What Are the Best Practices for IRS ERTC Claim Negotiations?

December 21, 2023
Dayes Law Firm

When you file a claim for the Employee Retention Tax Credit (ERTC), you hope everything goes smoothly. However, due to an influx of false or ineligible ERTC claims, the IRS is conducting thorough compliance reviews of all ERTC in-process claims. You might be subject to an IRS audit if they notice something amiss with your documents. 

A qualified tax attorney can help you navigate this process. Audits can be complex, but understanding what to expect during ERTC IRS negotiations is a good place to start. 

How Do You Appeal an IRS Audit?

With the Employee Retention Credit claimed, you want to protect your refund. Receiving an IRS audit letter isn’t the end-all-be-all. You can appeal this audit through the Office of Appeals. This office allows you to file reports and plead your case to avoid litigation. 

You can negotiate IRS audits with the right legal documentation as a taxpayer. The more evidence you have, the better. Be prepared to prove the validity of the amended employment tax return you included with your ERTC claim.

Five Best Practices for ERTC IRS Negotiations During an Audit

If the IRS audits your ERTC claim, follow these five tips to navigate the process.

1. Meet the Appeals Deadline

You have 30 days from the date on your audit letter to file an appeal. Meeting this deadline shows the appeals officers that you are a responsible business owner who is cooperating. However, if you do miss this deadline, you aren’t out of options. 

Start by asking for a 30-day or 60-day extension. Additionally, If you owe over $25,000, you can file Form 12203. If you owe between $2,500 and $25,000, you may write a “small case request” letter of protest. If you owe less than $2,500, you can ask your auditor directly for an appeal.

2. Prepare All Necessary Information

Include all necessary information in your appeal letter and during negotiations. This information should be accurate and complete. Include: 

  • Contact information (name, address, phone number)
  • The IRS audit letter and your appeal statement
  • List of items you disagree with
  • The facts that support your position, including evidence of your decline in gross receipts or a full or partial suspension of operations due to a government order
  • Other relevant information, such as if you were able to obtain paycheck protection program loan forgiveness
  • A penalties-of-perjury statement

3. Present Your Case Clearly 

Remember to remain professional and calm. Clearly state your objections, provide proof, and cooperate fully with the IRS appeals officers. If the officer requires additional documentation or evidence, give them a clear timeline for when they can expect to have it. Having a tax attorney on your side during this process can help you accomplish this.

4. Be Open To Compromise

Willingness to compromise will increase your credibility during ERTC IRS negotiations. Agree to pay a few of the adjustments to show good faith, but don’t specify which adjustments. Your attorney can help you determine a fair portion of adjustments to pay.

5. Examine the Offer Thoroughly

Before you sign a settlement offer, examine it thoroughly with your attorney. If you don’t understand something, ask for clarification. Once you sign the document, the IRS will hold you accountable for the agreement. 

Dayes Law Firm: Credible ERTC Lawyers On Your Side During Negotiations

You don’t have to take on the burden of ERTC IRS negotiations alone. At Dayes Law Firm, we can help you through this process. We’ll ensure you meet the necessary deadlines, provide proper documentation, and come to a reasonable agreement with the IRS appeals officer. If the IRS sent you an audit letter, there’s no time to waste. Contact us at 800-503-2000 today for a free consultation.