ERC Audit Defenses

ERC AUDIT DEFENSES

WE WON’T SUGARCOAT IT—the Employee Retention Credit (ERC) is a big deal, and if you claimed it wrong, you could be in serious trouble. The Internal Revenue Service (IRS) has been coming down strong on those who took ERC benefits that were not legally allowed. If you get audited and lose, you risk crushing tax penalties, massive interest fees, and even potential criminal charges. That means actual prison time could be on the table if the government proves you committed tax fraud. This is not a scare tactic, it’s reality.

We are Spodek Law Group, a nationwide federal defense law firm created by Todd Spodek. We specialize in defending businesses and individuals who were accused of wrongdoing on federal and state levels. We’ve handled tough cases nationwide, and we’re not about to let ERC audits scare us—or you. If you’re on our website, it’s because you need a powerful defense strategy. Many people are looking at potential ERC audits because a broker misled them, filled out their paperwork incorrectly, and now the company is suffering.

WHAT IS ERC?

The Employee Retention Credit is a tax credit that was introduced to help businesses keep workers employed during COVID-19. The IRS that was authorized by Congress to create this credit offered eligible businesses up to tens of thousands of dollars per employee. That was supposed to offset payroll costs. A business that was financially hit by government shutdowns could get some relief, but only if the business met certain benchmarks – many fraudulent companies setup to take advantage of the ERC program and helping business owners do the paperwork.

Here’s the harsh truth: If you filed for this credit without doing your homework, you face a nightmare. Incorrect documentation means the IRS can claim fraud. Fraud that was committed intentionally can lead to criminal charges and a record that follows you for life.

WHY THE IRS IS CRACKING DOWN

They smell blood. That’s the simplest way to put it. The IRS that was under pressure to distribute relief funds quickly is now under pressure to make sure those funds went to the right people. Agents see ERC audits as an easy target because many companies rushed their filings. Some businesses used shady accountants or broker who promised huge ERC refunds. Some used incomplete records. Others flat-out lied.

If the IRS that was assigned to your case finds any sign of false statements, it might slap you with a willful tax violation. A willful violation that was proven could lead to felony charges, which can result in prison time and astronomical fines. That’s how high the stakes are.

COMMON REASONS FOR ERC AUDITS

• Improper Qualification: A business that was not truly affected by COVID restrictions but claimed credit anyway.
• Inflated Wages: Wages that were reported higher than the actual payroll to claim a larger credit.
• Double Dipping: Using Paycheck Protection Program (PPP) loan funds for the same payroll expenses, even though this is forbidden.
• Fake Documentation: Paperwork that was created or backdated to justify bigger claims.

Any of these actions can result in a criminal referral. A criminal referral that is made can wreck your life, your livelihood, and your reputation. If you think “Oh, they won’t catch me,” you are kidding yourself.

AGGRESSIVE CONSEQUENCES YOU FACE

1. Civil Penalties. If the audit shows that you made an unintentional mistake, you can still owe back taxes and heavy penalties. Those penalties that are imposed can reach 20% or more of the underpaid amount, plus interest. That means you pay more money than you got in the first place.

2. Criminal Charges. If the IRS that was investigating suspects that you lied on purpose, or that you knowingly submitted false documents, it can escalate into a criminal case. A felony that is proved could lock you up for years, plus you’ll be stuck with a criminal record. This can cost you your professional licenses, your future job prospects, and your reputation.

3. Asset Seizure. The government that was granted broad powers can seize assets like bank accounts or business property if it believes you owe back taxes or fines. Asset seizures that are enforced can cripple your ability to operate, leaving you broke and stuck in legal turmoil.

