A lot of Michigan business owners thought the hard part was over when the ERC refund check showed up. Then the IRS started sending letters, freezing claims, and asking for backup that many promoters never told you to keep. If you’re worried about an ERC audit Michigan 2026 notice, you’re not overreacting. The filing window has closed, and the IRS is now focused on documentation, disallowances, and audits.
That does not mean every claim was wrong. It does mean you need to know what the IRS is testing, which records matter, and what options are still open. This guide explains the biggest audit triggers, the records the IRS usually demands, the line between civil error and criminal fraud, and the current status of ERC withdrawal and voluntary disclosure relief. Tax laws change frequently — verify current guidance at IRS.gov/erc before you respond.
ERC Audit Michigan 2026: What Is the IRS ERC Audit Wave?
The ERC claim period is over, but the IRS is still very busy with ERC cases. In 2026, the pressure is showing up through audits, refund holds, disallowance letters, and recapture notices. For many businesses, the first sign is Letter 6612, which says the IRS is auditing the claim and holding the credit while it reviews your documentation.
The enforcement picture also changed after the One, Big, Beautiful Bill. For the third and fourth quarters of 2021, claims filed after January 31, 2024 generally cannot be allowed or refunded after July 4, 2025. So some Michigan businesses are discovering that timing matters just as much as eligibility. The current wave is less about filing new claims and more about defending old ones.
What Triggers an ERC Audit — High-Risk Claim Characteristics
Most ERC audits start because the claim has obvious risk markers. The IRS has warned repeatedly about promoter-driven filings that said supply-chain issues automatically qualified a business or that nearly everyone was eligible. That is not how the credit works. The IRS wants a real COVID-era government order that actually suspended operations, or a real gross-receipts decline measured quarter by quarter against 2019.
Other common triggers are fourth-quarter 2021 claims by businesses that were not true recovery startup businesses, double-dipping wages already used for PPP forgiveness, and files that do not contain payroll workpapers or source documents. A Michigan owner who relied on a canned promoter memo may feel prepared until the IRS asks for the exact order, dates, quarter calculations, and wage support. That is where weak claims usually start to unravel.
What Records the IRS Will Demand
An ERC case turns on records, not sales language. IRS training materials for ERC exams list items such as Forms 941 and 941-X, the worksheet used to compute the credit, payroll journals, and support for leave wages and health-plan expenses. The IRS also says employers should keep documentation supporting ERC-related credits for at least six years.
In practice, you should expect requests for payroll registers, gross-receipts reports, PPP loan and forgiveness records, ownership information for related entities, and the exact government orders you relied on. If a third party prepared the claim, get every workpaper they created. The examiner is trying to rebuild the claim from the ground up. If your file cannot do that, your response is not ready yet.
ERC Fraud vs. ERC Error: A Critical Distinction
Many ERC problems are civil problems. Maybe the gross-receipts test was done wrong. Maybe a promoter overstated how a government order affected your business. Maybe the wages were miscalculated. Those issues can still lead to a painful audit, but they usually stay in the world of civil tax controversy and audit defense.
Criminal exposure is different. That usually means facts like fabricated payroll, fake shutdown stories, forged documents, or a knowingly false claim. Levy Tax Help handles civil tax matters only and does not represent clients in criminal tax proceedings. If the facts suggest deliberate fraud instead of a mistaken or poorly supported filing, the case needs a different kind of lawyer right away.
The IRS ERC Voluntary Disclosure Program
This section needs an update that many business owners miss: the second IRS ERC Voluntary Disclosure Program closed on November 22, 2024. So in 2026, you generally cannot join that program as a new fix. A lot of stale online articles still describe it like it is open, and that can lead to bad decisions.
Some businesses still have a different option. If the entire ERC claim was filed on an adjusted employment tax return and the IRS has not paid it, or paid it but the check has not been cashed or deposited, the ERC claim withdrawal process may still be available in limited cases. If the claim was already paid and cannot be withdrawn, you may need to amend the return or defend the claim in audit instead.
If You Receive an ERC Audit Notice: Immediate Steps
First, read the notice number and calendar the response deadline. Second, pull the exact return and workpapers for the quarter at issue. Third, preserve everything tied to the claim, including emails with the promoter, engagement letters, calculations, payroll data, and internal notes. Fourth, do not send a rushed response that only tells the IRS you are working on it. Fifth, match every eligibility statement to actual documents.
If the notice offers the IRS Document Upload Tool, use it carefully and keep proof of what was sent. If you mail or fax records, keep a full copy and proof of transmission. A strong ERC response is organized by quarter, easy to follow, and built around facts instead of broad conclusions. That can make a major difference in how the case develops.
Why Former IRS Officers Understand ERC Audits from the Inside
ERC disputes are detail-heavy. You need to know what makes an examiner skeptical, where a promoter memo falls apart, and which records actually answer the IRS’s question. That is where former IRS revenue officers and experienced civil tax professionals can make a real difference.
Levy Tax Help’s ERC audit defense team and its broader tax audits and appeals practice focus on civil tax controversies. That is the firm’s lane, and it matters when the goal is to fix a claim, defend a legitimate one, or limit damage from a bad promoter-driven filing.
Frequently Asked Questions
How do I know if my ERC claim is under audit or just delayed?
Read the letter number. Letter 6612 means the IRS is auditing the ERC claim and wants documentation before releasing the credit. A delay is one thing. An audit notice means you should gather records and respond by the stated deadline.
Can I still use the ERC voluntary disclosure program in 2026?
No. The second IRS ERC Voluntary Disclosure Program closed on November 22, 2024. Some businesses may still be able to use the ERC claim withdrawal process in limited situations, but that is different from the old voluntary disclosure program.
What if my promoter told me supply-chain problems automatically qualified me?
That is one of the biggest ERC warning signs. A supply-chain problem by itself usually does not qualify. The IRS wants specific proof that a qualifying government order affected a supplier in a way that actually suspended your operations under the ERC rules.
What records should I gather first for an ERC audit?
Start with the filed Forms 941 and 941-X, the ERC calculation worksheets, payroll registers, gross-receipts reports, PPP forgiveness records, health-plan expense support, and any government orders you relied on. Then organize everything by quarter.
Does Levy Tax Help handle ERC fraud cases?
Levy Tax Help handles civil ERC audit defense and civil tax controversy matters. The firm does not represent clients in criminal tax proceedings. If the facts point to intentional fraud, you need counsel that handles criminal tax defense.
If you’re dealing with an ERC audit Michigan 2026, the team at Levy Tax Help is ready to help. Our attorneys, CPAs, and former IRS revenue officers have handled cases exactly like yours — many of us worked on the IRS side of these negotiations. Call (877) 500-4930 or contact us online for a free consultation.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.