Unprecedented Audit Volume Anticipated as IRS Cracks Down on Employee Retention Tax Credits
Business Owners Need to "Prepare for the Worst" says Established California Tax Law Firm Brotman Law
SAN DIEGO, Aug. 23, 2023 /PRNewswire/ -- After rebounding from problem after problem since the onset of COVID-19, small businesses across the nation are in for a shockwave that may be bigger than all those that have come before it. The Employee Retention Tax Credit started as a program introduced by the IRS to offset the burdens business owners incurred by keeping employees on staff during the pandemic when many were hit with severe disruptions to operations and revenue streams.
Over the course of the last year, there has been an influx of ERC companies that have been aggressively marketing to businesses, making claims that they can file for the credit on behalf of these organizations. While some are doing filings appropriately, many such companies are instead taking advantage of business owners and filing inaccurate or illegitimate claims with the IRS. Whether intentional or not, the result of these improper filings will only start to catch up with the businesses themselves in the coming months, but it will be a disaster when it does.
"The IRS approved many applications for the Employee Retention Tax Credit that were questionable because there was such a backlog of matters," said Sam Brotman, Owner and Managing Attorney for Brotman Law. "What we are seeing now is a tightening up of the process, which could mean that the window for applying closes sooner than was originally stated. But even more critically, it means that all those payments that were granted – all those checks that were sent - businesses may have to give those back. And not just the amounts sent by the IRS, but also penalties and interest that has accrued."
Brotman Law has been successfully navigating audits with the IRS for over 10 years, finding ways to produce the best possible result for clients even in situations where matters are incredibly nuanced or difficult. That being said, the firm has had to adapt in order to develop a counterstrategy for what promises to be a large number of new audits coming through from the IRS all because of the Employee Retention Tax Credit. The burden of those audits and helping businesses survive the damage caused by unscrupulous companies that filed amended tax returns is going to fall on tax lawyers and CPAs throughout the United States.
"We anticipate thousands of business owners will need our help, which is why we're getting ready now and urging all businesses that filed for the ERC to do the same," said Brotman. "Over the years, our team has seen just about everything and we handled ERC filings for hundreds of clients, including ones with highly technical corporate structures. We know the information that business owners need to prepare and have ready in order to navigate the audit process, but we don't recommend anyone try to work with the IRS alone. Engaging a tax law professional to assist with the process is key to making sure that the end result protects the business. Our firm wants to support businesses far and wide through the wave of audits that's coming, and we will do a complimentary evaluation of any business' filing to help them understand whether the claim submitted for their company was legitimate."
Some of the first matters likely to be audited will likely be businesses that filed for very large credits, show a clear discrepancy between revenue reported and the number of employees claimed on the credit, and new businesses that have no established tax reporting history, yet filed for a credit. Every business that filed for the Employee Retention Tax Credit should ensure they have organized documentation demonstrating that the numbers pencil out for the credit that was claimed. If that was not provided by the company that filed their credit, the business needs to speak with a qualified tax professional to assess how to move forward before the IRS ramps up their auditing.
"Now is the time. Interest and penalties will continue to accrue the longer a business owner waits, so even if there is just a small chance that a filing was done incorrectly, it's important to take things seriously and speak to a tax lawyer," Brotman continues. "At Brotman Law, we're staying on top of the latest updates from the IRS so that we can better serve our clients, but we can only help businesses that make the effort to help themselves. That's the message we want to get out – be proactive about verifying your Employee Retention Tax Credit if you have any doubts as to its legitimacy."
Brotman Law is a national tax law firm headquartered in San Diego, California. The firm is available to speak with any business owner, professional services provider or individual interested in assessing their Employee Retention Tax Credit claim and can be reached on their website.
About Brotman Law
Brotman Law is an established team of law professionals that have been helping clients and their businesses navigate the intricacies of tax law for over 10 years. The firm has processed thousands of individual ERC claims representing over $125 million and the seasoned audit representation team has collectively been involved in more than a thousand audits. Brotman Law is dedicated to providing every client with exceptional legal services accompanied by a compassionate approach that is unheard of in the industry. Beyond just successes with the IRS and tax agencies, the Brotman Law team is singularly united by genuine empathy for all clients, a strong desire to help, and never-say-quit tenacity that propels the firm to the best possible results on their clients' behalf. For more information or to book a consultation with the Brotman Law team, visit SamBrotman.com or call (619) 378-3138.
Contact:
Alanna Markey
Director of Marketing
Brotman Law
(619) 378-3138
[email protected]
SOURCE Brotman Law
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