IRS ERC Investigations
Experienced New York IRS ERC Lawyers for High-Stakes IRS Audits and Investigations
The Internal Revenue Service is continuing to aggressively target individuals and organizations for Employee Retention Credit fraud years after the COVID 19 pandemic. In mid 2024, the IRS warned of intensifying audits at a time when the agency had already recovered billions in improper ERC credits and refunds. Individuals and businesses that need help understanding the breadth of these investigations often review important context about our practice before reaching out.
IRS Criminal Investigation is pursuing criminal charges in many ERC fraud cases as well. When accused of intentionally defrauding the federal government under the ERC program, business owners, accountants, promoters and others can face significant fines and possible prison time. Skilled legal representation is essential, and individuals targeted in IRS ERC investigations should consult with a New York ERC lawyer as soon as possible.
Common Triggers for IRS ERC Audits and Investigations
Our New York ERC lawyers have represented clients in audits and investigations involving the Employee Retention Credit since the COVID 19 pandemic. We have defended clients against allegations in both civil and criminal inquiries. Based on our experience, common triggers for IRS ERC investigations include allegations such as:
- Claiming the ERC when a business was ineligible
- Improperly calculating qualified wages during one or more tax periods
- Improperly calculating the ERC during one or more tax periods
- Claiming the same credit for multiple tax periods despite changes to ERC rules
- Claiming the ERC for an entire tax period when only partial eligibility existed
- Conspiring with accountants, business partners or others to fraudulently claim the ERC
- Promoting ERC filing schemes involving false or misleading claims
These examples reflect numerous issues that can lead to ERC related scrutiny from the IRS or IRS CI. Whether you received an audit notice or target letter, you have been served with a search warrant or subpoena, or you simply have concerns about an ERC filing, our New York ERC lawyers can help you evaluate strategic next steps. Clients who want to better understand IRS audit procedures often examine related matters before contacting us.
ERC Litigation: What to Expect
ERC litigation is becoming increasingly common as the IRS continues to challenge claims it believes were filed improperly. Litigation may involve disputes over eligibility, wage calculations, aggregation rules, government order tests or interpretations of ERC changes enacted during the pandemic. A court challenge requires a detailed record of the company’s operations, payroll data, financial statements and contemporaneous documentation that supports the claim. Our attorneys build this record carefully to strengthen each position presented during litigation. We also advise clients on settlement options when litigation may not provide the most efficient resolution.
What to Do if Your ERC Claim Has Been Denied
If the IRS denies an ERC claim, the first step is to review the denial notice to understand the specific reasons for rejection. In many cases, the notice will reference documentation gaps, eligibility issues, wage calculation errors or conflicting information in quarterly filings. It is essential to respond quickly and develop a comprehensive record that addresses each issue raised by the IRS. Some individuals and businesses examine additional compliance options when evaluating potential exposure or when they discover errors in prior filings. Our attorneys can help you prepare a challenge to the denial or pursue administrative appeal rights when available.
The IRS is Continuing to Target ERC Claimants and “Promoters”
Holding companies and individuals accountable for ERC fraud remains a top priority for the IRS. The IRS issued updated FAQs on the ERC in October 2025, and, in its updated FAQs, the IRS highlighted its ongoing efforts to target companies and individuals with a wide range of fraud-related allegations.
This includes not only companies and individuals that claimed the ERC (whether during or after the pandemic), but also “promoters” that allegedly encouraged or facilitated fraudulent filings. In all cases, facing allegations of ERC fraud presents serious risks—including the risk of criminal prosecution in some cases.
What We Can Do to Help
Our New York IRS ERC lawyers are providing comprehensive legal representation to companies and individuals that are facing (or have concerns about facing) ERC-related scrutiny from the IRS. Our ERC-related services include:
Providing a Second Opinion on ERC Compliance
Whether you are facing an ERC investigation or you have concerns about the possibility of facing scrutiny from the IRS in the future, we can provide a second opinion regarding ERC compliance. This includes evaluating all potential risks for civil or criminal enforcement. Many companies and individuals filed for the ERC without a clear understanding of their eligibility—because only limited information was available—and now the IRS is targeting them with serious allegations of fraud.
