Some business owners are concerned about the possibly of an IRS audit on their Employee Retention Credit (ERC) claims. In this article we will provide an overview of all of the information relating to IRS audits of ERC claims.
How long does the IRS have to audit an ERC claim?
Understanding the Employee Retention Credit (ERC) audit procedure is critical for businesses. One common question that arises is, "How long does the IRS have to audit ERC claims?" For 2020 ERC and the first two quarters of 2021 the IRS has three years to audit your ERC filing. For the Q3 2021 the IRS has five years.
Does an ERC audit mean an audit of my whole business?
No. When the IRS does an audit on an ERC filing, it only audits the ERC filing, not the entire business. So any hesitation you may have about filing for ERC because it increases the risk of an audit can be put to rest.
Are ERC filings audited at a higher rate than normal?
ERC filings have a 2% - 3% chance of being audited by the IRS. This is slightly higher than the less than 1% chance of an audit for a typical tax filling.
What protection is there from an ERC audit?
This five-year window is significant because ERC claims do tend to be more frequently scrutinized and audited by the IRS. But don’t let that worry you! Ensuring that your ERC filing is accurate and compliant is crucial to prevent any issues down the line.
At CLRA Group we take this concern very seriously. That’s why our in-house counsel diligently reviews and signs off on every ERC filing, ensuring they meet all necessary compliance standards. Moreover, we provide a comprehensive 5-year audit protection to all our clients. This means that from the moment your ERC claim is filed, you're covered for the entire potential audit period.
This approach not only guarantees accuracy but also provides peace of mind. Our clients can rest assured knowing they are protected and their filings are in the best hands possible, making the ERC claim process as stress-free as possible.