How do I know if my ERC claim will be audited?

The IRS has not disclosed specific selection criteria, but claims over certain dollar thresholds, claims prepared by known promoters, and claims filed after the moratorium period are believed to face higher audit rates.

What penalties can the IRS assess on ERC claims?

The IRS can assess a 20% accuracy-related penalty for negligence or substantial understatement, and a 75% civil fraud penalty for fraudulent claims. Criminal penalties are also possible for egregious cases. We defend against all penalty types.

Should I withdraw my ERC claim?

If your claim is ineligible or contains errors, the IRS Voluntary Disclosure Program may offer reduced penalties. We evaluate your claim's merits and advise whether withdrawal, amendment, or defense is the best strategy.

My ERC claim hasn't been processed yet. What should I do?

The IRS has a massive backlog of unprocessed ERC claims. If your claim has been pending for over a year, we can file an administrative claim to compel processing or pursue litigation to recover your refund.

Can I amend my ERC claim?

Yes. If your claim contains errors — either overclaimed or underclaimed — you can file an amended return. We help clients correct claims to reduce audit exposure while preserving legitimate credit amounts.

What documentation do I need for an ERC audit?

Government orders that affected your business, quarterly financial statements showing gross receipts, payroll records for all quarters claimed, health plan cost documentation, and the workpapers showing how the credit was calculated. We help compile and organize this documentation.

Brotman Law — ERC audit defense attorneys

ERC Services

ERC Audit Defense
Protect Your Credit.

The IRS is aggressively auditing Employee Retention Credit claims. We've defended over $160 million in ERC credits and know exactly how to protect your claim.

Sam Brotman, J.D., LL.M.|Last updated April 2026

Key Takeaway

The IRS is auditing ERC claims using a formulaic approach. Knowing their playbook — what documents they request, what arguments they make — allows you to build the strongest possible defense from day one.

The IRS Is Coming After ERC Claims. Is Yours Protected?

The IRS has made ERC enforcement a top priority. They've flagged hundreds of thousands of claims for examination, and the audits are aggressive. Disallowance letters, proposed adjustments, and penalty assessments are hitting business owners who legitimately claimed the credit — and those who didn't qualify are facing even worse outcomes.

Many ERC claims were prepared by promoters who used aggressive or incorrect methodologies. If your claim was prepared by a third-party promoter, you may be especially vulnerable to audit. But even well-prepared claims face scrutiny in this environment.

We've been defending ERC claims since the credit was enacted. We understand the eligibility rules, the calculation methodologies, and the specific issues the IRS is targeting in audits. For a complete overview, read our comprehensive ERC guide.

From Our Practice

We've defended ERC claims through every stage of the IRS audit process — from initial information requests to full examinations. The IRS is using a formulaic approach to ERC audits, and knowing their playbook allows us to anticipate objections and build the strongest possible defense.

What We Handle

ERC Audit Services

ERC Examination Defense

Full representation during IRS examination of your ERC claim. We respond to information requests, prepare documentation, and negotiate with the examining agent.

Eligibility Verification

We review your claim's eligibility basis — government orders, gross receipts decline, or supply chain disruption — and build the evidentiary case to support it.

Calculation Review

If the IRS challenges your credit calculation, we verify qualified wages, health plan expenses, and aggregation rules to defend every dollar.

Disallowance Defense

Received a disallowance letter? We file formal protests and represent you through the appeals process to reverse incorrect IRS determinations.

Penalty Defense

The IRS is asserting accuracy-related penalties and even fraud penalties on ERC claims. We defend against all penalty assessments with reasonable cause and good-faith arguments.

Promoter Claim Repair

If your claim was prepared by an aggressive promoter, we review and — if necessary — amend or withdraw claims before the IRS initiates enforcement.

Understanding the Process

ERC Audits: What You Need to Know

Why is the IRS targeting ERC claims?

The IRS estimates that a significant percentage of ERC claims are improper — either ineligible, overcalculated, or fraudulent. With over $230 billion in claims filed, the enforcement effort is massive. The IRS has dedicated special teams specifically to ERC examination.

Even legitimate claims are being scrutinized because the volume of improper claims has created a presumption of skepticism among examiners.

What does an ERC audit look like?

ERC audits typically begin with a letter requesting documentation: government orders that affected your business, payroll records, financial statements showing gross receipts, and the workpapers behind your credit calculation.

The IRS examiner will verify eligibility, recalculate qualified wages, check aggregation rules for related entities, and assess whether your claim methodology was correct.

What if my ERC claim was prepared by a promoter?

Many promoters used aggressive or incorrect methodologies. If your claim is inaccurate, you have options: the IRS Voluntary Disclosure Program allows you to withdraw improper claims with reduced penalties, or we can amend your claim to correct errors.

If your claim is legitimate but poorly documented, we rebuild the supporting evidence to defend the credit on audit.

Can I still claim the ERC?

The IRS placed a moratorium on processing new ERC claims starting September 2023. While the moratorium has been partially lifted, processing remains slow and scrutiny is high. We help clients navigate the current landscape and determine the best path forward.

Talk to a Tax Attorney

Not Sure Where You Stand?

Schedule a free 15-minute call. We'll assess your situation, outline your options, and tell you exactly what to expect — no obligation.

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Why Brotman Law

$160M+ in ERC Credits Defended

$160M+ Defended

We've defended over $160 million in ERC credits. We know what the IRS is looking for and how to protect your claim.

ERC Since Day One

We've been working with ERC claims since the CARES Act was enacted. Our experience spans the full life cycle of this credit.

Eligibility Expertise

Government orders, gross receipts tests, supply chain disruption — we understand every eligibility pathway and how to prove it.

Promoter Claim Experience

We've reviewed and repaired hundreds of promoter-prepared claims. We know the common errors and how to fix them.

Appeals Track Record

When the IRS disallows a legitimate claim, we take it to appeals and fight for every dollar of credit you're entitled to.

Penalty Defense

We aggressively defend against ERC penalties, including accuracy-related and fraud penalties that can exceed the credit amount.

Learn More

ERC Guides & Resources

Free Guide

ERC Audit Defense
Protect Your Credit.

The IRS Is Coming After ERC Claims. Is Yours Protected?