ERC Litigation

Businesses now have a powerful legal option when their Employee Retention Credit (ERC) claims face long delays or disallowances—they can sue the IRS. ERC was designed to help struggling employers survive during and recover from the COVID-19 pandemic. However, the government has failed to timely process and pay legitimate refund claims timely. Businesses that have claimed the credit and are entitled to a refund don’t have to wait passively to receive these funds. Instead, eligible employers can take legal action to compel the government to review the claim.

Latest on ERC Processing Time & Fraud Alerts

Learn more about ERC refund processing time updates and fraudulent ERC provider details released by the IRS in 2023 and 2024.

Understand Your ERC Options

Our ERC Practice is your one-stop destination for all things related to the Employee Retention Tax Credit. Whether you need a second opinion regarding eligibility, representation in an audit, or information about your ERC refund claim, our team of professionals are here to assist you every step of the way.

ERC Resource Center

Need assistance with your ERC claim? Learn what ERTC services fit your needs!

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ERC Audits and Appeals

Has the IRS initiated an audit of your ERC claim or disallowed the credit? Get insights from experienced tax attorneys on how to properly evaluate and substantiate your claim.

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Problems with ERC Provider or PEO

If you encountered roadblocks from your Professional Employer Organization (PEO) in filing your ERC claims or believe that an ERC company incorrectly analyzed and/or calculated your credit, there are legal remedies available.

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Expedite Your ERC Refund

If your ERC refund is delayed which is causing an undue financial hardship, there are two ways we can help. First, we can try to expedite your claim through the Taxpayer Advocate Service (TAS) by filing a 911 claim. Second, we can file a refund suit in either the United States District Court or the Court of Federal Claims.

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ERC Second Opinions, Withdrawals, and Voluntary Disclosures

If you have doubts about the accuracy of your existing ERTC claim or worry about potential audit risks, Frost Law offers second opinions and risk assessments to protect your business.

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What is ERC Litigation?

Decision-makers considering this remedy should understand the litigation process and consider working with tax attorneys specializing in ERC cases to navigate the process.

Filing a Lawsuit Against the IRS for ERC Claims

Businesses can sue the IRS for ERC claims under two conditions:

  • The IRS takes no action on the refund claim for a period of six months after it is filed; or
  • The IRS sends a notice of claim disallowance (Letters 105C or 106C)
  • Businesses who receive a disallowance have two years from the date of the disallowance to file their refund suit, regardless if they participated in the IRS appeals process

Why You Should Not Wait for Disallowance

The IRS's strict review process for pre-moratorium ERC claims signals potential ineligibility for many. Proactive legal action is now the most effective way to secure your rightful credit.

When you wait for a formal disallowance notice:

  • You miss the chance for early intervention and to set the tone of the claim evaluation process
  • You forfeit the right to a clean record before the court
  • Cases going through the appeals process will be even more delayed
  • If Appeals decides against your claims, your recourse would be litigation anyways

What Are the Steps for ERC Litigation?

Legal action against the IRS must meet specific procedural requirements. Businesses can improve their chances of recovering their Employee Retention Credit through litigation with proper preparation.

What Documents Do You Need?

Your ERC refund lawsuit needs detailed documentation to support the claim. The required paperwork includes:

  • Copies of all Form 941 and Form 941-X submissions
  • Payroll records that show qualified wages
  • Proof of business effects during qualifying periods
  • Financial statements that reflect revenue decline
  • Copies of All Relief Upon Governmental Orders (if applicable)
  • Your complete IRS correspondence history

Choosing the Appropriate Court

Businesses can file their ERC lawsuit in two federal venues. The U.S. District Court near their residence or business can be a convenient local option. The U.S. Court of Federal Claims in Washington, D.C. specializes in tax matters and serves as another choice.

