What to do now that the IRS Freezes Employee Retention Tax Credit Processing

Business Owners Can Still File But Need To Be Wary Of Audit Traps Says CA Law Firm, Brotman Law

SAN DIEGO, Sept. 15, 2023 /PRNewswire/ -- The IRS moratorium on new Employee Retention Tax Credit filings announced Thursday afternoon, September 14, should have taxpayers quaking in their boots. At unprecedented levels, the IRS is going after fraud and all responsible parties for illegitimate claims filed by or on behalf of small businesses nationwide. Particularly vulnerable are companies that used a third-party provider and not a legitimate tax professional to submit their ERTC claim.

Businesses are advised to have their claim re-reviewed by a qualified tax professional and be proactive in gathering tax documentation to substantiate their claims. At this time, auditing taxpayers seems to be the primary method that the IRS will use to scrutinize Employee Retention Tax Credit filings; however, the IRS also has the power to skip the audit process and assess a deficiency, speeding up the timeline in which the taxpayer will be told they need to return the credit.

"This is the first major action in the IRS' battle against ERC mills and credit filings that range from negligent to fraudulent. Although it is the first step taken from the IRS, it certainly won't be the last," says owner and managing attorney of Brotman Law, Sam Brotman. "I cannot stress enough the importance of being proactive if you have any doubts about the validity of your credit. Our firm, and plenty of other tax professionals experienced in filing ERTC credits, would be happy to help any business avoid this crisis."

Professionals recommend taking immediate action versus waiting for the IRS to make a determination on the validity of an ERTC filing. The IRS has hinted that they may be extending a settlement program to those that have already claimed the credit and cannot withdraw their filing, but details on the program and any associated penalties have yet to be released.

While the crackdown is going to send waves through the business community as unsuspecting taxpayers are forced to potentially return credits they never should have received, there is still a way to file for the credit despite the freeze if a business legitimately qualifies. To determine eligibility, business owners should first speak with a licensed tax professional who is knowledgeable about ERC and potential audits from the IRS, avoiding ERC mills at all costs. In addition, businesses should consider a tax opinion letter for larger credits.

Tax opinion letters are valuable for several reasons. If an attorney documents the legitimacy of the credit, this letter may be used to mitigate penalties if the IRS makes the determination it is improper. Drafting the opinion letter will also put you through a process of gathering substantiation and other supporting evidence surrounding the credit claim, which will naturally prepare the business if the IRS comes knocking. Finally, it will provide peace of mind because the business owner will know they have done everything they can to be compliant and protect their credit.

Brotman Law is a national tax law firm headquartered in San Diego, California. The firm 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. Brotman Law 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. 

Contact: 
Alanna Markey
Director of Marketing
Brotman Law
(619) 378-3138
amarkey@sambrotman.com 

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.

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SOURCE Brotman Law