Anyone fighting lawsuits against ERC contingency fee rates after IRS moratorium?

What would qualify as "grossly disproportionate" though? I paid a firm 35% and all they did was ask for my quarterly payroll reports, have me sign some forms, and submit. Took them maybe 2 hours total? For a $78,000 claim that's over $27,000 in fees!

For a court to consider fees "grossly disproportionate," they typically look at industry standards for similar services and the actual expertise and time required. Most successful challenges have involved situations where firms charged premium rates while providing essentially clerical services that required minimal specialized knowledge. In your specific case, $27,000 for what appears to be minimal work could potentially be challenged, especially if the firm made representations about having specialized expertise that wasn't actually required or utilized in your claim processing. The key factor would be what specifically was promised in your agreement versus what was delivered.

Does taxr.ai handle the actual filing or just the analysis part? I'm still trying to figure out if I qualify but I'm paranoid about the IRS scrutiny after that moratorium announcement.

I'm skeptical about any service related to ERC at this point. How do you know they're actually doing a proper analysis vs just another company trying to cash in on this credit? Did they actually save you money compared to the contingency firms?

They primarily focus on the analysis and documentation part, determining eligibility and calculating the correct amount. They provide comprehensive documentation that you can use for filing or give to your accountant. After the moratorium, they've been especially thorough about documentation standards since the IRS is scrutinizing claims much more closely. What convinced me they were legitimate was their transparency about when clients DON'T qualify - they turned away several of my business contacts because their situations didn't meet the criteria, while contingency firms were telling those same people they qualified. They charge based on the service, not a percentage of your refund, which immediately aligned their incentives with my best interests rather than just maximizing claim amounts.

Wait this actually works? I thought the IRS was just straight up not answering phones anymore lol. How exactly does this service get you through when the regular number doesn't?

This sounds like BS honestly. If there was a way to skip the IRS phone queue, everyone would be doing it. I've been trying to reach someone about my ERC claim for months. There's no magic solution to get through to the IRS.

Claimyr uses an enterprise-level phone system that continually redials and navigates the IRS phone tree until it secures a place in the queue, then it calls you to connect when an agent is almost available. It's not skipping the line, it's just automating the painful redial process that most of us don't have time for. The reason everyone isn't using it is simply because most people don't know about it. I found it after my accountant recommended it because he uses it for his clients. The IRS is actually answering phones - they're just completely understaffed with hours-long hold times and a system that disconnects calls after certain wait thresholds.

Can you share which law firm is handling the class action? I paid 35% to a company that basically just took my quarterly payroll reports and submitted a form. Would like to explore my options.

I can't publicly post the law firm's name here for privacy reasons, but I can tell you they're based in Chicago and specialize in tax-related class actions. If you search for "ERC contingency fee class action Chicago law firm" you should be able to find them. The key factor in their case is proving the firms misrepresented the complexity and specialized knowledge required for ERC claims while charging fees comparable to complex legal or accounting work. They're also arguing that many firms intentionally submitted claims they knew wouldn't meet IRS scrutiny just to collect fees upfront.

Good plan checking your claim status. With the increased scrutiny, many ERC claims are taking 9-12 months to process even when everything is in order. Make sure you ask the IRS agent specifically if your claim is under review or just in the processing queue - those are different situations with different timelines. If your claim is under review, request information on exactly what additional documentation they need rather than waiting for a letter. Sometimes those letters get delayed for months while your claim sits in limbo.

Good advice - I didn't realize there was a difference between review and processing queue. I'll definitely ask about that specifically and request information on any documentation they might need. I'm also going to ask my accountant to review everything the ERC company submitted to make sure it was proper. Better to be proactive now than deal with potential audits or penalties later. Feeling more confident now about how to move forward!

This is really helpful perspective from someone who's seen this from the professional side. I'm definitely concerned about the audit risk now - my ERC firm seemed way too eager to submit without asking many questions about my specific situation. Quick question: when you mention 8-15 hours for proper ERC work, does that include the initial eligibility determination or just the filing process? I'm trying to figure out if the 2-3 hours my firm spent was as inadequate as it seemed, or if there's legitimate work that happens behind the scenes that I wasn't aware of. Also, have any of your clients who used these "claim factory" firms actually faced audits yet, or is this still mostly theoretical risk at this point?

