Getting an Internal Revenue Service (IRS) audit letter often makes you pause for a moment, especially when you’re still trying to understand how to respond to an IRS audit notice for an ERTC request properly. There’s a deadline staring at you, an IRS letter asking for a response, and no clear instructions beyond a few lines on the page. You know you can’t ignore it, and you know the timing matters, but it’s not obvious how to start or what the IRS expects from you.
So this blog post walks you through the next steps in a clear and steady way, so you’re not guessing your way forward.
Understanding the IRS ERTC Audit Notice
An IRS Employee Retention Tax Credit (ERTC) audit notice is simply a letter that tells you the IRS is reviewing your ERTC claim. It explains that your claim has been selected for audit, which quarter is being reviewed, and that the process has officially started. It’s not a final decision or a denial. It’s just the IRS informing you that they need to look at your claim more closely and will be asking for information.
Steps to Respond to an IRS ERTC Audit Notice
When you get an audit notice, the IRS is basically asking you to explain and support your ERTC claim. And this is where understanding how to respond to an IRS audit notice for an ERTC review becomes important because every step you take shapes how the process moves forward and what options stay open for you. I
Step 1: Read and Review the IRS Audit Notice Carefully
Before doing anything else, take a slow and careful look at the letter. The notice tells you:
- Which quarter is the IRS reviewing?
- What part of the ERTC claim are they questioning?
- The documents they may ask for.
- The exact response deadline.
The IRS makes it clear that ignoring the notice or missing the date can limit your rights later. So even if the letter feels simple, highlight the key instructions and keep a copy in your records.
Step 2: Gather the Necessary Documentation for Your ERTC Claim
Once you know what the IRS wants, start pulling together proof that supports your numbers and eligibility. The IRS generally looks for:
- Payroll records and wage summaries.
- Form 941 (Employer’s Quarterly Federal Tax Return) or Form 941-X (Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund) filings.
- Gross receipts statements for revenue-drop claims.
- Copies of government-ordered shutdowns.
- Proof that Paycheck Protection Program (PPP) wages were not double-counted.
- Any worksheets used to calculate the credit.
Organizing these documents clearly helps the IRS match each record to the point they’re reviewing. It also shows that your claim wasn’t speculation; instead, it was based on real numbers.
Step 3: Respond to the IRS Within the Given Timeframe
The date printed in the audit notice is basically the deadline the IRS expects you to follow. For most ERTC audit notices, the IRS usually gives about 30 days, and that’s the timeline you’re working with. So the moment you see that date, it’s worth treating it seriously because the IRS goes by what’s written in the letter.
What you can do:
- Send your response before the deadline, along with the records they asked for, so the IRS has your side of the story.
- Ask for extra time only if you really need it, and make sure you ask before the deadline arrives.
- Keep proof of delivery, just so you can show the IRS that you responded on time.
If the IRS doesn’t hear from you by the deadline, they can move forward based on what they already have, and your documents may not be considered. So responding on time keeps your options open.
Step 4: Address Specific Issues Raised in the IRS Audit Notice ERTC
The notice often points to exact areas the IRS is questioning, like eligibility, wages, PPP overlap, or missing proof. The best approach is to respond point-by-point:
- Issue raised → Show supporting document.
- If something needs explaining, → Add a short written clarification.
- If a document is unavailable → State why and offer alternative proof.
This direct matching helps the IRS understand your position without guessing. If the IRS later makes an adjustment and you believe something was overlooked, the audit reconsideration process can sometimes help you present new information that was not included the first time.
Step 5: Consider Professional Help if You’re Unsure How to Respond
If any part of the notice feels unclear or if the IRS requests more complex documentation, bringing in a professional may help. Tax attorneys, certified public accountants (CPAs), or employment-tax specialists can:
- Review your notice.
- Prepare your response.
- Communicate with the IRS on your behalf.
- Help protect your appeal rights.
This isn’t about looking guilty. It’s just about having someone experienced guide you through a technical process with deadlines.
Get Your IRS Audit Response Handled the Right Way with Mr. Michael Sullivan!
Receiving an IRS ERTC audit notice can be overwhelming, and it’s common to feel uncertain about communication, document submission, and timing. The IRS process is strict and continues regardless of your readiness. Having a clear plan can help ease the stress of the situation.
Mr. Michael Sullivan is genuinely helpful with his decades of experience in the IRS system, specifically with audits. He understands how cases are viewed and what effective audit defense entails for ERTC claims. His approach focuses on providing a clear perspective, facilitating proper communication, and ensuring your responses align with IRS procedures rather than relying on trial and error.
If you are not sure what to do next or if you are still trying to understand how to respond to an IRS audit notice for an ERTC review appropriately, getting in touch with him today.
FAQs
An IRS audit notice ERTC is a letter indicating that the IRS is examining your ERTC claim. It clarifies that your claim has been chosen for audit and specifies the quarter under review. Essentially, the notice serves as a request from the IRS for you to submit information and documentation to substantiate the credit you claimed. Receiving this notice does not imply that your claim has been rejected or that you have committed any errors. It merely represents the initial phase of the review process.
You respond by following the instructions written in the notice. The IRS expects you to send the information they asked for and do it by the deadline shown in the letter. Here is a simple way to handle it:
Read the notice slowly and note the deadline.
Collect the documents the IRS requests.
Send your response in writing to the address listed in the notice.
Keep a copy of everything you send for your records.
The goal is to reply on time with the information the IRS needs so they can review your claim properly.
The documents you need depend on how you qualified for the credit, but most businesses usually gather items that show eligibility and wage details. Common records include:
Payroll reports and wage summaries.
Form 941 or Form 941-X.
Gross receipts statements if you claimed a revenue decline.
Government orders related to shutdowns or restrictions.
Proof that PPP wages were not counted for ERTC.
Any worksheets or calculations used to compute the credit.
These documents help the IRS see how you arrived at your claim and whether the rules were followed. Organizing them clearly makes the review smoother.
If the deadline is missed, the IRS can move ahead with its review using only the information it already has. And when that happens, any change they make can turn into a balance you need to take care of, which is why this part becomes important.
Here is what missing the deadline can lead to:
They may reduce part of your credit because your documents were not considered.
A balance due may show up if the IRS adjusts your claim.
Interest and, in some cases, penalties may be added based on that adjustment.
Your chance to fix or explain things later may become limited.
That is why replying on time helps you avoid these situations and keeps the process manageable.
You are allowed to handle the response on your own, and many people do that when the notice is straightforward and the documents are easy to pull together. The challenge usually comes when the IRS is asking for detailed records, raising technical questions, or reviewing multiple quarters. That is where having someone experienced can take a lot of pressure off because they already understand how the IRS reviews these claims and how responses are expected to be presented.
Mr. Michael Sullivan fits that background himself. He’s a former IRS agent who has gone through numerous audits and works alongside a group of CPAs and tax lawyers that deal with these notices daily. Thus, if a person is in doubt or just wants the whole thing done the right way from the very beginning, his team can make the response more understandable and structured while still allowing the final choice to be theirs.
