How Can I Appeal an IRS Decision To Disallow My ERTC Claim? 

December 6, 2023
Dayes Law Firm

Have you submitted your ERTC application only to find that the IRS has rejected your application and disallowed your claim? What do you do now? 

If you believe the IRS’s decision was in error, you can appeal it. However, you must follow specific steps to appeal an IRS ERTC rejection successfully. 

What Is a Notice of Claim Disallowance? 

If the IRS thinks you claimed the ERTC in error, it may send you a Notice of Claim Disallowance informing you that the IRS is not allowing you to claim the ERTC. 

The IRS will state the reasons for the disallowance in its letter. You don’t have to do anything further after the IRS sends you a Notice of Claim Disallowance. You may file an appeal if you disagree with this decision and think you are still entitled to a credit. 

Appealing an IRS Claim Disallowance 

You must follow specific processes to appeal an IRS ERTC rejection. You’ll also do well to work with a tax professional throughout the appeals process to ensure that you approach each step correctly and that your reasoning for the appeal is sound. 

Step 1: Submit a Small Case Request or Formal Written Protest

Your first step is to send a written request to the IRS detailing your desire to appeal. 

You will send a small case request if the total amount of tax, penalties, and interest for each tax period that was part of your rejected ERTC application is $25,000 or less. If any of the tax periods in your application exceed this $25,000 cap, you must file a formal written protest for all periods involved. 

To file a small case request, send a brief written statement requesting an appeals conference. Indicate the specific rejection you disagree with and provide documents supporting why you disagree with it. 

To file a formal written protest, send a letter that includes the following information:

  • Your name, address, and phone number
  • A statement that you want to appeal an IRS finding to the Appeals Office
  • A copy of the letter from the IRS
  • The tax periods involved in the appeal
  • A list of all rejections you disagree with and why
  • A signed statement indicating that the written protest is true under the penalties of perjury

Step 2: Await the Claim Decision 

The IRS will consider your letter, then forward it to the IRS Independent Office of Appeals, which is the only level of appeal within the IRS. 

The Office of Appeals will decide whether or not to allow your claim. If it decides not to allow it, your next step is to file a suit with the U.S. District Court with jurisdiction over your area. These courts are part of the federal government and have no connection to the IRS. 

Step 3: Complete a Conference With an Appeals Officer

If the Office of Appeals allows your claim, you’ll schedule a conference with an appeals officer. The conference will be in person, through correspondence, or over the phone. You may have a CPA or enrolled agent present at your conference. 

During the conference, you will discuss all disputed issues and attempt to reach an agreement with the officer. Most disputes are settled at this level without involving the court. 

Contact Dayes Law Firm for IRS Appeal Assistance

The process of appealing an IRS ERTC rejection is complex and requires careful attention to several steps. To improve your chances of successfully appealing your disallowance or erroneous claim penalty, contact Dayes Law Firm. Our tax attorneys are committed to protecting taxpayer rights, and we can provide professional assistance throughout your appeal. Give us a call at (800) 503-2000 or fill out our online form to schedule your free consultation.