Sikich Employee Retention Credit Webinar Provides Insights on Employers’ Experiences with the Credit

Survey data finds many companies’ claims have not yet been refunded

CHICAGO – October 24, 2024 – Sikich, a Chicago-based leading global technology-enabled professional services company, held an Employee Retention Credit webinar polling over 300 industry experts and professionals on the eligibility for and status of their Employee Retention Credit (ERC) claims, and their levels of preparation for an IRS disallowance notice or an IRS notice of an audit. The survey data provides valuable insight into what experts are anticipating, following the upcoming IRS statute of limitations expiration for certain 2021 claims in April 2025.

The webinar polled employers and others working on the ERC, a refundable tax credit for certain eligible businesses and tax-exempt organizations. Webinar attendees that filed ERC claims were polled on the status and eligibility of those claims. Most respondents (84%) have not received all the ERC refunds they filed for, many of whom stated they feel “somewhat prepared” or “totally unprepared” for an IRS notice or audit on their ERC claim (45%). Additionally, the number of attendees that have already been contacted by the IRS was significant (11%), indicating an increase in IRS audit activity.

In addition, 12% of the respondents did not know the method of eligibility they followed to qualify for ERC refunds, and 44% of respondents followed a method of eligibility that required more interpretation and, thus, documentation to support their claim upon audit. “Both groups are at higher risk, as it is our experience that they are less prepared or relied on an ERC provider that did not fully follow the documentation requirements,” said Andrew Creedon, Senior Manager, Sikich.

“With the increase in IRS review and audit activity, being prepared to receive an IRS notice or audit is imperative given the nature of risk involved with claims,” said Tom Bayer, Principal, Sikich. “It is possible with the IRS statute of limitations deadline for certain 2021 claims approaching in April 2025 that the IRS could issue a significant number of disallowance notices to taxpayers prior to April if legislation extending the statute does not pass Congress. Since taxpayers have up to two years to respond to this notice, it effectively extends the statute of limitations for the claim in question.”

The IRS has a statute of limitations for all claims, including ERC claims, that states one must file a claim for a credit or refund within three years of the original tax return. Many of these claims have not been refunded or credited. However, a separate erroneous refund statute exists, providing the IRS two additional years from the date the last refund claim is deposited. There are also exceptions to the three-year statute where fraud is asserted or a taxpayer is considered a “promoter.” The results from Sikich’s webinar on Employee Retention Credit claims revealed the much-needed preparation and ultimate uncertainty over tax policy.

About Sikich

Sikich is a Chicago-based global company specializing in technology-enabled professional services. With more than 1,900 employees, Sikich draws on a diverse portfolio of technology solutions to deliver transformative digital strategies. From corporations and not-for-profits to state and local governments and federal agencies, Sikich clients utilize a broad spectrum of services and products to help them improve performance and achieve long-term, strategic goals.

Sikich practices in an alternative practice structure in accordance with the AICPA Professional Code of Conduct and applicable law, regulations, and professional standards. Sikich CPA LLC is a licensed CPA firm that provides audit and attest services to its clients, and Sikich LLC and its subsidiaries provide tax and business advisory services to its clients. Sikich CPA LLC has a contractual arrangement with Sikich LLC under which Sikich LLC supports Sikich CPA LLC’s performance of its professional services. Sikich LLC and its subsidiaries are not licensed CPA firms.

“Sikich” is the brand name under which Sikich CPA LLC and Sikich LLC provide professional services. The entities under the Sikich brand are independently owned and are not liable for the services provided by any other entity providing services under the Sikich brand. The use of the terms “our company”, “we” and “us” and other similar terms denote the alternative practice structure of Sikich CPA LLC and Sikich LLC. 

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