If you have questions or concerns about compliance, our New York IRS ERC lawyers can reassess potential enforcement risks, such as:
- Claiming the ERC for an Ineligible Business – The ERC’s eligibility criteria changed over time, and many businesses filed despite being ineligible to do so. Even if an ineligible business inadvertently submitted an invalid ERC claim, this can still lead to serious fraud allegations.
- Improperly Calculating ERC Credits – Not only did the ERC’s eligibility criteria change over time, but the methods for calculating the ERC changed over time as well. If a business improperly calculated the ERC in any one or more calendar quarters, this could lead to IRS enforcement.
- Claiming the ERC During Periods of Ineligibility – Due to the changes implemented over time, businesses that were eligible to claim the ERC for some calendar quarters may have been ineligible to claim the ERC in others. Even if only a portion of a company’s ERC claims were improper, this is still enough to create significant liability exposure.
If you or your business is at risk of facing civil or criminal penalties related to ERC fraud, this is a fact you need to know. Our lawyers can provide the insights you need to make informed decisions about your next steps.
Defending Against IRS ERC Investigations
Our lawyers can provide legal representation for IRS ERC investigations on an emergency basis when necessary. If the IRS is looking into your company’s ERC filings or your personal involvement with any ERC filings, it is imperative that you engage experienced defense counsel right away. This is an extremely high-risk scenario, and you will need to execute an effective defense strategy in order to avoid unnecessary consequences.
We have extensive experience representing companies and individuals in high-risk IRS investigations, including investigations involving the ERC. Our New York IRS ERC lawyers can make contact with the IRS on your behalf, quickly assess the risks involved, and then get to work building and executing an effective defense strategy on your behalf.
IRS investigations targeting ERC violations can pose risks for civil enforcement action or criminal prosecution, depending on the specific allegations involved. However, it is also possible to resolve IRS investigations without formal legal action in many cases. Once we have a clear understanding of the circumstances at hand, we can advise you regarding whether it makes sense to fight to avoid liability altogether, target a settlement with the IRS, or begin preparing to dispute the IRS’ allegations in federal court.
Serving as Defense Counsel in ERC Litigation
If disputing the IRS’ allegations in federal court is your best (or only) option, our New York IRS ERC lawyers can use their experience to fight for a favorable verdict by all means available. While much of our practice involves working with the IRS directly on behalf of our clients, we are also experienced litigators—and we have successfully protected many of our clients at trial.
We are available to handle both civil and criminal litigation involving the ERC. Whether your company is facing (or you personally are facing) a civil enforcement action, a federal grand jury, or charges for tax fraud and other serious federal crimes, we can use our experience to fight for a favorable result in pre-trial proceedings and at trial if necessary.
Disputing Improper ERC Denials
Along with defending clients accused of ERC fraud, we are also representing clients who have claims against the government for improper ERC denials. Due to the government’s concerns about widespread fraud under the ERC program, many companies have faced denials that are unwarranted.
If you believe that the IRS has improperly denied your company’s ERC claim, our team can determine if an appeal or litigation in the U.S. Tax Court is warranted. If it is, we can use your company’s substantiating documentation to demonstrate that your company is entitled to the ERC for all relevant calendar quarters. Note, however, that under the One Big Beautiful Bill (OBBB), the IRS is no longer allowing ERC claims filed after January 31, 2024.
Submitting Voluntary Disclosures
For companies and individuals that filed (or assisted with filing) fraudulent ERC claims and that are not yet facing IRS scrutiny, it may be possible to avoid an IRS ERC investigation by submitting a voluntary disclosure. The IRS’ Voluntary Disclosure Practice is an option for proactively resolving willful statutory violations before the IRS launches an inquiry.
There are similar options for resolving non-willful violations—and, here too, a proactive approach can be essential for mitigating the risks involved. If you need to know more about the options for proactively resolving ERC violations, we encourage you to speak with one of our New York IRS ERC lawyers in confidence as soon as possible.
IRS ERC Investigations: Time Is of the Essence
If you are facing an IRS ERC investigation in New York, time is critical. These investigations can move quickly, and the IRS is not hesitating to pursue substantial penalties when it believes they are warranted. Our New York ERC lawyers can start preparing a strategic defense immediately and help you work toward the most favorable resolution possible.
Speak with a New York IRS ERC Lawyer at Thorn Law Group
To speak with an experienced New York IRS ERC lawyer at Thorn Law Group, call (914) 534-6004, or tell us how we can reach you online and we will be in touch promptly.
