ERC
Frequently Asked Questions
What is the Employee Retention Credit (ERC) Audit Defense and why might my business need it?
The ERC Audit Defense is a service provided by Azarvand Tax Law to assist businesses in defending their ERC claims during IRS audits. Given the complexity of ERC eligibility requirements and the increasing scrutiny from the IRS, businesses may face challenges in defending their claims and generally need legal counsel to navigate the audit process effectively.
How does Azarvand Tax Law assist businesses during an ERC audit?
Azarvand Tax Law provides comprehensive support throughout the audit process, including legal representation, documentation preparation, and strategic audit defense planning.
The Azarvand Tax Law team leverages their extensive knowledge of ERC guidance, legislative changes, and the relevant IRS procedures to advocate for the client’s interests and ensure compliance with all relevant laws and guidelines.
An ERC audit can result in significant liabilities, including repayment of the ERC amounts claimed, penalties, and interest. In some cases, there may also be criminal penalties imposed.
Azarvand Tax Law helps mitigate these ERC audit risks by conducting thorough assessments of the client’s ERC claims, identifying potential issues or areas of vulnerability, and developing robust defense strategies to defend clients from adverse audit outcomes.
The total cost of ERC Audit Defense services varies depending on the complexity of the case and the level of assistance required. ERC audits are charged on an hourly basis as follows:
- Attorneys: $375 per hour
- CPA’s: $175 per hour
- Law Clerks: $200 per hour
- Paralegals: $75 per hour
- Bookkeepers: $95 per hour
Azarvand Tax Law offers transparent pricing structures and can provide tailored cost estimates based on the client’s specific needs.
The upfront investment to cover your expenses offers potential savings and protection from future costly audit findings, making it a prudent safeguard investment for businesses claiming ERC.
In order to meet substantiation requirements, businesses should gather and organize all relevant documentation related to their ERC claims, including, but not limited to payroll records, profit and loss statements, PPP loan forgiveness calculations, ERC calculations, and applicable government orders.
Azarvand Tax Law assists with this preparation process by conducting a comprehensive review of the client’s documentation, identifying deficiencies, and advising on corrective actions to strengthen the client’s position during the audit
Any business that filed for the ERC is at risk of an audit and should ensure that they are keeping their ERC records intact throughout the duration of the applicable audit statute of limitations.
For any payroll tax return claiming the ERC for Q2 2020 – Q2 2021, the IRS has three years from the date the return was filed to audit the ERC claim. For any payroll tax return claiming the ERC for Q3 2021 – Q4 2021, the IRS has five years from the date the return was filed to audit the ERC claim.
It is important to note that the Tax Relief for American Families and Workers Act of 2024 proposes extending the ERC audit statute of limitations for all periods to six years from the latest of (1) the date on which the original return for the relevant calendar quarter is filed, (2) the date on which the return is treated as filed under present-law statute of limitations rules, or (3) the date on which the credit or refund with respect to the ERC is made.