Percentage-Based Fees
Promoters who charge fees based on the size of your ERC refund are violating IRS regulations. The IRS prohibits this type of payment arrangement under Circular 230.
ERC Alert
ERC Warnings Business Owners Can’t Brush Off
The landscape around Employee Retention Credit claims is changing fast. On June 20, 2024, the IRS announced a crackdown that will affect many businesses that relied on this credit during the pandemic.
Get in TouchJune 20, 2024
The IRS Crackdown on ERC Claims
The IRS will deny tens of thousands of high-risk ERC claims — potentially worth billions of dollars — following an in-depth review of pending filings.
10–20% of claims flagged high-risk and denied outright
60–70% of risky claims undergoing further examination
1–2K returns processed per week
~1.5M filings in the IRS backlog
The IRS has also imposed a processing moratorium on new claims submitted after September 14, 2023. Low-risk claims received before that date are still being processed, but the pace has slowed considerably. Businesses awaiting legitimate claims may begin receiving payments later this summer.
A Way Out
The IRS Withdrawal Program
This update underscores the importance of ensuring any ERC claims you previously filed meet all eligibility requirements and are well-documented. IRS Commissioner Danny Werfel advised businesses to review the IRS guidelines, consult legitimate tax professionals, and consider the withdrawal program if there are issues with a claim.
The withdrawal program lets businesses withdraw unprocessed claims without penalties or interest, preventing future compliance issues. If your business hasn’t yet received its ERC payment — or you received a check but haven’t cashed or deposited it — you can return the check and withdraw your claim.
Red Flags
Warning Signs You May Have Been Targeted
Expect increased IRS scrutiny and possible audits. Watch for these signs that an ERC promoter or unethical preparer may have put your claim at risk.
Indemnification Clauses in Agreements
Some promoters include disclaimers to shield themselves from liability. A clause like “ERC Preparer does not provide tax advice or CPA services and is not responsible for the preparation of tax returns” is a red flag if the promoter helped file your claim.
Unrealistic Claims of Quick Eligibility
Statements like “Determine your ERC eligibility in minutes” are not realistic. ERC claims require careful analysis, and determining eligibility properly often takes weeks or months.
Refusal to Sign Tax Returns
If a preparer refuses to sign the return or provide identifying information, they may be a “ghost preparer” — the IRS’s term for unqualified preparers who don’t comply with tax rules. Always require transparency and a signature.
Failure to Explain Eligibility Requirements
If a promoter fails to explain eligibility criteria, wage limitations, or how the ERC interacts with the Paycheck Protection Program (PPP), they may be giving incorrect or misleading advice.
Supply Chain Disruptions
Some promoters incorrectly claim businesses qualify for the ERC due to supply chain disruptions. This is only true in rare cases — understand the eligibility requirements to avoid mistakes.
Unsolicited Calls and Advertisements
Legitimate tax professionals don’t cold-call or blanket-advertise to pressure you into filing. Aggressive, unsolicited outreach pushing ERC claims is a hallmark promoter tactic.
We help businesses navigate these changes.
Our team stays current with the latest IRS announcements and can review existing claims, assess new eligibility, evaluate the withdrawal program, or prepare you for an ERC audit. Call (410) 698-4005 or schedule a free consultation.