What To Expect During Your ERC Audit and Investigation
Navigating an ERC audit and investigation can be daunting. The Employee Retention Credit (ERC) was a vital support mechanism for businesses during the COVID-19 pandemic, but it has also led to increased scrutiny from the IRS. Understanding what to expect during an audit and investigation can help you prepare and respond effectively. We aim to provide clarity and support during these challenging times. Here's a comprehensive overview of what you can anticipate during your ERC audit and investigation.
What is an ERC Audit?
An Employee Retention Credit (ERC) audit is a thorough review conducted by the IRS to verify the accuracy and legitimacy of businesses' claims for the ERC. The ERC was introduced under the CARES Act to help businesses keep employees on their payroll during the COVID-19 pandemic. Due to the significant financial relief provided by the ERC, the IRS is vigilant in ensuring that only eligible businesses receive these funds.
Purpose of an ERC Audit
The audit aims to confirm that your business met the eligibility criteria for claiming the ERC, such as experiencing a significant decline in gross receipts or being subject to a full or partial suspension of operations due to government orders. The IRS will check that the amounts claimed for the ERC are accurate and correspond to the number of employees retained and the wages paid during the qualifying periods. The audit helps detect and prevent fraudulent claims, ensuring that the ERC funds are used as intended to support legitimate business needs.
What To Expect During Your ERC Audit and Investigation
Navigating an ERC audit and investigation can be a stressful and complex process. Understanding what to expect can help you prepare and respond more effectively. At Candice Fields Law, PC, we are here to guide you through each step. Here’s an overview of what you can anticipate during your ERC audit and investigation:
Initial Notification
The process typically begins with an official letter or notice from the IRS indicating that your ERC claims are under review. This notice will inform you of the impending audit and outline the documents and information you must provide.
Document Review
Be prepared to gather and submit extensive documentation related to your ERC claims, including payroll records, employee data, financial statements, and correspondence with accountants or payroll services. Organizing your files thoroughly and promptly can help streamline the audit process. To avoid additional scrutiny, submit the requested documentation by the deadline specified in the IRS notice.
IRS Examination
The IRS will conduct a detailed review of the submitted documents to verify the accuracy of your ERC claims. IRS agents may contact you for additional information or clarification during the review process. Be prepared to answer questions about your records and business practices. Sometimes, IRS agents may visit your business premises to inspect records and verify the information provided.
Findings and Resolution
The IRS will provide a preliminary report outlining its findings, which may highlight discrepancies or issues with your ERC claims. You will have the opportunity to respond and provide additional information or corrections. After reviewing your response, the IRS will finalize whether your ERC claims were approved, adjusted, or denied. Depending on the findings, you may be required to repay the ERC funds, face additional penalties, or, in severe cases, face criminal charges.
What To Do When Being Audited By the IRS for Your ERC Claim
Facing an IRS audit for your Employee Retention Credit (ERC) claim can be stressful, but taking the right steps can help you manage the process more effectively. At Candice Fields Law, PC, we are here to guide you through this challenging time. Here’s what you should do when being audited by the IRS for your ERC claim:
Respond Promptly
When you receive an audit notice from the IRS, it’s crucial to respond promptly. Ignoring the notice or delaying your response can lead to additional scrutiny and penalties. Ensure that you carefully read the notice and understand the deadlines for submitting required documents.
Gather and Organize Documentation
Be prepared to gather and submit all relevant documentation related to your ERC claim. This includes payroll records, employee data, financial statements, and any correspondence with accountants or payroll services. Organize these documents thoroughly to make the audit process smoother and demonstrate your compliance.
Maintain Open Communication
Keep lines of communication open with the IRS. If you have questions or need clarification about the audit process, don’t hesitate to contact the IRS auditor assigned to your case. Clear communication can help prevent misunderstandings and ensure that you provide all necessary information.
Stay Calm and Professional
Approach the audit process with a calm and professional demeanor. Staying composed can help you handle the situation more effectively and maintain a positive relationship with the IRS auditor. Remember, the audit is a routine procedure, and cooperation can work in your favor.