The 8-15 hours includes everything - initial eligibility analysis, quarter-by-quarter revenue and employee count verification, documentation of qualifying circumstances (government orders, supply chain disruptions, etc.), calculating the credit properly across all eligible periods, and preparing comprehensive supporting documentation. What you described - 2-3 hours total - is definitely inadequate for a legitimate claim. That's barely enough time to fill out the forms, let alone do proper due diligence on eligibility requirements. Regarding audits, yes, I've had three clients contacted by the IRS for additional documentation requests in the past four months. Two were able to provide adequate support because we went back and properly documented everything after their original submissions. The third is still working through it, but their original ERC firm provided almost no supporting documentation beyond the basic form. The IRS has publicly stated they're scrutinizing ERC claims much more heavily now, so this isn't theoretical anymore. I'd strongly recommend getting that post-submission review done sooner rather than later, especially if your refund hasn't come through yet - it's much easier to withdraw or amend a claim than to deal with penalties after the fact.

The 8-15 hours includes everything - initial eligibility analysis, documentation review, calculations, and preparation of all forms and supporting materials. What most people don't realize is that a proper ERC analysis should include reviewing your PPP loans, analyzing quarterly payroll data for eligibility periods, documenting government orders that affected your business, and ensuring all calculations comply with the constantly changing IRS guidance. If your firm only spent 2-3 hours, they almost certainly skipped critical steps in the eligibility determination process. I've seen firms that literally just asked "did COVID affect your business?" and took clients' word for it without reviewing actual documentation. As for audits, yes - I have three clients who've received IRS correspondence requesting additional documentation for their ERC claims in the past six months. Two were from these high-volume processing firms, and the documentation they provided was completely inadequate for the IRS requests. We're having to reconstruct their entire eligibility case from scratch. The third client used a more thorough firm and had proper documentation, so responding was straightforward. The IRS has definitely shifted from just processing claims to actively reviewing them, especially those submitted by firms that filed large volumes.

The 8-15 hours includes everything - initial consultation, eligibility analysis, documentation review, calculations, and form preparation. What most people don't realize is that proper ERC work involves analyzing payroll records quarter by quarter, reviewing government orders that may have affected operations, and ensuring all qualifying criteria are met and documented. If your firm only spent 2-3 hours, that's a red flag. They likely just took your word on eligibility without doing due diligence on the actual requirements. As for audits - yes, I have three clients who've already received IRS examination notices on their ERC claims, all filed by high-volume contingency firms. The IRS is particularly scrutinizing claims where the supporting documentation is thin or where firms submitted large volumes of claims. Two of my clients are now facing potential repayment plus penalties because their original firms didn't properly document the business impact requirements. I'd strongly recommend getting that post-submission review done sooner rather than later. If there are issues with your claim, it's much better to address them proactively than wait for an IRS audit.

The 8-15 hours includes everything - initial eligibility assessment, quarterly analysis for each period claimed, wage documentation review, and proper form preparation. What most people don't realize is that legitimate ERC work requires analyzing each quarter separately to determine if your business met the criteria during those specific periods. Regarding audits, yes - I've had three clients receive IRS examination notices in the past four months, all for ERC claims processed by high-volume firms. Two of them had inadequate documentation that we're now scrambling to reconstruct. The IRS is definitely following through on their audit threats, not just posturing. The audit letters specifically ask for detailed records proving the business impact during each claimed quarter, employee retention documentation, and reconciliation of wages claimed versus actual payroll. If your firm just submitted basic payroll summaries without this supporting detail, you're at higher risk. I'd strongly recommend getting that post-submission review done sooner rather than later. It's much easier to gather proper documentation now while records are accessible than during an audit when you're under time pressure and potential penalty exposure.

The 8-15 hours includes everything - initial eligibility review, quarterly analysis for each period claimed, wage calculation verification, documentation of qualifying events, and proper form preparation. What you described as 2-3 hours is definitely inadequate for a thorough job. Regarding audits, yes - I've had three clients receive audit notices in the past four months, all of whom used high-volume ERC processors. Two were able to resolve quickly because we had gone back and properly documented everything after submission. The third is still ongoing because the original firm's documentation was essentially useless - just basic payroll summaries with no analysis of qualifying factors. The IRS seems to be targeting claims from specific firms that submitted large volumes, so if your processor was one of the major national companies advertising heavily, you're at higher risk. I'd definitely recommend getting that post-submission review done sooner rather than later.

