September 23, 2024 | less than a minute read

IRS Provides Two-Year Window to Appeal ERC Denials

Employee retention tax credit papers and folder.

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Barclay Taylor

Of Counsel

Get in touch

Barclay Taylor

Of Counsel

Tens of thousands of businesses have received letters from the IRS denying their Employee Retention Credit (ERC) claims. The IRS is in the process of sending many more ERC denial letters. Previously, the IRS only allowed 30 days to appeal the denial. The IRS changed course last week by expanding the appeal window for ERC denials to two years.

This is significant because the ERC rules are complex, claims can cover several calendar quarters, and eligibility may differ from quarter to quarter. Giving businesses ample time to gather the appropriate documentation and submit an explanation of how the business qualifies for the ERC is a step in the right direction. Businesses that receive denial letters would be wise to contact a tax professional to assist with the appeals process.

Along with an explanation that addresses the reason for the initial denial, taxpayers should submit documentation proving eligibility for at least one of the credit requirements for each quarter the ERC was claimed, including whether the taxpayer’s business was suspended from a COVID-19 government order or whether it experienced a decline in gross receipts.