Seek Professional Assistance
Engaging an experienced federal criminal defense lawyer, like Candice Fields Law, PC, can provide invaluable guidance and representation during the audit. A knowledgeable lawyer can help you understand your rights, ensure that your documentation is complete and accurate, and represent you in communications with the IRS. Additionally, working with your accountants and tax professionals can help ensure that all financial records and claims are in order.
What Not to Do During an ERC Audit by the IRS
An ERC audit by the IRS is a serious matter, and how you respond can significantly impact the outcome. Here are some critical actions to avoid during an ERC audit to ensure the process goes as smoothly as possible:
Do Not Ignore the Notice
Ignoring the audit notice from the IRS is one of the worst mistakes you can make. Failing to respond promptly can lead to additional scrutiny, penalties, and potentially more severe consequences. Always read the notice carefully and adhere to the deadlines provided.
Do Not Provide Incomplete or Inaccurate Documentation
Submitting incomplete or inaccurate documentation can harm your case. Ensure all requested documents are complete, accurate, and well-organized. Providing incorrect information, even unintentionally, can lead to further investigation and potential penalties.
Do Not Destroy or Alter Documents
Never destroy or alter any documents related to your ERC claims. This is considered obstruction of justice and can lead to severe legal consequences, including criminal charges. Preserve all records as they are and provide them as requested.
Do Not Make False Statements
Honesty is crucial during an IRS audit. Making false statements or misrepresenting facts can lead to serious repercussions, including charges of fraud or perjury. Always be truthful in your communications with the IRS.
Do Not Handle the Audit Alone
Attempting to manage an IRS audit on your own can be overwhelming and risky. Engage an experienced federal criminal defense lawyer, like Candice Fields Law, PC, to guide you through the process. Professional assistance ensures your rights are protected and can improve the audit's outcome.
Do Not Overlook Professional Help
Failing to consult with your accountants or tax professionals can lead to mistakes or omissions. These experts can help ensure your financial records are accurate and complete, providing valuable support during the audit process.
Do Not Be Confrontational
Approaching the audit with a confrontational or uncooperative attitude can hinder the process and damage your relationship with the IRS auditor. Stay calm, professional, and cooperative to facilitate a smoother audit.
How an ERC Fraud Defense Lawyer Can Help
Facing an ERC fraud investigation or audit can be an overwhelming and stressful experience. At Candice Fields Law, PC, we understand the complexities of these cases and are here to provide you with the experience and support you need. Here’s how an ERC fraud defense lawyer can help you navigate this challenging situation:
Experience in ERC Regulations
Understanding the intricate details of ERC regulations is crucial for building a strong defense. Our team at Candice Fields Law, PC is well-versed in these regulations and can help you understand your case's specific requirements and compliance issues.
Comprehensive Document Review
We will thoroughly review all documents and records related to your ERC claims. This includes payroll records, financial statements, and any correspondence with accountants or payroll services. By meticulously examining these documents, we can identify any potential issues or discrepancies that may arise during the audit.
Strategic Defense Planning
Every ERC fraud case is unique, and we tailor our defense strategies to fit your specific situation. We will develop a comprehensive defense plan that addresses the particular allegations against you, leveraging our knowledge and experience to protect your rights and interests.
Representation During IRS Interactions
Interacting with IRS auditors can be intimidating. As your defense lawyers, we will represent you in all communications and meetings with the IRS. Our goal is to ensure that your case is presented accurately and professionally, minimizing the risk of miscommunication or misinterpretation.
Negotiating Settlements
In some cases, negotiating a settlement with the IRS can be in your best interest. We have extensive experience in negotiating favorable settlements that can reduce penalties and avoid more severe consequences. We will work diligently to achieve the best possible outcome for your case.
Legal Advocacy
If your case proceeds to litigation, we will provide vigorous legal advocacy on your behalf. Our team at Candice Fields Law, PC is experienced in defending clients in federal court and will fight to protect your rights and achieve a favorable resolution.
Contact Us for Experienced Legal Support
If you are facing an ERC fraud investigation or audit, don't navigate it alone. Contact Candice Fields Law, PC today for legal support and representation. We are here to protect your rights and guide you through every step of the process. Reach out to us now to discuss your case and explore your options.
