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First things first, let’s cover the basics. An ERC audit is when the IRS examines your business’s eligibility for the Employee Retention Credit. Why? To ensure you calculated everything correctly – and didn’t claim more than you were entitled to.The IRS has a few reasons for cracking down on ERC claims. One, the credit was a massive pandemic relief program – meaning billions of dollars were paid out. Two, there’s been a rise in third-party “ERC mills” making questionable claims on businesses’ behalf. So, if you get that dreaded audit notice, don’t take it lightly. The IRS could disallow part – or all – of your ERC claim, leaving you on the hook for repayment (plus interest and penalties). That’s a financial hit no business wants.But with an elite Columbus law firm specializing in ERC audits, you can fight back. A skilled attorney will:
It’s simple. The right lawyer can make all the difference in protecting your ERC claim – and your bottom line.
Sure, you could try handling an ERC audit yourself. But is that really a risk you want to take? These audits are incredibly complex, document-intensive – and the stakes are sky-high. A single miscalculation or missed deadline could derail your entire case. And if the IRS rules against you? You’ll be stuck paying back those credits (plus potential penalties and interest).That’s why partnering with an elite Columbus law firm is critical. These attorneys specialize in ERC audits – it’s all they do.
They have the expertise to:
When so much is on the line, can you really afford not to have that level of legal firepower in your corner?
Not all law firms are created equal when it comes to handling ERC audits. You’ll want to be extremely selective, ensuring your attorneys have:
This isn’t the time for on-the-job training. Your lawyers need to have successfully navigated countless ERC audits and appeals. Look for firms specializing exclusively in ERC and other COVID-19 relief programs.
Don’t just take their word for it – ask about their win rate in ERC cases. How many audits have they handled? What were the outcomes? The more experience, the better.
ERC audits are highly technical tax matters. Your legal team must include tax attorneys and CPAs with specialized knowledge in this area. No exceptions.
When the IRS comes calling, you need a firm that’s ready to jump into action immediately. Constant communication and rapid response times are non-negotiable.
In the legal world, reputation is everything. Research reviews, ratings, and testimonials to gauge the firm’s professionalism and client satisfaction record.
From audit representation to appeals and litigation, your law firm should offer full-service ERC support. You don’t want to have to switch firms midstream.
Every ERC audit is unique, but most follow a similar process. Knowing what to expect can help reduce stress and ensure you’re fully prepared.
It all starts with a letter from the IRS notifying you that your business has been selected for an ERC audit. This notice will outline:
Don’t ignore this notice! Missing the response window could automatically disqualify your ERC claim.
Next, you’ll receive one or more Information Document Requests (IDRs) from the auditor. These IDRs detail all the records and supporting evidence you need to provide, such as:
Responding thoroughly – and promptly – is crucial. Incomplete or late submissions could be viewed as a lack of cooperation.
Once you’ve submitted the requested documentation, the auditor will carefully review everything to assess your eligibility for the ERC. This process can take weeks or months. During this time, the auditor may follow up with additional IDRs requesting clarification or supplemental records. They may also request to interview company representatives with direct knowledge of your operations and workforce during the covered periods.
After their comprehensive review, the auditor will issue a preliminary report outlining their findings and position on your ERC claim. The potential outcomes include:
If the auditor proposes partial or full disallowance, you have options – starting with an appeal.
If you disagree with the auditor’s determination, you can file an appeal through the IRS Office of Appeals. This is your opportunity to present further evidence and legal arguments supporting your position. Having a skilled Columbus ERC audit lawyer at this stage is invaluable. They can:
If the appeals process fails to resolve the dispute, your final recourse may be litigation in U.S. Tax Court.
While the IRS insists it isn’t specifically targeting any businesses or industries, certain factors can increase your audit risk for the ERC. These include:
The IRS has repeatedly warned about unscrupulous “ERC mills” making inflated, unsupported claims on businesses’ behalf – often for a hefty contingency fee. If you worked with one of these outfits, expect heightened scrutiny.
Calculation mistakes, typos, or figures that don’t align with your historical payroll and financial data can raise red flags for auditors.
Failing to maintain thorough, organized records supporting your eligibility is a surefire way to pique the IRS’s interest – and suspicion.
