Several weeks ago the IRS issued 28,000 ERC Disallowance Letters aka “105c Letters.” Many of those letters were missing the section explaining the taxpayers “right to appeal.” The IRS has announced to FPC that they will be sending out a subsequent letter to all those affected informing them of their rights. That letter will not be a replacement of the 105c. So the date of the initial letter will still stand as the beginning of the time period to appeal.
Every employer is entitled to appeal within 30 days and because there are so many disallowance letters, the 30 days, in this case, is merely to evoke an immediate response. So when the responses come back to the IRS from taxpayers, they will be shipped to the Ogden or Cincinnati campuses. The IRS is looking to stand up a process so that the taxpayer can send the response to the service center anytime within the 2 years and the IRS will be reviewing all of the responses even if it’s past the 30 days. At that point, the Service will see if the information provided is enough to overturn the disallowance prior to going to the Office of Appeals. If so, they will process it. If not, the protest will be forwarded to the Office of Appeals.
Why is the IRS being so cooperative? It comes down to the sheer number of expected responses, efficiency, and the expense of having an Appeals Officer review cases in which they are simply going to ask the same questions the Service Center is going to ask. The IRS realizes that the Appeals Officer’s time is finite, expensive, and if they are going to ask for it anyway, they want to get ahead of it and put it in the hands of the IRS Service Center first.
In the coming weeks the IRS is looking to update their website that will give guidance to “here’s what you should be submitting” It will be in a quasi-FAQ format divided into 3 main areas: How are you eligible? What can support your eligibility? How did you calculate your ERC? The FAQ is still sitting with Counsel so no word when it will be published.
