Goldburd | Goldburd McCone LLP

For nationwide tax guidance, call:
212-302-9400 or toll-free at 844-653-2873.

Goldburd | Goldburd McCone LLP

For nationwide tax guidance, call: 212-302-9400 or toll-free at 844-653-2873.

Serving Individual And Corporate Tax Clients Nationwide From Our New York, New Jersey, Florida And California Offices

Steven Goldburd and Benjamin A Goldburd

Since 1983, our tax firm has skillfully represented individuals and corporations across the United States and around the globe from our offices in New York, New Jersey, California and Florida.

Three things to know as the IRS prepares to ramp up ERC audits

On Behalf of | Jun 7, 2023 | Business Tax

Lawmakers passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help get businesses through the worst of the pandemic. The Employee Retention Credit (ERC), part of this law, was aimed to do just what the name says — help small businesses keep their workforce. When businesses could not bring in a profit, this tax credit would provide financial relief so the business owner would not have to let go of their staff.

To qualify for the ERC, the IRS generally looked for businesses to meet one of the law’s three requirements. Either they had fully or partially suspended operations due to pandemic related shutdowns like stay-at-home orders, experienced a significant decline in gross receipts, or qualified as a recovery startup business during the third or fourth quarters of 2021.

Not surprisingly, some bad actors tried to take advantage of this tax credit. Fraudsters came in two main categories. They either falsely claimed the credit on their tax returns, or they posed as tax professionals who could help other businesses take advantage of the credit. The latter put honest entrepreneurs at risk for allegations of tax fraud.

Are business owners liable if they got bad advice from someone who posed as a tax professional?

They could be. The answer will depend on the details, but the taxpayer is generally responsible for their tax returns even when using professional help.

How do I know if a tax professional is legit?

There are some red flags to watch out for. In this specific type of case, red flags could include promises of inflated tax savings, assurance of eligibility without getting information about the business, blanket statements like all businesses in a certain industry qualify for the credit, and any request for payment upfront.

Basically, if it sounded too good to be true it probably was.

What if I claimed the ERC?

Businesses that are concerned they may have falsely claimed the credit or find themselves the subject of an audit are wise to take the matter seriously. Gather documentation and prepare for the potential of a tax bill. It is generally wise to seek legal counsel to mitigate the risk of additional fees and penalties. The attorneys at Goldburd McCone are familiar with these tax matters and can advocate for your interests to better ensure a more favorable outcome.