July 2023

Employee Retention Credit Audits – What You Need to Know



Employee Retention Credit (“ERC”) Audits

The Internal Revenue Service (“IRS”) has added ERC claims to its annual “Dirty Dozen” list.

The Employee Retention Credit is a federal tax credit that was created during the pandemic to assist certain businesses.  The ERC has very specific requirements which not all taxpayers qualify for, but many ineligible taxpayers have filed claims based on aggressive marketing by certain promoters who in many cases have aided in filing false claims, according to the IRS.  The IRS is now actively auditing Employee Retention Credit claims and pursuing criminal investigations of false claims, including targeting tax preparers and promoters involved in filing improper ERC claims.  The IRS has specially trained auditors examining these claims and tax practitioners are seeing significant audit and investigative activity, confirming the IRS’s focus on these claims.

If you have any questions about Employee Retention Credit claims, audits or investigations or other federal or state tax matters, please contact the Sideman & Bancroft Tax Group at (415) 392-1960 or Steven Katz at skatz@sideman.com.