Frequently Asked Questions from Businesses Regarding IRS Audits of their ERC Claim
Q: What are the most common reasons why the IRS audits ERC claims?
The most common reasons the IRS audits ERC claims include:
- Mathematical errors
- Inaccurate reporting of qualified wages
- Failure to meet the eligibility requirements
- Suspected fraud
Q: What should I do if I receive a notification that my Employee Retention Tax Credit claim is being audited?
The first thing you should do is gather all relevant documentation and review your ERC worksheet carefully. You should also contact a tax attorney to discuss your case.
Q: What can I expect during an IRS audit of my ERC claim?
The IRS will review your documentation and ask you questions about your ERC claim. They may also request additional information. It is important to be cooperative and to answer all of the IRS’s questions honestly.
Q: What are the consequences if I fail to comply with an IRS audit of my ERC claim?
If you fail to comply with an IRS audit, you may be subject to penalties and interest. The IRS may also disallow your ERC claim, which would mean that you would have to repay the credit.
Q: Can I negotiate with the IRS during an audit of my ERC claim?
Yes, you can negotiate with the IRS during an audit. Your tax attorney can help you negotiate with the IRS on your behalf.
Q: What should I do if the IRS disallows my ERC claim?
If the IRS disallows your ERC claim, you can file an appeal. Your tax attorney can help you file an appeal and represent you at the appeal hearing.
Q: What are the recent IRS news and developments regarding ERC audits?
On September 14, 2023, the IRS announced a moratorium on new ERC audits. The moratorium stands to last until at least December 31, 2023. The IRS is also reviewing its ERC audit procedures and will be providing more guidance to taxpayers in the near future.
Q: What should I do if I am concerned about my ERC claim being audited?
If you are concerned about your ERC claim being audited, you should review your documentation carefully and make sure that you have followed the ERC guidelines correctly. You should also contact a tax attorney to discuss your case.
Q: What should businesses do if they have already filed an ERC claim?
Businesses that have already filed an ERC claim will need to be patient while the IRS processes their claim. The IRS stated that it is prioritizing the processing of existing claims, but it may take up to 180 days or even longer for claims to be processed.
Q: What are the benefits of having a tax attorney represent me during an IRS audit of my ERC claim?
A tax attorney can help you navigate the audit process and protect your interests. They can also negotiate with the IRS on your behalf and represent you at the appeal hearing if necessary.