IRS Deadline Looms For Resolving Problems With Employee Retention Credit Claims

The Employee Retention Credit (ERC) helped keep workers on the payroll during the COVID-19 pandemic. As lockdown forced businesses to close or drastically cut hours, it offered a 50 percent tax credit on up to $10,000 of employee wages per year, translating to $5,000 per worker.

Many business owners benefited from the credit, but some did so in error. As the deadline looms for resolving improper ERC claims, Florida tax-IRS attorney Ronald Cutler explains more about the problem, the penalties you could face, and how to protect your rights in resolving the matter.

Voluntary Disclosure Program For Improper ERC Claims Ends In November

In the spring of 2020, COVID-19 lockdowns dealt a blow to businesses. The Employee Retention Credit helped offset losses while encouraging employers to keep workers on payrolls.

Through the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, the ERC provided credit for up to $5,000 per worker for businesses forced to cease operations or for those who otherwise saw a 50 percent decline in profits. Companies nationwide benefited, but the IRS says that over $1 billion was paid out on improper ERC claims.

Thousands of claims are currently under audit, and as of July 2024, the IRS initiated over 460 criminal cases. Improper ERC claims are often the result of abusive tax promoters and preparers. However, tax codes are hard to decipher, and some business owners may have simply taken the credit in error. Regardless of the reason, the IRS demands repayment.

As a business owner, you may come forward voluntarily to address the issue. If you do, this could lower repayment amounts and avoid additional penalties. However, keep in mind the voluntary program ends on November 22, 2024. Those who have problems with ERC claims and do not come forward face audits, fines, and high-interest payments.

 Protecting Yourself Against Improper ERC Claims

The U.S. Department of the Treasury provides fact sheets detailing basic guidelines for the Employee Retention Credit. If you have concerns about potential improper ERC payments, contact our Florida tax-IRS attorney right away.

Addressing the situation through the IRS voluntary program is strongly encouraged, though you should get legal help to discuss other options available. To protect yourself and your rights throughout this, take the following steps:

• Get copies of tax returns filed from 2019 through the pandemic;
• Document the total amount you may have received through the ERC;
• Gather payroll records, receipts, and other evidence from that time period;
• Be cautious in corresponding with the IRS and avoid companies offering a quick fix.

Contact Our Experienced Florida Tax-IRS Attorney Today

Improper ERC claims stemming from the pandemic can end up jeopardizing your business today. This is a serious problem that needs to be addressed as soon as possible. To get the trusted legal guidance you need, contact Ronald Cutler, P.A.

As a Florida tax attorney, CPA, and a former FBI special agent, he has over 50 years of experience dealing with the IRS and other government agencies. Give us a call or contact our office online to schedule a consultation today.

Sources:

home.treasury.gov/policy-issues/coronavirus/about-the-cares-act

irs.gov/newsroom/irs-reopens-voluntary-disclosure-program-to-help-businesses-with-problematic-employee-retention-credit-claims-sending-up-to-30000-letters-to-address-more-than-1-billion-in-errant-claims

home.treasury.gov/system/files/136/Employee-Retention-Tax-Credit.pdf