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.

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.