IRS Intensifies Audits on Employee Retention Credit (ERC) Claims: A Focus on Improper Filings
Adam Tahir
February 9, 2025

The Employee Retention Credit (ERC) was established to support businesses during the COVID-19 pandemic by providing refundable tax credits for maintaining employee payrolls. However, the Internal Revenue Service (IRS) has identified a significant number of improper ERC claims, leading to intensified audits and enforcement actions.

Surge in Improper Claims

In recent months, the IRS has observed a substantial increase in ERC claims that do not meet eligibility requirements.

Aggressive marketing by some promoters has contributed to businesses submitting erroneous claims, often without a thorough understanding of the program's complexities. This surge has prompted the IRS to take decisive action to protect the integrity of the tax system.

IRS Enforcement Actions

To address the issue of improper ERC claims, the IRS has implemented several measures:

Warning Signs of Incorrect Claims

The IRS has identified common issues in improper ERC claims, including:

Businesses are urged to review their ERC claims for these warning signs and consult with trusted tax professionals to ensure compliance.

Steps for Businesses

To navigate the IRS's intensified scrutiny of ERC claims, businesses should:

By taking these proactive steps, businesses can ensure compliance with ERC regulations and avoid the risks associated with improper claims.