Protecting Your Rights Regarding The Employee Retention Tax Credit
The Employee Retention Tax Credit (ERTC), also known as the Employee Retention Credit (ERC), is a tax relief measure introduced by the U.S. government under the CARES Act in 2020. The credit was meant to encourage businesses to keep employees on their payroll during the economic disruptions caused by COVID-19. To support employers in retaining their employees, the ERTC/ERC grants eligible businesses a quarterly credit of up to $28,000 in each employee’s wages.
However, the IRS has become increasingly zealous in denying claims, disallowing refunds and auditing recipients. Skillful tax law counsel is critical for any company or individual navigating the intricacies of the ERC. At Goldburd McCone LLP, we work with employers across all industries to manage issues relating to tax credit eligibility, compliance and determination of rights. We also defend clients aggressively during IRS audits. Our other primary areas of service are IRS ERTC audits and ERTC fraud defense. For nearly 40 years, our New York-based attorneys have provided outstanding representation in all areas of tax law, earning our reputation as leaders in the field.
What To Know About The IRS’s ERTC Investigation
Recently, the IRS completed an in-depth analysis of millions of ERTC claims. The agency conducted the study to assess the presence of impropriety and, in doing so, potentially save taxpayers money. However, in its fervor to weed out and penalize wrongdoers, the IRS also overzealously decided to deny tens of thousands of claims that it deemed high-risk for impropriety. It has also reached out to numerous claimants whose claims were previously granted to notify them of the disallowance of their refund. Additionally, the heightened attention means that businesses claiming the credit are now at a higher risk of audit. In light of these developments, the IRS has offered a special withdrawal program for claimants whose claims the agency has identified as questionable.
The Importance Of Tax Law Counsel
The IRS’s review highlights the substantial risks associated with claims perceived to be improper. Even well-intentioned employers may find themselves facing complex challenges if their claims do not fully align with IRS guidelines. For businesses that have already filed for the ERC or are considering doing so, these developments underscore the importance of legal guidance to mitigate ERTC audit risks.
Our team of ERC attorneys is prepared to explain every detail and do everything necessary to shield you from the intensity, stress, expense and potential penalties of an IRS audit. As preeminent New York ERC lawyers, we can help you:
- Avoid costly errors: We work to ensure your claim is accurate and defensible.
- Respond effectively to IRS inquiries: If you receive a letter regarding ERTC audits, our knowledgeable legal representation can significantly affect the outcome.
- Assess withdrawal options: Legal services can help evaluate whether utilizing the IRS withdrawal program is appropriate for ERC fraud cases.
- Stay informed of changing regulations: As the IRS continues to refine its approach to ERC claims, our legal team stays up-to-date on the latest developments to help protect your interests.
- Mitigate audit risk: Our ERC attorneys’ thorough understanding of IRS audit procedures can help prepare your business to withstand potential scrutiny and avoid an ERC audit penalty.
Whether you are considering filing for the credit, have already submitted a claim or are facing an ERC tax credit audit, the financial stakes are too high and the regulatory landscape too complex to handle alone. In such situations, our tax law firm has the legal support you need.
We Assess Your Eligibility And Ensure You Comply
The increased scrutiny from the IRS should not discourage you from applying for the Employee Retention Tax Credit if you believe that you may be eligible. To qualify, a business must meet the following criteria:
- Have no more than 500 employees
- Keep employees on your payroll
- Closed partially due to a government order, or at least a 20% decrease in business revenue
If you received a grant or loan, such as those from the Paycheck Protection Program (PPP), you may still claim the ERTC. However, claimants cannot use any employee wages used in their PPP loan forgiveness for the ERTC.
Our ERC/ERTC lawyers can sit down with you to analyze your eligibility for the credit. You should consult us before you try to apply. If you apply for the credit without realizing that you do not meet one of the eligibility criteria, the IRS may not only deny your claim but also flag it for impropriety. You could end up facing scrutiny from the IRS – even a tax audit. By working with us, we will ensure that you have a valid claim for the ERC/ERTC and can help you build a strong claim.
Putting The Employee Retention Credit In Your Hands
Filing for the ERC involves a detailed process and requires thorough documentation. The general steps are as follows:
- Determine eligibility: Verify that your business qualifies based on IRS guidelines concerning impacted operations and a significant decline in gross receipts.
