If your company filed for the Employee Retention Credit (“ERC” or “ERTC”), you may receive a
Letter 6612 from the IRS. It is important to understand what the Letter 6612 is and how to
respond appropriately.
The IRS provides the following explanation of what receiving a Letter 6612 means:
“We’re auditing your tax return reporting an adjustment or claim for refund and need documentation to verify the Employee Retention Credit (ERC) you claimed. We’re holding the ERC until we get the results of this audit.”
Essentially, Letter 6612 and its required response amounts to a pre-audit of your company’s ERC claim. The intention of the pre-audit is to allow ERC claimants the opportunity to demonstrate their eligibility for the ERC prior to its disbursement.
Included with Letter 6612 will be instructions on how to respond. One such response includes the completion of Form 4564, Information Document Request (IDR). Form 4564 details information that the IRS requires as well as questions that need to be answered. Here are the steps the IRS says to take:
The letter will include a due date for responding. It is important to meet this deadline or your ERC claim may be disqualified. Upon receipt of your response, the IRS will then have a minimum of 30 days to process your claim. At this point, if the IRS is dissatisfied with the substance of your company’s response, the agency will send recommendations for amending your claim.
Your required response will likely include the following:
The IRS recommends reviewing a Letter 6612 and any included forms with a trusted tax professional. Doing so can help ensure that you and your company fully understand the ERC eligibility criteria and ensure that your claim was calculated correctly. Additionally, if during this pre-audit process it is determined that you are not eligible for the ERC, the IRS provides the opportunity to withdraw the claim.
