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What if you improperly claimed the ERC?
What if you improperly claimed the ERC?
If your business erroneously or fraudulently claimed the Employee Retention Credit (ERC), it could face very serious consequences. While the IRS offered two ERC-related voluntary disclosure programs, the time to voluntarily come forward for both programs has now passed.
Below is a brief overview of what to expect from previous IRS VDP programs:
Potential Consequences
Repayment of the Credit
At a minimum, expect to repay the amount of the credit you claimed. Penalties and interest will almost certainly be applied.
Penalties:
The IRS is very likely to impose significant penalties for fraudulent and erroneous claims, which could include monetary fines as well as criminal penalties. As with previous VDP programs, these penalties are extremely steep including up to 50% of the amount in question.
Improperly claiming the ERC
Legal Action:
In numerous cases, fraudulent (and even erroneous) ERC claims can lead to criminal charges, including tax fraud, which could result in fines or imprisonment. This is not a good place to be in.
If you suspect this may be your business, please reach out to us at Liberty Tax Defenders immediately.
Audit or Investigation:
The IRS also may very likely conduct a detailed audit of your business's financial records and operations that expands beyond the Employee Retention Credit.
Steps to Address the Issue
If you believe your business was not entitled to claim the ERC, whether intentionally or unintentionally, taking immediate corrective action is critical:
Consult with us at Liberty:
Please reach out to us for your FREE CONSULTATION! Not only have we helped save our clients millions in taxes the IRS claimed they owed, we also have experience in dealing with the ERC. Our CEO not only helped implement the ERC while working for the IRS, but he also possesses experience in dealing with previous Voluntary Disclosure Programs.
We can assess your situation and guide you through the appropriate corrective actions, or refer you to someone else if we're not the right fit for you.
Amend Tax Returns:
If the claim was made in error, preemptively filing an amended return to correct the mistake is of first importance. This shows good faith and can later reduce penalties.
Disclose the Issue to the IRS:
It's important to promptly contact the IRS and let them know of the error. Contacting the IRS to explain and rectify the situation can mitigate penalties and is always a better course of action than letting the IRS come to you first.
Prepare for Potential Repayment:
Be ready to repay the claimed credit along with any accrued interest and penalties. While the voluntary disclosure programs did allow for partial repayment in some cases, you can't bank on that now that the windows have closed to enter the VDP programs.
Importance of Timely Action
Ignoring this issue is the absolute worst thing to do right now. This could result in escalated penalties or criminal prosecution. Taking prompt and transparent action demonstrates accountability and may lead to more favorable outcomes.
The ERC, voluntary disclosure programs, and of course IRS representation are areas where we have significant experience. If you suspect this may be you or your business, please reach out to us today! We can deal with the IRS and bring you back into compliance.
Cheers!
P.S. Make sure you get your FREE copy of our SPECIAL REPORT: "The 8 Secrets The IRS Does NOT Want You To Know!" (simply click on the link in the previous sentence, scroll down to the second section of our home page, and download your copy today!)
Or, email us at: info@libertytaxdefenders.com for your FREE copy.
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