What If the IRS Disallows My ERTC Claim Over a Clerical Error?

December 26, 2023
Dayes Law Firm

Many business owners have enjoyed significant tax benefits thanks to the Employee Retention Tax Credit (ERTC or ERC). You may have also claimed the ERTC after reviewing the eligibility criteria and following the filing guidelines. But what should you do when your ERTC claim is denied because of a clerical error, with possible repercussions like an IRS audit or a criminal investigation?

Why ERTC Claims Undergo Close Scrutiny 

Alongside legitimate ERTC claims from qualifying business owners, the IRS has had to deal with a barrage of false claims that included ineligible wage deductions on amended tax returns. Many honest business owners fell prey to tax fraud and scams by illicit companies.

The IRS invests a lot of effort into screening claims to combat fraud. New ERTC claims are under a moratorium to give the IRS time to process pending claims. 

What If the IRS Denies Your Claim Based on Clerical Errors?

With an ERTC claim denied, what can you do? First, examine the notice you receive from the IRS and understand where the error occurred. Common examples of clerical errors include:

  • Mathematical errors (like incorrect addition or subtraction)
  • Using the wrong tax table to calculate your return
  • Transcription errors
  • Failure to include supporting forms
  • Incorrect or missing TIN

You may be able to reverse the claim denial if you provide the necessary supporting documentation. For example, if your original return includes the wrong TIN, you can appeal the unfavorable notice by supplying the correct TIN.

If you prepared your tax documentation yourself, receiving an error notice is a good time to consult a tax lawyer or another trusted professional who can advise you on amending your forms. 

Should You Expect an IRS Audit Because of a Math Error?

If your tax form includes a clerical error, the IRS may notify you of the mistake and request additional documentation. Uncovering math errors is a highly technical process, and your business won’t necessarily have to go through a full-blown audit.

However, given the current close inspection of ERTC claims, any error increases the risk of an audit. An audit becomes a likelier possibility if your claim’s processing reveals any inconsistencies beyond a clerical error, like wage calculations that contradict your payroll documents. 

When to Consult a Tax Professional  

Tax professional advice can help you avoid trouble before and after you claim the ERTC benefit. Clerical errors can often happen when handling tax documentation without qualified help. You will save a lot of time and trouble by working with a tax lawyer who can do the following on your behalf:

  • Confirm that your business qualifies for the ERTC
  • Ensure you only claim the benefit on eligible wages
  • Verify that your tax forms include all the necessary accurate information
  • Minimize the risk of clerical errors on amended tax returns

If you still encounter claim denial because of a math or clerical error, or if you face the prospect of an IRS audit, a tax lawyer can help you prepare for such proceedings and possibly reduce tax penalties. 

Dayes Law Firm: Reliable Legal Advice for ERTC Claims

An ERTC claim denied because of a clerical error is a frustrating situation for many honest business owners. If you run into this issue, contact us at Dayes Law Firm. Our competent lawyers will review your tax documentation, explain what you can do to claim any eligible credits, and help you avoid the risk of an IRS audit.

Give us a call at (800) 503-2000 or fill out our online form to schedule your free consultation.