How Can I Prepare for an IRS Interview About My ERTC Claim?

December 15, 2023
Dayes Law Firm

The Employee Retention Tax Credit (ERTC), also known as the Employee Retention Credit (ERC), can be an invaluable source of help for eligible employers who continued paying employees throughout the COVID-19 pandemic. However, not all businesses that claim the credit are eligible to do so. If you’ve received a request in the mail from the IRS for an interview after claiming the ERTC, you’re probably wondering what to expect.

Here are some tips to help you prepare for an ERTC IRS interview.

Why Does the IRS Want to Interview You?

The IRS doesn’t only interview people for suspicious tax returns. If it notices anything odd about your ERTC request, an IRS agent may want to audit you and your business.

Understanding why is the first step in preparing for an ERTC IRS interview. The following are a few reasons the IRS might want to interview you:

  • Someone completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers. This could be an employee or anyone else who suspects you (or your tax preparer) of fraudulently claiming the ERTC.
  • You made a claim that doesn’t match your business’s qualified wages or number of employees.
  • You’re ineligible for the credit. To qualify, your business must either have had a significant decline in gross receipts (at least 20% for 2021 and at least 50% for 2020) or closed down because of a government order.
  • You made a mistake on Form 941-X.
  • The IRS previously audited your business, which could increase the chance of another audit.

How to Prepare for an ERTC IRS Interview

Once you know why the IRS wants to talk to you, you’ll have a better idea of how to prepare for your ERTC IRS interview. Here’s what to do:

  • Carefully look over the letter the IRS sends you. It will likely include the name of an IRS contact person and a timeframe for the interview.
  • Gather all supporting evidence showing you qualify for the credit. This includes your tax returns, proof of deductions, and records of your employee wages, benefits, and taxes paid. Collect your gross receipts if you claimed the credit based on the receipts test. If you claimed the ERTC using the government order test, be prepared to provide proof of how the shutdown affected your business.
  • Retain a representative, such as a tax attorney, to help you before, during, and after the interview. Your representative may be able to request a list of questions the IRS agent plans to ask.
  • Have your representative submit a request to record the interview. Recording is allowed as long as you or your representative makes the request at least ten days before the interview.
  • During the interview, answer all questions as truthfully as possible. Try not to embellish your answers, as the interviewer may think you’re acting suspiciously or hiding something.

After the interview, the IRS agent will make a decision on your case. If you’re unhappy with the decision, you can file an appeal.

Avoiding IRS Audits for the ERTC

It’s much easier to avoid an ERTC IRS interview than to go through one. Here’s how:

  • Stay away from shady ERTC mills and stick with reputable tax professionals for your claim.
  • Double-check calculations for qualified wages and gross receipts.
  • Keep all documentation necessary to back up your claim.
  • Respond to IRS communications promptly.

Call Dayes Law Firm If the IRS Comes Knocking

Facing an ERTC IRS interview on your own can be frightening. If the IRS has requested to interview you, call Dayes Law Firm at (800) 503-2000 to find out how we can help.