During the pandemic, the federal government passed the Employee Retention Credit (ERC) program. For businesses and employees, ERC was a lifeline. Fraud and invalid claims, however, forced the IRS to suspend the program in September 2023. 

In 2024, the IRS sent out tens of thousands of letters informing businesses that their ERC claim had been denied. The IRS has since stated that they are reviewing approximately 400,000 claims. 

That a business receives a denial letter doesn't mean they cannot claim the credit. What they need to do is appeal and provide documents and evidence that their claim was valid.  

What Is The Employee Retention Credit? 

Also referred to as the Employee Retention Tax Credit (ERTC), the ERC is a refundable tax credit. It was designed to assist eligible businesses and tax-exempt organizations that were affected during the COVID-19 pandemic.  

THE ERC had different requirements depending on when a business or organization claimed the credit. Concern over improper claiming of the credit led to the IRS reviewing tax returns that claimed the credit. 

Appeals Window 

The IRS previously gave taxpayers 30 days to appeal a decision involving the ERC. In September 2024, however, the IRS extended the window to two years. 

This extension is beneficial to both the IRS and taxpayers. The IRS now has more time to review appeals and prevent a massive backlog that would occur within the 30-day window. 

Taxpayers benefit because ERC claims can be complex. It may take a business significant time to assemble the needed documents and other evidence necessary to their appeal. 

If You Submitted An Ineligible Claim 

For businesses or organizations that submit an improper claim, the IRS recommends that they either withdraw the claim or apply for the second Employee Retention Credit Voluntary Disclosure Program. This second program remains active until Nov. 22, 2024.  

If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.