DEFENSE STRATEGIES THAT ACTUALLY WORK

Att Spodek Law Group, we have specific strategies that can crush the government’s attempts to bury you. Here are some of the defenses we deploy:

• Documentation that was properly maintained proves intent: If you have solid paperwork that shows you genuinely qualified for the ERC, we push that in front of the IRS. We argue that any minor discrepancy was a simple oversight, not fraud.
• Reliance on Expert Advice: If a business that was audited got advice from a credentialed accountant or tax attorney, we use that to show good faith. Good faith that was demonstrated can undermine any claim of willfulness. If we can show your intent wasn’t to commit fraud, and you relied on someone else – this can be shown as just a mistake then.
• Lack of Willful Intent: A mistake that was made without malicious intent can lead to reduced penalties or a dismissal of criminal charges. This helps if the IRS cannot prove beyond doubt that you meant to lie.
• Negotiating a Settlement: If you owe back taxes, sometimes the best move is negotiating a lower penalty. The IRS that was pressured to collect might be open to cutting a deal if you have the right legal team in your corner.

Any of these arguments that we make should be supported by real evidence. Evidence that was disorganized or absent weakens your credibility. If you step into an IRS audit unprepared, you’re basically inviting the agent to steamroll you. Don’t be an easy target. Get your records straight, or let us do it for you.

We’ve seen it all. Clients who say they “didn’t know.” Clients who say their “accountant messed up.” If that’s your plan, get ready to lose. The agent who was assigned to your audit doesn’t care about your excuses. The judge who was assigned to your case definitely doesn’t care. You need a real strategy, not pathetic complaints.

If you’re serious about surviving an ERC audit, you have to face reality. Reality that says you need an aggressive team with deep experience in federal defense. That is the leverage that can protect you from an angry IRS.

MULTIPLE POINTS OF VIEW

Some observers argue that ERC auditing is too harsh, punishing businesses that barely survived lockdowns. Meanwhile, others say the government has every right to enforce laws and penalize fraud. We see a middle ground: legitimate businesses have a right to protect themselves when the government overreaches or bungles the review process. We don’t accept the “just roll over and pay” approach. We fight because we believe in forcing the IRS to prove every single claim.

At the same time, we’re not here to encourage actual cheats. If you invented false wages or messed with the numbers on purpose, you’re in hot water. We suggest you come clean and figure out a legal strategy now, rather than gamble with your freedom.

OUR MINDSET: DOMINATE THE SYSTEM, DON’T BEND TO IT

At Spodek Law Group, we think in root causes and systems. We look for the cracks in the IRS’s approach—maybe the agent made procedural errors, maybe the evidence that was submitted by the government is incomplete, or maybe there’s a constitutional challenge. We use every legal, procedural, and strategic weapon in our arsenal. We call out every weak point we see, and we push back with maximum force.

If you’re seeking easy forgiveness from the IRS, you’ve come to the wrong place. We are not about asking politely. We’re about building a systematic defense that forces them to question their own allegations. That’s how we win.

TAKE IMMEDIATE ACTION

Remember: you can lose everything if you ignore an ERC audit. Ignoring an audit that was initiated by the IRS can lead to final assessments, liens, and criminal investigations. You end up paying for that negligence with more than just money. You could lose your business, your career, and your sense of security.

If you want to learn more about official ERC guidance, visit the IRS: https://www.irs.gov/coronavirus/employee-retention-credit. For Department of Labor COVID-19 info, check https://www.dol.gov/coronavirus. Know what they’re saying so you don’t stumble in the dark.

FREQUENTLY ASKED QUESTIONS (FAQ) QUICK-REFERENCE

If you’re serious about avoiding fines, criminal charges, and the absolute destruction of your reputation, get legal representation now. Don’t wait until the IRS has cornered you. Fight from day one. That is how we maintain leverage. If you contact Spodek Law Group, we’ll give you a risk-free consultation and tell you where you really stand. We won’t lie to you or baby you.

You either step up or you get rolled over. This is how the game works. There is no middle ground here. We’re here 24/7. Call us right now.

Disclaimer: This content is not legal advice and does not create an attorney-client relationship. Every ERC case is different. You should seek professional legal advice that was tailored to your unique facts. Our firm does not guarantee outcomes. We are not responsible for actions you take based on this information.