- Calculate qualified wages: Identify wages eligible for the credit during the specified quarters.
- Gather documentation: Compile payroll records, tax forms and any documents supporting business disruption.
- Complete Form 941: Adjust your quarterly tax filings using Form 941 to claim the credit.
- Submit the form: File the adjusted Form 941 with the IRS.
- Keep records: Retain all relevant documentation for at least four years as proof of compliance and readiness for potential audits.
Some of the most common pitfalls that employers make when filing for the credit include:
- Inaccurate payroll records: Ensure accuracy to prevent discrepancies.
- Misinterpretation of eligibility criteria: Understand the rules fully to claim correctly.
- Delay in filing: Submit documents promptly to avoid missing deadlines.
By working with a reputable ERTC attorney such as ours to ensure correct filing procedures and compliance, businesses can effectively claim the ERTC and gain financial relief. If your company is eligible, we can discuss how to optimize your claim so you receive the best tax incentives available. If your company has already claimed the ERTC/ERC, we will ensure that you remain in compliance with the law. We can also help you explore the necessary steps to render your company eligible for the credit.
Your Shield In An ERTC/ERC Audits
Even a scrupulous employer may find themselves in the position of facing an ERTC audit. Inconsistencies in the claim can trigger these audits, as can random selection. If notified of an ERC audit, our ERTC attorneys will guide you through the following steps:
- Reviewing your claim and supporting documents.
- Organizing financial records for easy access during the ERC audit period.
- Communicating with the IRS before the audit.
- Representing you before IRS representatives during an in-person audit.
Keeping accurate records and maintaining transparency are your best defenses. Our team of ERTC audit lawyers takes pride in their ERC audit defense strategies that safeguard your business’s interests. As frightening as ERC IRS audits may seem, having an ally on your side makes the process much less stressful. They can also work with you to mitigate ERTC audit risk preventatively.
Capable Defense For ERTC/ERC Fraud And Criminal Issues
With the IRS on the hunt for any miniscule form of error or impropriety, the agency is only too eager to bring any suspicions to the federal authorities for prosecution. Innocent claimants have found themselves on the other end of terrifying federal tax fraud accusations.
ERTC/ERC fraud is a grave charge. It involves the intentional misrepresentation or omission of information to claim the credit unlawfully. The civil penalties for ERC fraud cases may include:
- The repayment of back taxes owed
- A penalty of 20% to 75% of the unpaid taxes
The criminal ERC fraud penalties may involve:
- Up to five years in prison for tax evasion or fraud
- Fines between $100,000 and $500,000
If facing allegations of ERTC fraud, having an ERTC fraud defense lawyer to protect you and negotiate resolutions is crucial. Our ERC fraud lawyers focus on detecting and investigating fraudulent activities to prevent legal repercussions for our clients. If the IRS or another public entity does initiate an audit or investigation, we readily respond with a tenacious defense. We have extensive experience representing our clients before the IRS, the Department of Justice, and state and federal criminal justice authorities.
Our ERTC Lawyers Can Get You The Credit And Add Value
Through our reliable counsel, we can assuage your concerns about potential IRS scrutiny. Hiring our team as counsel not only ensures legal compliance and audit defense but can also add value to your enterprise. Some of the common concerns we hear about include:
- Fear of triggering an audit: With proper documentation, this should not be a concern.
- Uncertainty about qualifying wages: We can clarify what counts as qualifying wages.
Our ERC attorneys have numerous success stories regarding ERTC/ERC claims. It is our honor to help businesses thrive following the challenges of the COVID-19 pandemic. Their insight into claiming the credit, remaining in compliance, and mitigating the likelihood of an audit or fraud allegation can add lucrative value to your business.
Sit Down To Explore Your Options
As an employer, you could be putting your operation at a disadvantage by not making use of the Employee Retention Tax Credit. Our lawyers have the information necessary to make the law work for you. To reach out to us to schedule an initial consultation regarding tax credits and other issues, please call our Manhattan office at 212-302-9400 or toll-free at 844-653-2873, or send us an email. We have two more New York offices in Long Island and Rockland County, as well as additional locations in New Jersey, California and Florida.