The IRS’s ERC voluntary disclosure program has drawn concern from tax attorneys due to uncertainty around entering into the program and still being subjected to criminal prosecution. Extensive disclosure is required as part of the program, however, the IRS does not provide any assurances related to the possibility of post-disclosure investigations, which raises significant questions and concerns. In addition, processing delays and impending deadlines could precipitate an uptick in refund suits. Despite additional funds, uncertainties persist regarding the Justice Department’s capacity for litigation.
On January 20, 2024, Gray Reed Partner Tony Box served on a panel discussing ERC enforcement at the ABA Tax Section’s Mid-Year Meeting in San Francisco, California. A reporter from Tax Notes was in attendance and used some of Tony’s insight in an article exploring concerns related to the IRS’s ERC voluntary disclosure program and the heightened risks for taxpayers. A lawyer and a CPA, Tony represents businesses and high-net-worth individuals in all types of civil and criminal tax controversies, white-collar defense cases, regulatory investigations, and enforcement actions focused on preventing government inquiries and minimizing business disruptions. Before joining Gray Reed, Tony was an Assistant US Attorney. He also has nearly a decade of experience as an FBI Special Agent.
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In that situation, taxpayers have the option of filing refund suits at least six months after the taxpayers filed their claims, according to Box. While some clients are wary of suing the IRS over the ERC, there have been a couple of refund suits filed already, and there may be a flood of them coming, he said. The IRS may have lots of extra money from the Inflation Reduction Act, but the Justice Department might not have the resources to keep up with that much litigation, Box said. Another option would be enlisting the Taxpayer Advocate Service, Box said.
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