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New ERC Denial Letters from the IRS Should Be Taken with a Grain of Salt

Gil Mitchell, Tonya Rule, and Ben Peeler

August 2, 2024

Key Takeaways

Last week, taxpayers started receiving denial letters for ERC claims.

Last week, taxpayers started receiving denial letters for ERC claims .

Unfortunately, these denial letters do not always include the proper language regarding your ability to appeal this decision. It’s important to know your rights and understand the IRS may be making an error in their determination. Form 941/Form 941x does not include information regarding how an entity qualifies for the ERC, thus the denial of a claim might be in error.

Additionally, the IRS announced in IR-2024-198 they will be reopening the ERC Voluntary Disclosure Program . While details haven’t been released, we encourage you to check your eligibility and ERC calculations, so you are able to apply within the given timeframe.

The penalties and interest on improper claims can be substantial and the fraud surrounding the ERC claims is said to be the largest tax fraud to date so rechecking all claims is extremely important.

Eide Bailly’s ERC team can help with your IRS denial letters, ERC eligibility, ERC calculation review, and more.

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About the Author(s)

Gil Mitchell, EA

Senior Manager

Gil helps our clients by using his 36 years of IRS examination experience to guide each examination or tax controversy to the best possible solution. Gil's main focus today is leading the firm's Employee Retention Credit Controversy (ERC) Team to resolve our clients issues with both ERC examinations and unpaid claims.

325.437.4101

Tonya M. Rule, CPA

Partner/Affordable Care Act Practice Leader

Tonya helps businesses with the rules surrounding the Affordable Care Act. She assists large employers with the compliance requirements, Forms 1094-C and 1095-C, and she also advises them on very technical rules that many employers and advisors aren't aware of. In addition, she works with small businesses who are planning on expanding their current operations to make sure they are doing everything from measuring their employees correctly to deciding on the best insurance plan for their business. Tonya regularly works with clients on various ACA IRS notices and has been very successful in getting most of these penalties abated.

507.386.6239

Ben J. Peeler, J.D., CPA, LL.M.

Partner/IRS Tax Controversy Practice Leader

Ben joined the firm early in 2014 with many years of tax experience, both as an attorney and an accountant. He specializes in federal tax, controversy and procedure work, assisting with clients in the areas of income tax, estate and gift tax, property tax, sales and use tax, estate planning and many other tax matters. Ben's vast experience includes representing clients before the IRS, as well as representing the IRS before the U.S. Tax Court and during litigation before the federal district courts as a special assistant to the United States Attorney. Today, Ben leads the firm's IRS Practices & Procedures as a federal tax, controversy and procedure specialist and serves on Eide Bailly's National Tax Office team that is committed to helping clients resolve their tax issues.

801.456.5476

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