The 8-15 hours includes everything - eligibility analysis, quarterly payroll review, calculation verification, documentation preparation, and form completion. What you experienced with 2-3 hours is definitely inadequate for a compliant filing. Regarding audits, yes - I've had three clients receive IRS correspondence requesting additional documentation for ERC claims filed by these mills. Two were able to resolve it with supplemental paperwork, but one is facing a full examination because the original firm's documentation was so sparse. The IRS is definitely following through on their audit threats, not just making empty warnings. The clients who used more thorough services (including a couple who used taxr.ai for documentation review) haven't received any IRS inquiries yet, which suggests proper documentation upfront really does matter for audit selection.

The 8-15 hours includes everything - eligibility analysis, quarterly payroll review, documentation of qualifying circumstances (like government orders or supply chain disruption), calculation verification, and proper form preparation. If your firm only spent 2-3 hours, they almost certainly skipped critical steps. Regarding audits - yes, I've had three clients receive audit notices in the past four months, all of whom used high-volume ERC firms. The IRS is specifically targeting claims that appear to have insufficient documentation or questionable eligibility determinations. One client's audit revealed their ERC firm never actually verified they met the gross receipts decline test properly. The audit risk is very real now, not theoretical. The IRS has stated they're examining ERC claims at much higher rates than typical tax issues. I'd strongly recommend getting that second opinion review - the cost of proper documentation review now is minimal compared to potential penalties and interest if the IRS finds problems with your original submission.

The 8-15 hours includes everything - initial eligibility analysis, quarterly revenue/payroll review, documentation of qualifying events, form preparation, and compliance review. What you described (2-3 hours) would barely cover filling out the forms, let alone proper due diligence. Regarding audits, yes - I've had three clients receive audit notices in the past two months, all who used high-volume ERC firms. Two were able to provide adequate documentation and resolved quickly, but one is facing significant penalties because the firm they used didn't properly document their qualifying period or revenue decline. The IRS is definitely not just reviewing randomly anymore. They're targeting claims processed by specific firms that submitted unusually high volumes or had patterns of questionable filings. If your firm was processing hundreds of claims quickly with minimal individual attention, that's exactly the type they're scrutinizing. I'd strongly recommend getting that post-submission review done sooner rather than later. If there are documentation gaps, it's much better to proactively address them now than scramble during an audit.

The 8-15 hours includes everything - initial consultation, eligibility analysis, documentation review, calculations, form preparation, and quality control. What most of these mills were doing is just the form preparation part, which is maybe 2-3 hours if you already have clean data. The real work is in the eligibility analysis - determining if supply chain disruptions actually impacted operations, whether government orders truly affected the business, calculating the correct qualified wages, etc. That's where legitimate firms spend most of their time and where the mills cut corners. As for audits, yes - I have three clients currently dealing with IRS examinations of their ERC claims. Two were processed by contingency mills, one by a legitimate firm. The difference in documentation quality is stark. The mill clients are scrambling to reconstruct their eligibility justification, while the properly prepared client has comprehensive documentation that addresses every IRS question. The mills relied on the assumption that the IRS wouldn't have capacity to audit many claims. That assumption is proving very wrong - audit rates for ERC claims are running much higher than typical business tax returns.

The 8-15 hours includes everything - initial eligibility assessment, detailed documentation review, wage calculations, quarterly analysis, and proper form preparation. What most people don't realize is that legitimate ERC work involves analyzing each quarter separately to determine specific eligibility periods, calculating wages correctly across different employee categories, and ensuring all documentation meets IRS standards. The 2-3 hours your firm spent was definitely inadequate if they were doing proper due diligence. That's barely enough time to review your payroll records, let alone do the detailed analysis required for a defensible claim. Regarding audits - yes, I've already had three clients receive audit notices on ERC claims that were processed by high-volume firms. Two of those audits resulted in partial disallowances because the documentation didn't support the claimed eligibility periods. The third is still ongoing, but we had to spend significant time reconstructing the proper documentation that should have been prepared initially. The IRS has been pretty clear that ERC claims are a high priority for examination, especially those submitted by firms that processed large volumes with minimal oversight. I'd strongly recommend getting that second opinion before your refund arrives.

The 8-15 hours includes everything - initial consultation, eligibility analysis, documentation gathering and review, calculating the credit amount, preparing forms, and creating supporting documentation packages. Most legitimate firms also include time for follow-up questions and potential audit support. If your firm only spent 2-3 hours total, that's definitely a red flag. Proper eligibility determination alone should take several hours, especially analyzing payroll records, government orders, and demonstrating significant operational impacts. Regarding audits - yes, I've already had three clients receive IRS inquiries on their ERC claims, all submitted by high-volume contingency firms. Two were able to provide adequate documentation and resolved quickly, but one is facing a full audit because the original firm's documentation was insufficient. The IRS is definitely not just threatening - they're actively reviewing claims, especially those submitted by firms that processed large volumes. The audit risk is very real now, which is why I'm recommending clients get their documentation reviewed even if their claims have already been submitted. Better to strengthen your position proactively than scramble during an audit.

