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ERC Audit: Navigating IRS Scrutiny with Expert Legal Help

 

Facing an Employee Retention Credit (ERC) audit? Don’t panic. The IRS closely examines these claims, but understanding the process and having the right legal support can make all the difference. 

Given the complexity and high stakes involved, professional guidance is crucial for navigating the audit and achieving a favorable outcome.

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Why Choose Silver Tax Group?

When facing an ERC audit, you need a team that combines expertise, experience, and a proven track record. Silver Tax Group stands out as your ideal partner. Our specialized knowledge in ERC regulations and IRS audit procedures has helped clients save over $100,000,000 from IRS-targeted tax debts.

Led by award-winning Attorney Chad Silver, our nationwide team acts swiftly to develop targeted strategies for efficient case resolution. With 24/7 availability for free consultations, we’re ready to protect your interests and navigate the complexities of your ERC audit. Don’t risk your business – contact Silver Tax Group for proven expertise.

What Our Clients Are Saying

Google Review

What a pleasure and joy it was working with Chad and his team. Not only did treat me like family. But they made a normally miserable process not feel like that.

Mike Huskisson

5/5

Yelp Review

Couldn't have been more happy with Chad and crew at Silver Tax Group. We were in a very tight tax bind that I won't get into here for obvious reasons and these guys saved us. After having one terrible tax experience after another, year after year, it was a God-send to find these guys. I'm glad we ignored the poor reviews on here .. most of the people anyway who seem to have reviewed them poorly don't seem to be active reviewers. Anyway, couldn't recommend these guys higher.

Nick M.

5/5

FindLaw Review

Facing a tax audit is never easy. Silver Tax Group provided exceptional audit defense. Attorney Dennis Kents meticulous approach and deep knowledge of tax law were impressive. Korey and the teams unwavering support helped me feel secure throughout the process. Their expertise and dedication resulted in a favorable outcome for my case.

Anonymous

5/5

What Triggers an ERC Audit?

The Internal Revenue Service (IRS) has been increasing its scrutiny of Employee Retention Credit (ERC) claims, leading to a rise in audits. Understanding what prompts these audits is crucial for businesses that have claimed or are considering claiming the ERC. 

In some cases, a delayed ERC claim might indicate discrepancies or inconsistencies that attract IRS attention. By being aware of these triggers, you can take steps to ensure your claim is accurate and well-documented, reducing the risk of an audit or preparing you to respond effectively if one occurs.

Conducting an ERC risk assessment can be a valuable step in this process. Let’s explore the main factors that can lead to an ERC audit:

Unfiled tax return help.

Large Claims

When a business submits an Employee Retention Credit (ERC) claim with a particularly high dollar value, it can raise a red flag for the IRS. Larger ERC refund claims often undergo more rigorous scrutiny as they represent a greater potential financial risk to the government. The IRS tends to prioritize these high-value claims for audits to ensure accuracy and prevent potential fraud or overstatements.

Inconsistencies

The IRS compares ERC claims with other tax filings, such as payroll tax returns, income statements, and other financial documents. If there are discrepancies, such as differences in reported wages, employee counts, or revenue declines, the IRS is likely to flag the claim for further investigation. Accurate and consistent reporting is essential to avoid triggering an audit.

Industry Targeting

The IRS is paying closer attention to specific industries that are more likely to have filed ERC claims, particularly those hardest hit by the pandemic, such as hospitality, retail, and healthcare. These sectors may have experienced significant financial disruptions, making them eligible for substantial ERC benefits, but they are also being closely watched for compliance issues to ensure the claims are legitimate.

Third-Party Preparers

Businesses that relied on third-party companies, often referred to as "ERC mills", to prepare and submit their ERC claims may face additional scrutiny. Some of these third-party preparers have been known to inflate claims or file for credits without fully understanding the qualifications. As a result, the IRS is focusing heavily on claims filed by such firms to ensure compliance, potentially leading to audits for businesses that used their services.

Responding to an ERC Audit

If you’ve received Letter 6612, you’re under audit. Here’s what you need to know:

30-Day Window

Once you receive Letter 6612, you have 30 days to respond. Failing to act quickly could lead to penalties or a disallowed claim.

Document Gathering

Gather payroll records, tax filings, and any documentation proving your ERC eligibility. Accurate and detailed records are essential for a successful audit defense.

Professional Help

ERC audits can be complex. A lawyer or tax professional can help ensure proper documentation and provide guidance to protect your claim during the audit.

Why an ERC Lawyer Matters During an Audit

Interpret Complex Regulations

ERC rules are intricate and constantly evolving. Our specialized lawyers stays current with the latest regulations, ensuring your claim is solid and compliant.

Guide Audit Response

We know how to effectively gather and present documentation. Our lawyers will help you compile comprehensive records, anticipate IRS questions, and present your case in the most favorable light.

Protect Your Rights

Safeguard your interests during aggressive IRS inquiries. Our ERC lawyers acts as a buffer between you and the IRS, ensuring you don’t inadvertently say or do anything that could harm your case.

Handle Appeals

If your claim is denied, we can craft a compelling appeal. Our lawyers will identify weaknesses in the IRS’s position, gather additional supporting evidence, and construct persuasive arguments to challenge the denial.

Represent in Litigation

When necessary, we can take your case to federal court. This involves preparing legal briefs, presenting oral arguments, and navigating complex court procedures to fight for your rightful credits.

Strategize for Future Compliance

We can help implement systems and practices to ensure your ongoing ERC claims remain compliant, minimizing the risk of future audits or disputes with the IRS.

Letter 6612 signals that the IRS is auditing your ERC claim. It’s a serious matter requiring immediate attention. You have 30 days to provide extensive documentation proving your eligibility. Failing to respond adequately could result in your claim being denied. We strongly advise seeking legal counsel to navigate this process effectively.

Document requests vary based on how you qualified for the ERC. Be prepared to provide:

  • • Government orders (if you qualified based on business suspension)
  • • Proof of significant revenue decline (if you qualified through gross receipts)
  • • Records showing ERC was not double-dipped with PPP or other relief programs
  • • Tax returns, PPP loan details, and other financial records

Extensions are possible but not guaranteed. You’ll need to contact the IRS promptly and provide compelling reasons for needing more time. An experienced ERC lawyer can help you craft a persuasive extension request and negotiate with the IRS on your behalf.

A denial isn’t the end of the road. You have options to fight it:

1. File a formal protest with the IRS Office of Appeals

2. Take your case to federal court

Both paths have pros and cons. Consult an ERC lawyer to determine the best strategy for your specific situation. They can help analyze the denial, prepare a strong appeal, or represent you in court if necessary.

An ERC lawyer provides crucial support by:

  • • Interpreting complex ERC regulations
  • • Guiding you through the document gathering process
  • • Crafting a strong response to the IRS
  • • Protecting your rights during aggressive inquiries
  • • Handling appeals if your claim is initially denied
  • • Representing you in court if litigation becomes necessary

Silver Tax Group:
Your ERC Audit Defense Team

At Silver Tax Group, our experienced ERC lawyers have a proven track record of successfully guiding businesses through ERC audits and appeals. We understand the nuances of ERC regulations and how to effectively advocate for your interests.

Don’t risk your ERC refund. Contact Silver Tax Group today for a consultation. Let us put our expertise to work, protecting your business throughout the audit process and fighting for the credits you deserve.

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    Chad Silver

    Attorney

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