Helping your business get up to $26K per employee on tax refunds.
We specialize in maximizing ERC funding for small businesses and protecting the money once they have qualified for it.
Find out if you are eligibleConfirm that your business meets the eligibility criteria, which may vary based on the specific ERC program and tax year.
Calculate the qualified wages paid to your employees during eligible quarters.
Copy Report the ERC on your federal employment tax returns, and either reduce your federal employment tax.
Stay informed about changes in ERC legislation, as the rules and eligibility criteria may evolve over time.
Confirm that your business meets the eligibility criteria, which may vary based on the specific ERC program and tax year.
Calculate the qualified wages paid to your employees during eligible quarters.
Copy Report the ERC on your federal employment tax returns, and either reduce your federal employment tax.
Stay informed about changes in ERC legislation, as the rules and eligibility criteria may evolve over time.
Welcome to our organization, where the Employee Retention Credit (ERC) is a valuable tax incentive designed to support small businesses by providing financial relief during challenging economic times. This tax credit is particularly relevant for businesses navigating uncertainties like those brought about by the COVID-19 pandemic.
You may be if you were impacted by any of the following:
96% of families income are from small businesses.
State
Industry
So No Matter Your Industry.
Whether You Have 1 Employee Or 500…
While the general qualifications for the ERC program seem simple, the interpretation of each qualification is very complex. We’re a specialty tax company exclusively dedicated to understanding and maximizing the Employee Retention Credit (ERC) for businesses affected by COVID 19.
A government authority required partial or full shutdown of your business during 2020 or 2021. This includes your operations being limited by commerce, inability to travel, or restrictions of group meetings.
Gross receipt reduction criteria are different for 2020 and 2021 but are measured against the current quarter as compared to 2019 pre-COVID amounts.
Rest Assured with Peace of Mind, as We Uphold the Highest Standards.
Real American CPAs
Audit Protection
Clear and Transparent Pricing
Experts who have worked with the IRS
Maximize Your Refund
Eligibility for Funding Advances
Thoroughly done and double checked
However, we recommend you do these things to lower ERC audit risk:
While this might sound the most obvious thing to do, you’ll be surprised at how many people don’t check the most recent IRS guidelines.
Working with a reputable tax professional, like the team here at Brotman Law, ensures you’re accurately claiming the credit.
Having all documentation to hand may just prevent them from needing to complete a full ERC tax credit audit.
As a responsible person in your business, you should double-check ERC calculations to ensure their accuracy.
If the IRS requests additional documentation to verify your ERC claim, respond promptly and provide the requested documentation.
To prepare for an ERC audit, take the following steps:
Review the notification letter
The IRS will typically send a notification letter to inform you that your business will be audited. The letter will provide details on the scope of the audit, the IRS contact person, and the timeframe. Review the letter carefully and take note of any deadlines or requirements.
Gather all relevant documentss
Ensure all relevant documents related to the ERC are in order, such as payroll records, tax returns, and other supporting documentation. You'll need these to respond to the IRS's requests and to demonstrate that the business is eligible for the credit.
Cooperate with the IRS
It’s really essential that you fully cooperate with the IRS and provide all requested information promptly. Failure to cooperate with the IRS can result in penalties and additional scrutiny (more on penalties coming up!)
Appeal the decision, if necessary
You may have the right to appeal the decision through the IRS's appeals process or through
litigation in court.
However, this can be lengthy and may require additional time, cost and
effort on your part. Naturally, this can be worth it.
An ERC audit penalty can result in additional tax liabilities, interest charges, and potential legal consequences:
Underpayment of taxes
Accuracy-related penaltiess
Potential legal consequences
Here are some questions about Erc Audit
The ERC isn't subject to Single Audit. Single audits, also known as Uniform Guidance audits, are specific types of audits required for entities that expend federal awards, grants, or financial assistance from the U.S. federal government. The ERC is a federal tax credit, NOT one of these.
ERC AUDIT PENALTY GUIDANCE:
An ERC audit penalty can result in additional tax liabilities, interest charges, and potential legal consequences:
Underpayment of taxes: Businesses may be required to pay back the erroneously claimed ERC amount, resulting in additional tax liabilities.
Accuracy-related penalties: In cases where the IRS deems that the errors were due to negligence, disregard of tax rules, or substantial understatement of income, accuracy-related penalties may be imposed. These penalties are calculated as a percentage of the underpaid taxes.
