ERC Refund Litigation

ERC Refund Litigation & IRS Disputes

The Employee Retention Credit (ERC) was designed to help businesses that kept employees on payroll during COVID-19 disruptions. For many companies, the ERC refund is not a “bonus”—it is essential to keeping doors open, paying staff, and stabilizing operations.

At the same time, the IRS has increased scrutiny of ERC claims—freezing refunds, launching audits, and sending letters demanding repayment with interest and penalties, often extending the ERC refund processing time. Some businesses relied on aggressive marketing from ERC “mills” and now find themselves caught between confusing tax rules and the threat of repaying an ERC tax credit refund.

Hartley Law helps businesses navigate ERC disputes, respond to the IRS, and pursue litigation when necessary to protect their rights and the benefits they are legally entitled to receive.

Common ERC Problems Businesses Are Facing

Every business’s ERC story is different, but many of the disputes we see fall into similar patterns:

• ERC refund checks delayed or frozen with little explanation from the IRS
• Audit or examination notices challenging eligibility or the amount claimed
• Letters demanding repayment of ERC refunds already received, often with penalties and interest
• Confusion created by ERC marketing firms that downplayed risk or overstated eligibility
• Disagreements over “partial suspension” or gross receipts tests for eligibility
• Concerns that prior ERC filings may be overstated and need to be corrected strategically

Whether your business has not yet received a refund, is under audit, or is facing a repayment demand, early legal guidance can help you understand your exposure and options.

Why Work with a Litigation-Focused ERC Team?

Many businesses first hear about the ERC from consultants or marketing companies—not from attorneys. Those companies may have helped file claims, but they typically do not represent you when the IRS pushes back or litigation becomes necessary.

Hartley Law approaches ERC disputes with a litigation mindset from day one. That means:

• Reviewing your ERC eligibility using the actual law and IRS guidance—not just marketing materials
• Organizing documentation so your position is clearly supported if challenged
• Responding strategically to IRS information requests, IDRs, and audit notices
• Evaluating whether administrative appeals, refund suits, or other litigation options make sense
• Preparing your case as if it may need to be proven in front of a judge

Our goal is to protect you from avoidable risk while preserving valid ERC refunds whenever the law supports them.

Key Questions in ERC Refund Litigation

ERC disputes often revolve around a few core topics:

• Eligibility: Did your business meet either the gross receipts decline test or the government order / partial suspension test for the quarters claimed?
• Qualified wages: Were the wages counted for ERC calculated correctly given your headcount, PPP loans, and other credits?
• Documentation: Do you have the records needed to support your position if the IRS audits or litigates the claim?
• Third-party involvement: How did ERC consultants, payroll providers, or promoters shape the claim that was filed on your behalf?
• Timing and procedure: Did the IRS follow the required steps and deadlines in reviewing, adjusting, or seeking repayment of your ERC claim?

Our team helps you understand how these questions apply to your business and what evidence will be most important in presenting your side of the story.

What Hartley Law Does in ERC Cases

When you bring an ERC dispute to Hartley Law, we focus on clarity and strategy. Depending on your situation, we may:

• Review your amended returns, ERC calculations, and any third-party reports you received
• Analyze IRS letters, including audit notices, proposed adjustments, and repayment demands
• Identify strengths and weaknesses in your eligibility position for each quarter
• Help you respond to IRS information requests with organized, persuasive documentation
• Explore administrative appeal options where appropriate
• Evaluate whether refund litigation or defensive litigation is viable and in your best interest

You do not have to navigate dense tax language, shifting IRS guidance, and aggressive collection efforts on your own.

Can You Fix or Withdraw an ERC Claim?

Some businesses are now worried that their ERC claims—and resulting ERC tax credit refund— may have been overstated by a marketing firm or based on overly aggressive interpretations of the rules. In those situations, it may be better to correct the filings proactively—rather than waiting for the IRS to act first

Hartley Law can help you:

• Assess whether your existing ERC claims are defensible under current law and guidance
• Weigh the risks of keeping, amending, or withdrawing certain claims
• Develop a plan to correct filings when appropriate while minimizing exposure
• Communicate with the IRS in a way that is strategic, accurate, and transparent
• The right approach depends on your business, your documentation, and where you are in the IRS process.

What Compensation or Relief Is at Stake?

In ERC disputes, the “damages” are often highly significant for the business. These may include:

• ERC refunds that have been frozen or never issued
• Refunds already received that the IRS now claims should be repaid
• Interest and penalties added to the alleged amount due
• Cash flow disruptions that affect payroll, rent, and ongoing operations
• Time and stress spent responding to repeated IRS notices
• Hartley Law works to protect the financial health of your business by defending valid credits and guiding you toward realistic resolutions when adjustments are necessary.

To discuss your ERC refund or IRS dispute with an attorney, call 1-844-844-1444 or contact Hartley Law online today.