The 8-15 hours includes everything - initial eligibility review, quarter-by-quarter analysis, documentation gathering, and proper form preparation. What takes the most time is actually verifying eligibility for each quarter, since the rules changed several times during the pandemic and many businesses had varying circumstances. The 2-3 hours your firm spent is definitely inadequate for a thorough job. Proper ERC work should include reviewing your PPP loans, analyzing government shutdown orders that affected your business, calculating eligible wages for each quarter, and ensuring you meet the gross receipts decline test properly. As for audits, yes - I've had three clients receive audit notices so far this year, all of whom used high-volume ERC processors. The IRS is particularly scrutinizing claims where the documentation doesn't match the complexity of the business situation or where standard templates were obviously used across multiple filings. One client is facing a 20% penalty on top of having to return the full credit amount because their ERC firm didn't properly document the revenue decline calculation. I'd strongly recommend getting that post-submission review done sooner rather than later. If there are issues, it's much better to file amended returns proactively than to deal with an audit.

The 8-15 hours includes everything - initial consultation, eligibility analysis, wage calculation review, documentation gathering, form preparation, and quality review. What you experienced with 2-3 hours is definitely inadequate for a legitimate process. Regarding audits, yes, several of my clients have already received IRS notices. The pattern I'm seeing is that claims processed by high-volume firms are being selected for examination at much higher rates - probably because the IRS has identified certain preparers as problematic. The clients who used proper documentation from the start are handling the audits fine, but those who relied on minimal paperwork from contingency mills are struggling. One client is facing a $30,000 penalty because their ERC firm didn't properly document the required wage calculations, which would have taken maybe 2 additional hours to do correctly. I'd strongly recommend getting your documentation reviewed before any potential audit. The cost of fixing issues proactively is much lower than dealing with penalties and interest later.

The 8-15 hours includes everything - initial eligibility analysis, reviewing quarterly payroll data, analyzing government orders and their impact on operations, calculating qualified wages, preparing supporting documentation, and completing the amended returns. If a firm only spent 2-3 hours, they likely skipped the crucial eligibility verification steps. Unfortunately, the audit risk isn't theoretical anymore. I've had three clients receive IRS notices in the past two months questioning their ERC claims. Two were from high-volume processing firms that submitted claims without proper documentation of how COVID-19 specifically impacted their operations. The third case involved a claim where the firm miscalculated qualified wages by including periods where the business wasn't actually eligible. The scariest part is that business owners are personally liable for any improper claims, even if they used a third-party processor. The IRS is holding taxpayers responsible regardless of what some contingency firm promised them. That's why I'm now recommending post-submission reviews for anyone who used these high-volume processors - better to identify and correct issues proactively than face penalties and interest later.

The 8-15 hours includes everything - initial eligibility analysis, documentation review, calculations, form preparation, and creating a proper audit file. What you're describing (2-3 hours total) is definitely inadequate for a legitimate claim. Proper ERC work should include: reviewing your 2020/2021 operations for government order impacts, analyzing payroll records quarter by quarter, calculating the correct credit amounts, preparing detailed worksheets, and most importantly - creating documentation that supports every aspect of your claim. As for audits, yes, several of my clients have already received IRS letters requesting additional documentation for their ERC claims. The pattern I'm seeing is that claims submitted by these volume processors are being scrutinized much more heavily. Two clients had to provide extensive additional documentation, and one ended up having their credit reduced by about 30% because the original firm overclaimed eligible wages. The IRS is definitely not just rubber-stamping these anymore. I'd strongly recommend getting that post-submission review to identify any potential issues before they become bigger problems.

The 8-15 hours includes everything - initial consultation, eligibility analysis, documentation review, calculations, form preparation, and quality review. What most people don't realize is that proper ERC work involves analyzing quarterly payroll data, government order impacts, revenue decline calculations, and ensuring all documentation meets IRS standards. To answer your audit question - yes, I've had three clients face ERC audits in the past six months, all of whom used high-volume contingency firms. Two were able to provide adequate documentation and kept their refunds, but one is currently fighting penalties because their firm submitted a claim without proper revenue decline analysis. The IRS is definitely not just making empty threats about increased scrutiny. If your firm only spent 2-3 hours, that's a major red flag. I'd strongly recommend getting that post-submission review done sooner rather than later, especially since you mentioned they seemed eager to submit without detailed questions about your specific situation.