How to File an ERC Lawsuit

The essential steps you need to follow when filing an ERC lawsuit:

  1. Wait for six months after filing your refund claim;
  2. Create and submit a comprehensive complaint that details your claim;
  3. Deliver legal notices to appropriate government officials;
  4. Complete all necessary court paperwork and pay the required fees; and
  5. Handle any communication from government representatives promptly

Tax Attorneys for ERC Litigation

ERC refund litigation requires specialized, legal support to succeed. A skilled ERC tax attorney can assess your claim's strength, represent your interest in matters before the court, and work collaboratively and efficiently with government attorneys. 

Your case must follow strict procedural rules and deadlines. Tax attorneys who know ERC regulations can direct you through these requirements while building strong refund claim cases.

Get Help with ERC Litigation

Our qualified ERC attorneys will review your case and guide you through the litigation process. Contact our ERC tax attorneys today. Call (410) 497-5947 or fill out our contact form to schedule a consultation.

HOW WE HELP

Do You Need a Second Opinion on Your ERC?

The ERC incentivized businesses to retain employees throughout the pandemic with a refundable payroll tax credit that has been a lifeline for many employers. However, fly-by-night return preparers and payroll processors, lacking scruples and a clear understanding of the CARES Act and subsequent legislation, are pushing business owners into over, or even under, claiming ERTC—and that can result in Form 941-X audits, which can then lead to serious consequences without proper documentation.

Our team has tracked pandemic relief legislation from PPP and EIDL in the beginning, through ERC claims and more. We are happy to help you understand what your business may be eligible to claim and can provide a second opinion if necessary.

Tax attorneys who will help your ERC Claim
The ERC Risk Assessment Team

Who will help you through your ERC Claim?

Meet the tax attorneys who can help you understand what to expect when claiming the ERTC and what to do if you are audited.

Partner Rebecca Sheppard, Esq.

As a former attorney for the Office of the Comptroller of Maryland, Rebecca’s current tax law practice is uniquely enhanced by the critical component of government perspective that she can offer when helping clients understand the full scope of what’s involved when maximizing tax credits and minimizing tax liabilities.

Partner Peter Haukebo, Esq.

Peter has provided individuals and businesses with sophisticated tax controversy assistance for more than a decade. In the ERC context, not only has Peter helped his own clients successfully navigate ERC requirements, he has committed countless hours to educating thousands of businesses, individuals, and other professionals across the nation about every aspect of the credit.

Client Testimonials

"I was referred to The Frost Law Firm through the National Restaurant Association for the ERC program. I am happy I chose them over the 100's of solicitations I have received over the past 6 months for the ERC program. The entire team at Frost Law were great to work with and always responded to any question I might have had. What also impressed me is that their fee did not increase when they informed me that my refund amount would be about double from the original amount and they did not charge me any additional fees to process my paperwork!  If you're reading reviews to determine who you want to represent you for the ERC program, you don't have to look any further!"

- Farmhouse KC
"Rebecca and her team at Frost Law were amazing. We met randomly through an online COVID business development series of webinars and she was so impressive, that I decided that I could trust her with my ERC filings. They did what was needed swiftly and professionally. I am in California and she in Maryland and there were no issues with that. I highly recommend Rebecca and her team for your tax needs even if she is in Maryland. I have even referred a client to her for another issue."

- Barbara K.

Frequently Asked Questions

How does the choice of court (District Court vs. Court of Federal Claims) affect my case?

The choice impacts the procedural rules, venue, and possibly the timeline of your case. District Courts may offer local convenience, while the Court of Federal Claims has specialized tax expertise. A tax attorney can help determine the best venue for your situation.

Is there a chance to settle with the IRS before the case goes to trial?

Yes, many ERC disputes are resolved through settlements before reaching trial. A skilled tax attorney can negotiate with government counsel to explore potential resolutions.

How long does ERC litigation typically take?

The duration varies based on the complexity of your case and the court’s schedule. While some cases resolve in months, others may take over a year, particularly if they proceed to trial.

What courts handle ERC lawsuits, and how are they different?

ERC lawsuits can be filed in U.S. District Courts or the U.S. Court of Federal Claims. District Courts are local, while the Court of Federal Claims in Washington, D.C., specializes in federal tax disputes.

Contact Our Team Today