ERC Audit Appeals Process: Know Your Rights
Contents
ERC Audit Appeals Process: Know Your Rights
At this point, you have a few paths forward:
- You can agree with their changes and pay any additional tax owed. Easy peasy, but not ideal if you think they’re wrong.
- You can request a meeting or call with the auditor to discuss their findings and provide any additional documentation to support your position. Think of it as pleading your case one last time before things get official.
- Or, you can skip straight to filing a formal protest and requesting an appeals conference. This is where the real fun begins.
The Appeals Process Explained
Requesting an appeals conference kicks off the official appeals process with the IRS Office of Appeals. These appeals officers are a new set of eyes on your case, separate from the auditors who made the initial determination. Their job? To take an impartial “fresh look” at your case and try to resolve the dispute without litigation. It’s like getting a second opinion from the IRS itself.Now, there are two main ways to request this appeals conference:
- Small Case Request: If the total amount of the ERC adjustments is $25,000 or less per tax period, you can submit an informal “small case” request. Just write a brief statement explaining why you disagree with the auditor’s findings, and include any supporting documents.
- Formal Written Protest: For larger adjustments over $25,000, you’ll need to submit a more formal written protest laying out all the details of your case and the legal arguments for why you qualify for the ERC.
Whichever route you choose, make sure to act quickly – you typically only have 30 days from the date of the IRS notice to file your protest or small case request. Miss that window, and you may have to pay the tax and file for a refund later.
Building Your Case
Okay, so you’ve requested that appeals conference – now what? It’s time to build a rock-solid case to present to the appeals officer. First up, gather every shred of documentation you have related to your ERC claim: payroll records, financial statements, shutdown orders, you name it. The more evidence you can provide to substantiate your eligibility, the better.Next, review the auditor’s report and the IRS notice carefully. Identify exactly which issues or eligibility requirements they’re challenging, and prepare detailed rebuttals with citations to the actual ERC legislation and guidance. For example, let’s say the auditor claims you didn’t experience a “full or partial suspension” of operations due to a COVID-19 government order. You’d want to pull together copies of any shutdown orders that applied to your business, documentation showing how your operations were impacted, and perhaps testimony from employees about the disruptions you faced. The key here is building an airtight, well-documented case that directly addresses and overcomes each of the IRS’s objections.
Presenting Your Case
Once you’ve assembled your evidence and arguments, it’s time for the main event: the appeals conference itself. These conferences can be held in-person, by video call, or even through written correspondence – it’s up to you and the appeals officer to decide the format. Regardless of how it’s conducted, prepare to make a compelling presentation laying out your side of the story. Don’t just read off a script, though. The appeals officer will likely have questions, so be ready to engage in a back-and-forth discussion about the finer points of your case. This is your chance to directly address any lingering concerns or misunderstandings. It’s perfectly fine – and often advisable – to have your accountant, payroll provider, or even a tax attorney join you for this conference to provide additional expertise and support.
If You Disagree With the Appeals Decision
After considering all the evidence and arguments from both sides, the appeals officer will issue their final determination. If it goes in your favor, congratulations! You’ve successfully appealed the auditor’s adjustments. But what if the appeals officer still disagrees with your ERC claim? Well, you do have one more level of recourse: you can take your case to court. Specifically, you can file a refund suit in either the U.S. District Court or the U.S. Court of Federal Claims. This is essentially suing the IRS to recover the ERC amount you believe you’re owed. Going this route means presenting your case all over again to a judge, so you’ll want to make sure you have an extremely strong legal argument and evidence backing you up. Having an experienced tax attorney in your corner is practically a must at this stage.
When to Seek Professional Help
Speaking of attorneys, you may be wondering if it’s worth hiring one to assist with the ERC audit appeals process from the get-go. The answer? It depends on the complexity of your situation and your level of comfort dealing with the IRS. For relatively straightforward cases with smaller ERC claim amounts, you might be able to self-represent and handle the appeals process on your own – especially if you have a background in tax law or a knack for wading through legal jargon. However, if your ERC claim was particularly large, you used a third-party provider who may have mishandled aspects of it, or you simply don’t want the hassle of going it alone against the IRS auditors, then bringing in a tax pro is probably a wise move. A skilled tax attorney can review your case with a fresh set of eyes, identify any potential weaknesses or missed opportunities, and forcefully argue on your behalf both in writing and at the appeals conference.
Don’t Go Down Without a Fight
Look, getting audited is never fun, but it doesn’t have to be the end of the line for your ERC claim. The appeals process gives you a legitimate path to fight back against the IRS’s findings and get a fair second look at your case. So don’t just throw in the towel if that initial audit doesn’t go your way. Gather your evidence, prepare your arguments, and take your case to appeals. With perseverance and a solid understanding of the ERC rules, you just might emerge victorious. And if you’d rather not go it alone? No problem, we’re here to help guide you through every step of battling the IRS. Our tax team has extensive experience representing businesses just like yours in ERC audits and appeals. The bottom line: you have rights as a taxpayer, and the appeals process is a powerful tool for exercising them. Use it to your full advantage, and don’t let an overzealous auditor take away credits you rightfully deserve.