The 8-15 hours includes everything - initial eligibility assessment, quarterly analysis for each qualifying period, wage calculation verification, documentation compilation, and form preparation. What most people don't realize is that proper ERC work requires analyzing each quarter separately since eligibility can change based on revenue declines or government orders. Unfortunately, the audit risk isn't theoretical anymore. I've had three clients receive IRS letters requesting additional documentation for their ERC claims in just the past two months. One was relatively straightforward to resolve, but the other two are facing potential full claim denials because their original ERC firms didn't properly document the government order impacts or revenue decline calculations. The IRS is specifically targeting claims submitted by firms that processed high volumes with minimal documentation. If your firm seemed rushed or didn't ask detailed questions about your specific circumstances, I'd definitely recommend getting that post-submission review done sooner rather than later. It's much easier to gather supporting documentation now than during an audit when you're under pressure and timelines are tight.

The 8-15 hours I mentioned includes everything - initial eligibility analysis, quarterly revenue and payroll review, documentation of qualifying events, form preparation, and creating a defensible audit file. Most legitimate firms spend 3-4 hours just on eligibility determination alone. What you're describing with 2-3 hours total is definitely inadequate and suggests they were operating more like a form-filling service than providing actual professional analysis. Regarding audits - yes, I've had three clients receive audit notices in the past four months, all of whom used high-volume ERC processing companies. Two of those audits resulted in partial claim denials because the documentation was insufficient to support the full amount claimed. The IRS is particularly scrutinizing claims where the supporting documentation looks templated or generic rather than specific to the business's actual circumstances. The audit risk isn't theoretical anymore - it's happening regularly now. I'd strongly recommend getting that second review sooner rather than later, especially if your refund hasn't been processed yet. It's much easier to supplement documentation now than to deal with it during an audit.

The 8-15 hours includes everything - initial eligibility assessment, revenue analysis for qualifying quarters, documentation of government orders or supply chain disruptions, payroll verification, and proper form completion with supporting schedules. Most legitimate firms spend 3-4 hours just on eligibility determination alone. If your firm only spent 2-3 hours total, that's a major red flag. Proper ERC work requires analyzing your specific circumstances against complex IRS guidance, not just checking boxes on a form. Regarding audits - yes, I've had three clients receive IRS notices this year requesting additional documentation for their ERC claims. Two were from "claim factory" firms and one was properly prepared. The properly prepared client responded with comprehensive documentation and the inquiry was closed within 60 days. The other two are still dealing with back-and-forth requests because their original submissions lacked proper substantiation. The IRS has stated they're examining ERC claims at much higher rates than normal tax returns, so this isn't theoretical - it's happening now. I'd strongly recommend getting your claim reviewed by a qualified professional before any potential audit notice arrives.

The 8-15 hours includes everything - initial consultation, eligibility analysis, quarterly revenue/payroll review, government order research, documentation compilation, and form preparation. What you experienced with 2-3 hours is definitely inadequate for a legitimate review. Unfortunately, the audit risk isn't theoretical anymore. Three of my clients who used high-volume ERC firms have received audit notices in the past two months. The IRS is particularly targeting claims from firms that submitted large volumes with similar documentation patterns. One client is facing a complete disallowance plus penalties because their firm never properly documented the required revenue decline or government order impact. The scary part is that when these firms cut corners, they often miss critical eligibility requirements while still submitting the claim. So you get the worst of both worlds - you pay the contingency fee AND potentially face penalties when the IRS reviews the inadequate documentation. I'd strongly recommend having someone review your submission before that refund hits your account.

The 8-15 hours includes everything - eligibility analysis, quarterly revenue/payroll review, government order documentation, calculation verification, and proper form preparation. What you describe as 2-3 hours is definitely inadequate for a compliant filing. Regarding audits, yes - I've had three clients receive IRS audit notices in the past four months, all of whom used high-volume ERC firms. One client's firm had submitted claims for quarters where the business actually grew revenue, which clearly didn't meet the eligibility criteria. Another had no documentation for the government orders they claimed impacted their business. The audit process is brutal - the IRS is requiring extensive documentation to prove every aspect of eligibility, and if you can't substantiate the claim, you face penalties plus interest. In one case, my client ended up owing more in penalties than they originally received in ERC funds. I'd strongly recommend getting that post-submission review I mentioned. If there are issues with your filing, it's much better to discover them proactively than during an IRS audit when you have limited time to respond and gather documentation.