IRS ERC Tax Audits and Investigations: What Boston Business Owners Need to Know in 2024

With an estimated $2 trillion in fraudulent claims, the Employee Retention Program (ERC) has proven to be one of the most abused federal relief programs in U.S. history. While the ERC was initially intended to provide relief to struggling businesses during the COVID-19 pandemic, the IRS allowed businesses to file claims retroactively through late 2023 (when it imposed a moratorium so that it could focus additional resources on enforcement), and fraudulent promoters convinced many businesses to file claims even though they were ineligible to do so. The IRS is actively targeting ERC fraud in 2024, and for businesses facing audits and investigations, engaging an experienced Boston IRS tax attorney is critical for avoiding unnecessary consequences.

Important Information for Boston Businesses Facing ERC Tax Audits and Investigations

What else do you need to know if you are facing an ERC tax audit or investigation in 2024? Here are some important insights from Boston IRS tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group.

Once the IRS Initiates an Audit or Investigation, Voluntary Disclosure is No Longer an Option

While the IRS’ limited-time ERC Voluntary Disclosure Program (ERC VDP) closed in March, eligible businesses can still seek to avoid prosecution for ERC fraud by filing under the IRS’ general VDP (or perhaps filing for withdrawal). However, once the IRS initiates an audit or investigation, voluntary disclosure is no longer an option. At this stage, targeted businesses and business owners must focus on building a defense strategy that mitigates their risk to the fullest extent possible.

Most IRS ERC Tax Audits and Investigations Are Based on Apparent Evidence of Fraud

When the IRS initiates an ERC tax audit or investigation, in most cases this means that the IRS already has apparent evidence of fraud in its possession. This evidence may be in the form of the business’s ERC claim itself, or it may be in the form of information obtained from a promoter or other third party. In any case, this is critical to keep in mind, and it underscores the importance of promptly building and executing an effective defense strategy.

Not All IRS ERC Tax Audits and Investigations Are Warranted

Even though most IRS ERC tax audits and investigations are based on apparent evidence of fraud, this does not mean that all of these audits and investigations are warranted. Targeted businesses and business owners will have strong defenses in many cases. When facing allegations of ERC fraud, it is critical not to make any assumptions—and instead to make informed decisions based on the advice of an experienced Boston IRS Tax attorney.

Schedule a Confidential Consultation with Boston IRS Tax Attorney Kevin E. Thorn

Regardless of the circumstances involved, if the IRS is targeting you or your business in an ERC tax audit or investigation, it is important that you speak with an experienced attorney as soon as possible. To schedule a confidential consultation with Boston IRS tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 617-692-2989 or contact us confidentially online today.