IRS has started auditing some ERC claims By: National Association of Tax Professionals
April 3, 2024

Some businesses that claimed the employee retention credit (ERC) have begun receiving IRS letters telling them their claims are on hold because they are under audit and must provide additional information to the agency. Several law firms and media outlets are reporting that some taxpayers who claimed the ERC began receiving IRS Letter 6612 in January.

The letters included a Form 4564 asking the taxpayer to answer 13 multipart questions and provide the IRS with supporting documentation. The letters state that the IRS will not finish processing the taxpayer’s return until it has provided the required documentation. Failure to respond to the request will result in the denial of the taxpayer’s ERC claim.

The information requested on the Forms 4564 includes:

  • Documentation that the taxpayer fully or partially suspended operations due to a government shutdown
  • Worksheets the taxpayer used when calculating the credit
  • Documentation of the taxpayer’s gross receipts for the time period for which the ERC was claimed

If the IRS finds the documentation does not support the ERC credit amount claimed by the taxpayer, the IRS will issue an audit report detailing any changes it made. The letter states that the taxpayer may withdraw an ERC claim if they no longer believe they are eligible.

The audit letters appear to be separate from the round of 20,000 letters the IRS said it was issuing in January to notify taxpayers that their ERC claims had been disallowed. The IRS said the initial round of letters focused on entities that did not exist or did not pay employees during the eligibility period.

IRS updates
ERC claims
Employee Retention Credit
Form 4564
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penAbout National Association of Tax Professionals

The National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.

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Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.

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