It’s 2024, and while the Employee Retention Tax Credit (“ERC” or “ERTC”) program is winding down, some employers are beginning to receive indications of pre-audits relating to their ERC claims. IRS Notice CP271 and Letter 6612 have been received by many ERC claimants. These IRS communications are intended to get out ahead of erroneous claims and give employers the chance to make any final changes or withdrawals.
In recent months, the ERC has become the subject of increasing scrutiny. The large volume of ERC claims and the prevalence of service providers that use aggressive and predatory tactics (known as “ERC mills”) have spurred the IRS to take measures to preemptively address potentially fraudulent or erroneous claims.
The ERC is subject to complex rules regarding the aggregation of related entities as well as the interaction between PPP loans and the ERC. A tax preparer who has insufficient experience or familiarity with the ERC may have overlooked or incorrectly applied these rules.
Beyond accounting, your ERC claim may rely on a Full or Partial Suspension of Operations (“FPSO”), which is a “facts and circumstances” test. A proper evaluation of FPSO eligibility requires a detailed legal analysis of COVID-19 government orders and the negative impact of such orders on your business operations.
Given the complex nature of the ERC eligibility and accounting rules, it is possible that your business claimed the ERC incorrectly. The consequences of filing for the ERC when ineligible or claiming the incorrect amount could be serious. If you think you may have worked with an ERC mill or an inexperienced provider and have hesitations about your ERC claim, you may want to consider having ERC experts take a second look at your claim. ERTC Funding’s team of tax professionals and support staff is prepared to analyze each and every intricate detail of your claim to ensure it stands on solid ground.
The good news is that even if your company is being asked to confirm its ERC claim, you still have the chance to give yourself peace of mind. If you have received a Notice CP271, now is a good time to initiate a secondary review and ensure your claim is accurate. If you have received a Letter 6612, it is urgent that you perform a secondary review if uncertain as to your eligibility, as failure to respond to a Letter 6612 within the required timeframe puts your ERC claim at risk. If you have doubts about the validity of your ERC claim, even if you have not received a letter from the IRS, performing a secondary review is the best way to ensure your claim is both accurate and properly-filed.
Amending or withdrawing your claim for any erroneously-claimed quarters is still possible. Contact ERTC Funding today to get started on a secondary review of your company’s ERC claim and ensure your peace of mind.