Interest charges: The IRS may assess interest charges on the underpaid taxes from the due date of the tax return until the date of payment.
Potential legal consequences: In cases of intentional fraud or willful misconduct, businesses may face criminal charges, including fines and imprisonment.
The penalty for false ERC claims is 20% of the excessive amount claimed. For example, if your ERC claim is $6,000 but, in actuality, your eligible amount was only $5,000, the excessive amount is $1,000 and your penalty is $200 (20% of $1,000).
In addition, the IRS may apply an "accuracy-related penalty if there is not a reasonable cause." Moreover, interest on any ERC penalty could be applied.
Note that this penalty isn't specific to the ERC but is the IRS' general guidance on false credit claims.
If the IRS selects you for an ERC audit, it will send an audit notice to your last known address. If you claimed this credit and you have changed your address since the last time you filed a tax return, you should update your address with the agency. Otherwise, you may miss the audit notices. If that happens, the IRS may disallow the credit and assess a tax liability without you even realizing what’s going on.
The audit notice will explain the type of audit, the issues being audited, and the next steps you need to take.
Here are the main types of ERC audits:
Correspondence — You mail the auditor documents that back up the details on your payroll tax return, and you handle most of the process through the mail.
Desk — The audit notice instructs you to set up a phone meeting with the auditor. Then, you send in supporting documents and talk about them on the phone.
Field — The auditor comes to your place of business to conduct the audit. This is likely to be rare (but not impossible) with ERC audits.
Often, the notice will include an Information Document Request (IDR). This outlines the documents you need to provide and tells you where to send them.
The employee retention credit didn’t just affect your payroll tax returns. It also had implications for your business income tax return and potentially your personal income tax return.
Here’s why. If you claimed the ERC, you were supposed to reduce the wage expense on your business income tax return by the amount of the credit. For instance, say that your wage expense was originally $100,000, and this was the amount you reported on your business income tax return. Then, you amended your payroll tax returns and claimed a $20,000 ERC.
At this point, you should have amended your business income tax return to reduce your wage expense from $100,000 to $80,000. This, in turn, would have increased your profits by $20,000 and thus increased your tax liability.
The ERC auditor may look at your business income tax return to see if it accurately reflects the ERC. If not, they may adjust your income tax return. If you’re a sole proprietor, the adjustment will be to your schedule C, and it will automatically adjust your personal income tax liability. If you file a partnership, S-corp, or corporate return, you will need to make the changes to those returns and then make additional adjustments to your personal income tax return.
What if the auditor looks at your documents and decides that you don’t qualify for the ERC? Then, they will issue an audit report that details the changes to your payroll tax return, and they will let you know how much you owe.
At this point, you can protest the changes, but you must do so quickly. Usually, you only have 30 days to appeal an audit decision, and if you miss the deadline, you won’t be able to appeal.
ERC Audit Penalties:
If you “fail” an audit, the auditor may also add penalties to your account. If they believe that you were negligent in following the tax laws, they may apply a 20% accuracy-related penalty. This is 20% of the underreported tax. In cases of fraud, the penalty is 75% of the tax.
The IRS can bring criminal tax fraud charges against people who attempt to defraud the government by illegitimately taking false tax credits. This is rare, but it can lead to prison time and up to a $100,000 fine for individuals and a $500,000 fine for corporations.
The IRS has extended the statute of limitations on payroll tax returns from the last two quarters of 2021 from three years to five years. This means that the agency has until April 2027 to audit these returns. The statute was extended with the American Rescue Plan Act.
At the time of writing, the IRS has not extended the statute of limitations for the other six quarters during which employers could claim this credit. However, the agency has put this request on its 2024 agenda. It is highly likely that the statute of limitations may change from three years to five years on these returns.
For most returns, the statute of limitations starts on the later of the due date or the date you file. However, with payroll returns, the timer starts on April 15 following the year the quarter occurred. For instance, Q1, Q2, Q3, and Q4 payroll returns for 2020 were due on April 30, 2020, July 21, 2020, November 2020, and February 2, 2021, and the statute of limitations for auditing these returns started on April 15, 2021. Currently, the IRS has until April 15, 2024, to audit these returns, but if the agency extends the statute, it will have until April 15, 2026.
If you filed an amended return after the due date, the statute of limitations typically starts on that day.