Employee Retention Credit Voluntary Disclosure
The IRS has increased scrutiny of Employee Retention Credit (ERC) claims and is conducting audits of businesses that received ERC refunds. If your ERC claim is under review, NewPoint Law Group's tax attorneys can represent your business, help document your eligibility, and defend your claim through the IRS audit and appeals process.
ERC Audit Defense | Tax Attorneys in Roseville, CA
The IRS and ERC Compliance
The Employee Retention Credit (ERC) generated billions of dollars in refund claims following COVID-19. As the volume of claims grew, the IRS raised concerns about widespread fraud and aggressive promotion by third-party ERC promoters. In 2023, the IRS announced a moratorium on new ERC claims and launched a comprehensive compliance initiative targeting existing claims.
Businesses that received ERC refunds — particularly those claimed through third-party promoters — are facing an elevated risk of IRS audit, examination, or demand for repayment.
What ERC Auditors Examine
Whether the business experienced the required full or partial suspension of operations due to a government order
Whether the business suffered the required decline in gross receipts in the applicable quarters
Whether the wages claimed were for eligible employees and were not also claimed for PPP loan forgiveness
Whether the business was a Recovery Startup Business in Q3 or Q4 2021
The underlying documentation supporting the credit calculation
ERC Voluntary Disclosure Program
The IRS established an ERC Voluntary Disclosure Program allowing businesses that received ERC payments they now believe were improper to repay a portion of the credit while avoiding full repayment and criminal referral. The IRS also created a claim withdrawal process for businesses with pending claims that were not yet paid. Our attorneys can evaluate whether these programs are appropriate for your situation.
Defending a Valid ERC Claim
For businesses with legitimate ERC claims, an IRS audit does not mean the credit will be reversed. The key is having proper documentation — government orders, financial records showing gross receipts decline, payroll records, and contemporaneous records of how the orders affected operations. Our tax attorneys help businesses compile and present this documentation effectively, respond to IRS information requests, and advocate for the credit through the audit and appeals process.