Are There Steps Businesses Can Take to Avoid ERTC Penalties?

If you’re a business owner who’s claimed the Employee Retention Tax Credit (ERTC/ERC), or you’ve been considering applying for it, you may have heard that the IRS is cracking down on fraudulent applications and even ordered a moratorium on the processing of new claims through the end of the year. If you’re concerned about ERTC-related penalties, you should know there are some steps you can take to protect yourself and your business. 

Measures Businesses Can Take to Potentially Avoid ERTC Penalties

In September, the IRS ordered a “moratorium on processing of new claims through year’s end” when it comes to the Employee Retention Tax Credit. The action was taken thanks to concerns of “improper” or “ineligible” claims being sent to the agency and worries of potential fraud in the program. 

Employers who improperly claim the ERTC may have to pay it back “possibly with penalties and interest,” according to the agency. If a business owner is audited and the amount of the ERTC is reduced, penalties could vary from a 20-percent “accuracy-related penalty” to a 75-percent penalty if the IRS asserts civil fraud by the employer, Bloomberg Tax reported.

So, how can business owners protect themselves and their businesses and potentially avoid ERTC-related penalties? 

As part of a guide to red flags to watch out for when looking for a company to help business owners claim the ERTC, the IRS noted that “eligible employers who need help claiming the credit should work with a trusted tax professional.” 

Law firms that have been around for many years, like Dayes Law Firm, can be held accountable for the work they do for you, while businesses that pop up quickly to seemingly assist with your ERTC application could close up shop as soon as the program is over. If you want to work with a third party to claim the ERTC, you should work with one you know can be trusted and is truly committed to helping you and your business. 

You should also only apply for the Employee Retention Tax Credit if you are absolutely sure you are legitimately qualified for the credit. Again, an ERTC team like the one at Dayes Law Firm can help you determine this, so you’re not stuck paying back the IRS because you weren’t actually authorized to claim the ERTC in the first place. 

Business owners should also make sure to double-check and document every single piece of information they’re sending as part of their ERTC application. If you’re working with an ERTC team like ours, those professionals should be able to provide a detailed checklist that explains your ERTC eligibility and exactly how they determined you qualify – and how much you should expect to receive in an ERTC refund. 

While those all could be considered special measures businesses can take to avoid ERTC-related penalties, to Dayes Law Firm, these measures are really just due diligence. A tax professional helping you with the Employee Retention Tax Credit should be willing to take all those steps and more to protect your business from IRS penalties. 

Working with Dayes Law Firm on the ERTC

At Dayes Law Firm, our team can offer a free consultation on any of your ERTC questions. You are under no obligation to work with us after this evaluation, but our tax professionals have helped clients receive over $25 million in funds for ERTC tax credit claims so far, and we think we can prove that we’re the right choice to work with you, too. 

Our tax attorneys can verify your eligibility and refund amount, as well as handle the more detailed aspects of the ERTC claims process. We can make sure all the necessary documentation for your application is present and accounted for, so you should have little reason to be concerned about ERTC-related penalties from the IRS.

However, if you do face an IRS audit, our tax professionals will defend your ERTC application, or assist if there is ever a request for an audit in the future. We stand by our work, and we’ll stand by you. 

Please contact us today at (800) 503-2000 to learn more!