What Can Businesses Do to Avoid ERTC-Related Penalties?

October 23, 2023
Dayes Law Firm

The IRS ordered a “moratorium on processing of new claims through year’s end” for Employee Retention Tax Credit (ERTC/ERC) claims on September 14 amid concerns of “improper” or “ineligible” applications being sent to the agency. Inaccurate or fraudulent ERTC claims can lead to major penalties, which no business wants to contend with. But what measures can businesses take to avoid these ERTC-related penalties?

ERTC IRS Moratorium 

When announcing an “immediate moratorium” through the end of 2023 on processing ERTC claims, IRS Commissioner Danny Werfel said in an announcement, “The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in.

Werfel further added that when it comes to claiming the credit, “businesses should seek out a trusted tax professional who actually understands the complex ERC rules.”

This is just one action businesses can take to avoid penalties and fees as a result of turning in inaccurate or ineligible claims to the IRS. Tax professionals, like the ones at Dayes Law Firm, comprehensively understand the ERTC and tax code and can help you turn in every piece of information for your claim that the agency could possibly want. 

The tax attorneys at Phillips Law Group can also help you and your business with an IRS audit defense if your claim somehow gets red-flagged in the midst of this increased scrutiny at the IRS.

How Businesses Can Avoid ERTC-Related Penalties 

Businesses can also work to avoid ERTC-related penalties by double and triple-checking everything from their expected ERTC refund amount, to the supporting documentation for wages paid – such as payroll reports and tax filings – that they include in their Employee Retention Tax Credit application, to whatever proof they have of a decline in gross receipts or closure due to a government order, and more. 

As long as your business has maintained clear and accurate records and completed internal investigations to look for any potential errors, you may be better equipped to avoid ERTC penalties. Choosing to work with experienced tax professionals to ensure compliance with ERTC regulations is a great idea, too. 

The IRS previously warned that the agency is becoming “more aggressive” about “increased audit and criminal investigation work on these claims.” Additionally, if a business owner is audited and the amount of their ERTC is reduced, penalties could range from a 20 percent “accuracy-related penalty” to a 75 percent penalty if the IRS claims civil fraud by the employer, Bloomberg Tax reported.

Dayes Law Firm Provides ERTC Assistance 

If you want to have a team of professionals on your side that thoroughly understands the Employee Retention Tax Credit, consider getting in touch with the team at Dayes Law Firm

Our attorneys will work with you to review your unique situation and help you understand whether or not you qualify for the ERTC. We can also help you make absolutely certain all of the information you send as part of your ERTC application is correct to avoid the ire of the IRS. 

Please contact us by calling (800) 503-2000 today for a free, no-obligation consultation to learn more.