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Preparing for Employee Retention Credit Audits: Claiming the ERC, Handling the Exam, Credit Mills

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Monday, April 24, 2023

Recorded event now available

or call 1-800-926-7926

This webinar will provide insights into preparing for the IRS' ongoing examinations of Employee Retention Credits (ERCs) claimed by businesses. Highly advertised and often promoted to ineligible taxpayers, these credits were spotlighted on the IRS 2023 Dirty Dozen list of tax scams. Unfortunately, the bad players have heightened the risk of an audit for even legitimate ERC claims. Our panel of former IRS attorneys will prepare business owners and tax advisers for these audits.


The ERC was implemented to help employers retain and pay employees during the COVID pandemic. With credits offered of $5,000 per employee in 2020 and increased to $7,000 per quarter for the first three quarters of 2021, the ERC provided substantial relief to businesses affected by the COVID pandemic. However, with the large amounts of potential credits also came “credit mills” and scammers.

ERC mills sell companies on being able to easily qualify for the ERC without diligently determining whether the companies qualify. Many companies have been swayed by these sales pitches, often to the dismay of their tax advisers. The IRS issued a warning on Oct. 19, 2022, that "warned employers to be wary of third parties advising them to claim the Employee Retention Credit when they may not qualify" and noted that these mills usually charge upfront or contingent fees for their services.

Penalties for improperly claiming the ERC are steep and could include a 20 percent accuracy-related penalty and a 75 percent penalty for civil fraud, as well as a criminal case against the taxpayer brought by the IRS. As if this wasn't enough, these payroll-type audits can open the door to income tax audits of the business itself. Tax practitioners working with businesses that have taken advantage of ERCs need to prepare for IRS scrutiny.

Listen as our seasoned panel of tax attorneys reviews eligibility for ERCs, outlines the risks associated with credit mills, and offers practical tips for handling an ERC examination.



  1. Overview of Employee Retention Credit
    1. Statute and IRS guidance
    2. How to claim the ERC
    3. Risks associated with less-than-reputable "credit mills"
  2. IRS audits and enforcement actions related to ERC
    1. IRS public statements on ERC audits
    2. Usual steps in IRS ERC audits
  3. Practical tips to prepare clients now before an IRS audit begins
  4. Practical tips during an ERC audit


The panel will cover these and other critical issues:

  • How to claim the ERC
  • Practical advice for handling an IRS audit related to the ERC
  • Useful tips to prepare clients for ERC audits
  • Separating legitimate and illegitimate ERC claims


Warner, David
David J. Warner

Tax Attorney, Shareholder & Managing Principal
Holtz, Slavett & Drabkin

Mr. Warner is a Tax Attorney and the Managing Attorney of the Orange County Office of Holtz, Slavett &...  |  Read More

Weiss, Michele
Michele F.L. Weiss

Holtz, Slavett & Drabkin

Ms. Weiss has over 20 years of experience in tax controversy and litigation matters. She helps her clients resolve...  |  Read More

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