If the wages or health plan costs included in your ERC calculations seem disproportionate or unsubstantiated, that could trigger an audit.
The larger your claimed ERC, the higher your perceived audit risk. Multimillion-dollar credits are virtually guaranteed to face intense scrutiny.
While the IRS denies industry-specific targeting, businesses in sectors like hospitality and food service have anecdotally reported higher audit rates.The bottom line? Inaccurate, sloppy, or questionable claims have a much higher chance of catching the IRS’s attention – and their auditors’.
If the IRS ultimately rejects part or all of your ERC claim after all appeals are exhausted, you could face steep financial penalties beyond just repaying the disallowed credits, including:
The IRS can assess a 20% penalty on any excessive portion of your ERC claim due to negligence or disregard of rules and regulations. This penalty jumps to 40% if the IRS deems your claim was inflated due to fraud.
If you can’t immediately repay the disallowed credits, additional penalties of 0.5% – 1% of the unpaid balance will accrue each month until paid in full.
On top of penalties, you’ll also owe interest on any unpaid ERC amounts dating back to when you originally claimed the credits.These costs can add up quickly, compounding the financial hit to your business. Having a seasoned Columbus lawyer in your corner is the best way to mitigate – or avoid – these penalties entirely.
The key to successfully defending your ERC claim? Preparation. By taking proactive steps now, you can streamline the audit process later.
From day one of claiming the ERC, you should have been diligently documenting everything:
Keeping these records organized and readily accessible will save you a massive headache if audited.
Before an audit, it’s wise to re-evaluate whether your business actually met all the ERC eligibility requirements, such as:
An experienced Columbus lawyer can perform this compliance check, identifying potential weaknesses before the IRS does.
Double-checking your original ERC calculations is a must. Even minor computational errors can jeopardize your entire claim.Your legal team should recreate your credit worksheets from scratch, ensuring:
Having an independent review can provide extra assurance – and foresight of potential audit issues.
The single best way to prepare for an ERC audit? Hire a Columbus lawyer with extensive experience in this area. An elite firm can:
With the right preparation and legal counsel, you can maximize your chances of a favorable audit outcome.
To illustrate the value of partnering with a top-tier Columbus ERC audit law firm, let’s look at a hypothetical example.
Main Street Diner is a family-owned restaurant that has been a fixture in downtown Columbus for over 50 years. Like many businesses, they were devastated by the COVID-19 pandemic and related government restrictions. At the height of the crisis in 2020, Main Street was forced to close its doors entirely for months. Even after reopening, they faced strict capacity limits that slashed revenues by over 70%. To keep their multigenerational legacy afloat, Main Street claimed the Employee Retention Credit for both 2020 and 2021 – a total credit amount exceeding $500,000.
In late 2022, Main Street received an IRS notice informing them they had been selected for an ERC audit. Recognizing the stakes involved, they immediately retained a premier Columbus law firm specializing in ERC cases: Spodek Law Group.Spodek’s attorneys sprang into action, taking these critical steps:
After a thorough six-month review, the IRS auditors accepted Main Street Diner’s ERC claim in its entirety – allowing them to keep every penny of their $500,000+ credits. In their official report, the auditors cited the “comprehensive documentation” and “well-reasoned legal arguments” provided by Spodek Law Group as key factors supporting Main Street’s eligibility. For the multi-generational family business, this outcome was a massive relief – securing their financial future and allowing them to continue serving the Columbus community for decades to come. This case study underscores the immense value of partnering with a elite Columbus law firm for your ERC audit. With adequate preparation, meticulous documentation, and aggressive legal advocacy, you can protect your ERC claim – and your business’s bottom line.
There’s no sugar-coating it: an ERC audit from the IRS is a massive deal with huge financial implications for your business. But that doesn’t mean you’re powerless. By taking proactive steps and aligning yourself with the right legal team, you can dramatically improve your odds of a successful outcome.
A premier Columbus law firm like Spodek Law Group can be your biggest asset, providing:
When so much is at stake for your business, can you really afford to go it alone? The right Columbus lawyer can mean the difference between losing your entire ERC claim – or retaining those vital credits.
So if that audit notice arrives, don’t panic. Get prepared, get represented – and get ready to fight for every dollar you’re owed. Your business’s future may depend on it.
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