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ARTICLE · 23 FEBRUARY 2024

ERC Audits: What Companies Need To Know

Bennett Thrasher
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The Employee Retention Credit (ERC) has served as a crucial support for numerous businesses, offering financial assistance in times of adversity.

United StatesAccounting and Audit
Timothy Watt
Timothy Watt

The Employee Retention Credit (ERC) has served as a crucial support for numerous businesses, offering financial assistance in times of adversity. Nevertheless, along with the advantages of the ERC tax credit, arises the obligation to adhere to the ERC laws enacted by Congress. This includes navigating the myriad of Internal Revenue Service (IRS) guidance issued to implement the legislative mandates. In this comprehensive guide, we will explore what ERC audits entail, how to prepare for them, and the potential penalties companies may face.

What is an ERC Audit?

An ERC audit is an examination carried out by the IRS to verify a company's eligibility and compliance with the Employee Retention Credit program. The IRS ERC audit program is a result of the agency's dedication to ensuring tax credit programs are not abused or exploited. This specialized program is designed to scrutinize companies' claims for ERC tax credits, with a particular focus on accuracy and

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