IRS Seeks Evidence from Businesses That Claimed COVID Tax Break

Tax attorney Daniel Strickland was interviewed by Bloomberg Tax about the IRS' latest efforts to go after fraudulent and overstated employee retention tax credit (ERC) claims. The ERC was created to help businesses keep employees on payroll during the pandemic, but subsequent audits have shown that many companies were either ineligible for the credit or received more than what they qualified for. The newest push involves sending a letter directly to taxpayers asking them to provide detailed answers to 13 multi-part questions within weeks of receiving the letter. Mr. Strickland commented on the accelerated timeframe for compliance, emphasizing how it will put pressure particularly on smaller organizations.

"Three weeks is not a lot of time to get that information together for a small business," he said. "Often, small businesses are short-staffed in the administration function. They don't just have a folder of ERC substantiation sitting around."

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