took a very measured approach in regard to this credit. We made the decision to only focus on our existing clients and rely on our extensive knowledge of the complex ERC rules and strict adherence to those rules. Put simply, ABGI intentionally avoided the ERC ‘payday’ by playing by the IRS rules unlike so many ERC promoters/providers.
 
The IRS Commissioner also recommended that, “Businesses should seek out a trusted tax professional who actually understands the complex ERC rules, not a promoter or marketer hustling to get a hefty contingency fee. Businesses that receive ERC payments improperly face the daunting prospect of paying those back, so we urge the utmost caution.” (IR-2023-169)
 
ABGI is that trusted tax professional. And we are here to help you.
 

Warning Signs

 
To assist businesses, the IRS has also outlined potential warning signs of incorrect Employee Retention Credit claims.
 

• Business Citing Supply Chain Issues. A supply chain disruption by itself doesn’t qualify an employer for the ERC. An employer needs to ensure that their supplier’s government order meets the requirements for the supplier’s business operations to be fully or partially suspended.
  
• Too Many Quarters Being Claimed. Some promoters urged employers to claim the ERC for all quarters that the credit was available. Qualifying for all quarters is uncommon.
• Government Orders That Don’t Qualify. Some promoters falsely told employers they can claim the ERC if any government order was in place in their area, even if their operations weren’t affected or if they chose to suspend their business operations voluntarily.
• Too Many Employees and Incorrect Calculations. Employers should be cautious about claiming the ERC for all wages paid to every employee on their payroll. Employers need to meet certain rules for wages to be considered qualified wages, depending on the tax period.
• Promoter Says There is Nothing to Lose. Businesses should be on high alert with any ERC promoter who urged them to claim the ERC because they “have nothing to lose.” Businesses that incorrectly claim the ERC risk repayment, penalties, interest, audit, and other expenses.

 
If you have made an ERC claim, ABGI is here to help with our ERC Health Check and ERC Audit Defense Program.

ERC Health Check

 
Whether you are looking for peace of mind, have concerns about the ERC claims you filed, or feel you may have been the target of an ERC promoter, our tax attorneys and tax experts can help you.
 
This starts with a comprehensive assessment of your ERC claims. This includes an analysis of both your eligibility for the credit and accuracy of the credit calculations. You will then receive a detailed evaluation of your credit claims as to how it meets or doesn’t meet the required criteria for both eligibility and calculation of the credits. It also includes recommendations regarding what documentation to make sure you retain or otherwise have available should your claim be reviewed by the IRS. After completing your ERC Health Check, we can also help guide you through the process of correcting any errors or omissions found in your credit claims. This may include amending your credit claims or withdrawing them altogether.
 
If you improperly received an ERC refund, there is a reasonable chance you could get audited. You can avoid an audit and potential penalties if you correct your mistake. However, you must act quickly, as the IRS is far more willing to show leniency if you come forward before an ERC audit occurs.
 
If you are audited by the IRS, you will need to defend your claim. Anyone who improperly claimed the ERC must pay it back along with interest and any penalties the IRS imposes. These penalties range from 20% of the incorrect credits claimed up to 75% of the claimed credits if the IRS determines the credits were claimed fraudulently – on top of full repayment of all ERC funds received.
 
A business could find itself in a much worse financial position if it must pay back the full ERC credit, plus interest and penalties, along with the time and stress that comes with an IRS audit. This underscores the importance of taking proactive steps to independently verify your eligibility to claim the credit and ensure it was accurately calculated.
 
To learn more about evaluating the viability and accuracy of your ERC claims, please contact us for an initial consultation at no cost to you.

Audit Defense Program

 
ABGI’s Tax Controversy Group is elite. And make no mistake, who represents you in front of the IRS matters tremendously. We are made up entirely of former trial lawyers with decades of tax controversy experience. Our team has handled audits in every state in the USA with historically incredible results, because unlike most tax incentive firms, we work collaboratively with the IRS versus adversarially. ABGI’s goal is to always achieve the best results as quickly as possible while working with the IRS.

 
An ERC audit is an examination carried out by the IRS to verify a company’s eligibility and compliance with the ERC rules. The IRS recently announced that it has trained 300 employees to handle ERC audits only, signifying the increasing focus on the ERC. This focus on ERC audits is designed to scrutinize companies’ ERC claims, with particular attention on accuracy and adherence to program rules. This involves a mix of random and targeted audits to ensure that both a broad spectrum of businesses and those with higher ERC audit risk are thoroughly examined.

 
Legislation recently passed by the House of Representatives would extend the deadline to audit 2020 and 2021 ERC refunds to April of 2027 and 2028, respectively. Currently, if the IRS believes your refund was issued in error, the IRS has two years from the date the refund was issued to decide whether to audit your ERC claim. However, if the IRS believes fraud was involved, it will have five years from the date the refund was issued to audit your ERC claims.

 
For ERC claims that pass our ERC Health Check we offer ERC audit defense services to help you prepare for the possibility of an audit and defend your ERC claim. Most importantly, the fees for this ERC audit defense service is entirely success based. The services provided by ABGI includes:

• Responding to information requests and other correspondence from the IRS;
• Diligently fighting on your behalf for all valid ERC claims;
• If necessary, negotiating with the IRS upon audit of an ERC claim and arguing against the application of penalties;
• Proactively advising on ERC claims not yet audited, including double-checking eligibility assessments from ERC Mills or ERC Promoters;
• Analyzing agreements with ERC Mills and ERC Promoters and consideration of mitigation remedies; and
• Evaluating alternative avenues for potentially other tax savings.

 
To learn more about evaluating the viability and accuracy of your ERC claims, please contact us for an initial consultation at no cost to you.