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Have you claimed or are considering claiming the Employee Retention Credit (“ERC” or “ERTC”)? Is your ERC claim being audited by the IRS?

The ERC provided an important benefit to business employers who continued paying employees during the COVID-19 pandemic even though the employer’s operations were shut down as a result of a governmental order or the business experienced a significant decline in gross receipts during the eligibility periods in 2020 and 2021. Unfortunately, although many businesses legitimately applied for the credit, many other businesses have applied for and received the credit based on guidance from promoters who aggressively mislead businesses into believing ERC eligibility was simple when often it is not. Further, many of these promoters charged large upfront fees or a fee that is contingent on the size of the refund.

Since October 2022, the IRS has been warning employers to beware of third parties promoting improper ERC claims and has reminded business taxpayers that the taxpayer is responsible for the accuracy of its ERC claim. In their announcements, the IRS has consistently said that they will be auditing aggressive ERC claims as well conducting criminal investigations on businesses and promoters filing dubious ERC claims.

The IRS has consistently been warning that if the ERC refund was unfounded, the employer will have to repay the claim as well as be liable for interest and penalties. The IRS has encouraged employers to seek independent tax advice about their ERC claim.

With our governmental and broad-based tax controversy experience, ZHF is well positioned to advise on the ERC. Our services include:

  • Providing an independent review of the factual and legal strength of an employer’s ERC eligibility. This includes reviewing the adequacy of the relevant documentation.
  • Advising on technical or interpretative issues involving the ERC such as how the ERC aggregation rules should be applied.
  • Advising on whether to withdraw a pending ERC claim or whether to take advantage of any IRS ERC settlement programs to avoid penalties and future compliance action.
  • Representing an employer before IRS Exam if its ERC claim is under audit or is being appealed.
  • Assisting the employer with responding to penalties proposed by the IRS.
  • Advising the employer on issues related to the statute of limitations, including the filing of a protective claim to permit the employer to be able to (re)deduct the amount of qualified wages used in the ERC computation.
  • Advising professional employer organization’s (“PEO’s”) and other third-party payers on issues related to their client’s ERC claims.

To further discuss our Employee Retention Credit services and their benefits, please contact any one of the ZHF professionals.

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