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ERC Audit Lawyers

April 3, 2024

ERC Audit Lawyers: Navigating the Complex World of Employee Retention Credit Audits

If your business claimed the Employee Retention Credit (ERC) during the COVID-19 pandemic, you may find yourself facing an audit by the IRS. This can be a daunting prospect, but with the help of experienced ERC audit lawyers, you can navigate the process with confidence. In this article, we’ll explore what you need to know about ERC audits and how our federal lawyers at Federal Lawyers can help protect your interests.

Understanding the Employee Retention Credit

The Employee Retention Credit was introduced as part of the CARES Act in 2020 to help businesses keep employees on their payroll during the economic downturn caused by the pandemic. Eligible employers could claim a refundable tax credit of up to $5,000 per employee in 2020 and up to $7,000 per employee per quarter in 2021. However, the rules surrounding the ERC were complex and changed several times, leading to confusion and potential errors in claiming the credit.

Why You Might Face an ERC Audit

The IRS has announced that it will be closely scrutinizing ERC claims to ensure that businesses complied with the eligibility requirements and calculated the credit correctly. Some common reasons why your business might face an ERC audit include:

  • Claiming the credit without meeting the eligibility criteria
  • Miscalculating the credit amount
  • Failing to maintain proper documentation to support your claim
  • Claiming the credit for employees who were not actually retained
  • Double-dipping by claiming both the ERC and Paycheck Protection Program (PPP) loans for the same wages

If the IRS determines that you claimed the ERC improperly, you may be required to pay back the credit plus interest and penalties. In some cases, you could even face criminal charges for tax fraud. That’s why it’s crucial to have experienced ERC audit lawyers on your side.

What to Expect During an ERC Audit

If your business is selected for an ERC audit, you’ll typically receive a notice from the IRS requesting additional information and documentation to support your claim. This may include:

  • Payroll records showing the wages paid to each employee
  • Documentation of your business’s decline in gross receipts or suspension of operations due to government orders
  • Proof that you maintained the same number of full-time employees or paid them at least 80% of their normal wages
  • Records of any PPP loans or other COVID-19 relief funds received

The IRS may also request an interview with you or your representatives to discuss your ERC claim in more detail. It’s important to have your ERC audit lawyers present during any such interviews to ensure that your rights are protected and that you don’t inadvertently say anything that could harm your case.

How Our Federal Lawyers Can Help

At Federal Lawyers, our team of experienced ERC audit lawyers is here to help you navigate the complex world of federal tax audits. We can:

  • Review your ERC claim to identify any potential issues or areas of concern
  • Gather and organize the necessary documentation to support your claim
  • Represent you in communications with the IRS and advocate for your interests
  • Negotiate a favorable resolution to your audit, such as a reduced penalty or payment plan
  • Defend you in court if necessary to protect your rights and reputation

Our federal lawyers have deep experience in handling all types of federal tax matters, from routine audits to criminal investigations. We understand the high stakes involved in an ERC audit and will work tirelessly to achieve the best possible outcome for your business.

Case Studies: How We’ve Helped Clients with ERC Audits

To give you a sense of how our ERC audit lawyers can help, here are a few examples of real cases we’ve handled:

Case Study 1: Restaurant Chain Faces ERC Audit

A regional restaurant chain claimed the ERC in 2020 and 2021 based on a significant decline in gross receipts due to government-mandated closures and capacity restrictions. However, the IRS audited their claim and alleged that they had miscalculated their credit amount and failed to maintain proper documentation.Our federal lawyers worked closely with the restaurant’s accounting team to gather and organize the necessary records to support their ERC claim. We also identified several errors in the IRS’s calculations and presented evidence to refute their allegations. Through skilled negotiation, we were able to reach a favorable settlement that reduced the restaurant’s liability by over 50% and avoided any criminal charges.

Case Study 2: Manufacturing Company Accused of Double-Dipping

A mid-sized manufacturing company claimed both the ERC and PPP loans in 2020, but the IRS audited their claim and accused them of double-dipping by using the same wages to calculate both benefits. The company faced significant penalties and potential criminal charges.Our ERC audit lawyers conducted a thorough review of the company’s financial records and identified that they had properly allocated their PPP funds and ERC claims to different wage expenses. We presented this evidence to the IRS and argued that the company had acted in good faith based on the guidance available at the time. Through our advocacy, we were able to resolve the audit with no penalties or criminal charges.

Frequently Asked Questions About ERC Audits

How long does an ERC audit take?

The length of an ERC audit can vary depending on the complexity of your claim and the responsiveness of both parties. In general, you can expect the process to take several months to a year or more.

Can I handle an ERC audit on my own?

While it’s possible to represent yourself in an ERC audit, it’s generally not recommended. The rules surrounding the ERC are complex and the stakes are high, so it’s best to have experienced legal counsel on your side.

How much does it cost to hire ERC audit lawyers?

The cost of hiring ERC audit lawyers will depend on the specifics of your case and the law firm you choose. At Federal Lawyers, we offer flexible fee arrangements and will work with you to find a solution that fits your budget and needs.

What happens if I lose my ERC audit?

If the IRS determines that you claimed the ERC improperly, you may be required to pay back the credit amount plus interest and penalties. In some cases, you could also face criminal charges for tax fraud. However, our federal lawyers will work diligently to minimize your liability and protect your rights throughout the process.

Don’t Face an ERC Audit Alone – Contact Federal Lawyers Today

If your business is facing an ERC audit, don’t wait to seek legal help. The sooner you involve experienced ERC audit lawyers, the better your chances of achieving a favorable outcome. At Federal Lawyers, we’re here to guide you through the process and protect your interests every step of the way. Contact us today for a confidential consultation and let us help you navigate the complex world of federal tax audits with confidence.

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