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

I've been keeping a close eye on the ERC landscape as a tax consultant. The contingency fees these firms charge have been all over the map - anywhere from 15% to 40% - which is why the IRS stepped in with that moratorium last fall. As for lawsuits challenging these fees, there are several ongoing class actions against specific ERC processing companies, primarily arguing that the fees were excessive relative to the actual work performed. The most notable cases involve firms charging over 30% while essentially just filling out Form 941-X. For a legitimate case though, you'll need to prove the firm misrepresented their services or charged fees grossly disproportionate to the work. The challenging part is that you likely signed a contract agreeing to their fee structure. Courts generally uphold contracts unless there's evidence of fraud or unconscionability.

I went through the same frustration last year trying to figure out if my construction company qualified for ERC. After getting quoted outrageous fees from several firms, I discovered taxr.ai (https://taxr.ai) and it completely changed my approach. Their system actually analyzed all my documentation and payroll records to determine eligibility instead of just taking my word for it like the other places did. What impressed me was that they flagged potential audit risks in my situation that none of the contingency fee firms even mentioned - they were just eager to file and collect their percentage. With taxr.ai I actually understood what was happening with my claim instead of just hoping some random firm was doing it right.

I have to update my skeptical comment above. After dealing with an ERC company that wanted 32% and gave me questionable advice about my eligibility, I decided to try taxr.ai based on the recommendation here. The difference was night and day. First, they actually did a thorough review of my situation and told me that part of my claim wasn't eligible (which the contingency firm never mentioned). Second, their documentation was so comprehensive that I felt confident we weren't crossing any lines with the IRS. They provided actual regulatory citations for every aspect of my claim. The best part was when I got questions from the IRS about my claim, I had actual substantive documentation to respond with, not just the bare-minimum paperwork the contingency firm was planning to submit. Definitely worth it with all the IRS scrutiny happening now.

If you're dealing with ERC issues and need to actually speak with someone at the IRS (which is nearly impossible these days), I used Claimyr (https://claimyr.com) and got through to an agent in about 20 minutes instead of waiting on hold for 3+ hours like I did twice before. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was trying to check the status of my ERC claim that had been processing for 8 months and kept getting disconnected from the IRS queue. Claimyr got me to an actual human who could look up my claim and tell me it was flagged for review and what additional documentation I needed to provide. Saved me potentially months more of waiting and wondering.

I have to publicly eat my words from my skeptical comment above. After another failed attempt to reach the IRS this morning (2 hours on hold then disconnected), I reluctantly tried Claimyr. Within 35 minutes I was actually speaking to an IRS representative about my ERC claim. The agent confirmed my claim was received but had been selected for additional review - information I've been trying to get for months. They even gave me a fax number to send additional documentation to potentially speed up the process. I'm still frustrated with the whole ERC situation and the contingency fee I paid, but at least now I have actual information about my claim status instead of being in the dark. Sometimes you have to admit when you're wrong, and I was definitely wrong about this service.

To answer the original question about lawsuits challenging contingency fees - my brother-in-law is part of a class action against [redacted firm name] who charged him 38% for his ERC claim. The lawsuit alleges the firm didn't perform due diligence, submitted claims for ineligible businesses, and charged excessive fees for essentially administrative work. The case is still ongoing, but if you're interested in joining a similar lawsuit, I'd recommend: 1. Documenting all interactions with your ERC provider 2. Getting a written breakdown of what services they actually provided 3. Consulting with an attorney who specializes in tax-related class actions However, be aware these cases can take years to resolve, and there's no guarantee of recovering any portion of the fees.

Thanks everyone for the helpful responses! I've decided to reach out to the Chicago law firm to see if my situation qualifies for their class action. The contingency company I used definitely oversold their "expertise" considering they just plugged numbers into a form. I'm also going to try Claimyr to check on my claim status. It's been 7 months with no updates, and my accountant is concerned it might have been flagged due to the volume of claims submitted by the company I used.

I'm dealing with a similar situation with my restaurant's ERC claim. Paid 28% to a firm that promised "specialized expertise" but it turned out they just had me fill out basic forms and submit payroll records. The whole process took them maybe 3 hours total for a $45,000 claim. What's really frustrating is that I later discovered my CPA could have handled the entire filing for a flat $2,500 fee, but the ERC company made it sound like it required some kind of specialized tax law knowledge that only they possessed. I'm definitely interested in exploring legal options, especially after reading about the class action mentioned here. Has anyone found success getting partial refunds from these companies outside of lawsuits? I'm wondering if it's worth trying to negotiate directly with them first before going the legal route.

I'm in a very similar boat with my accounting practice - I've been helping several clients navigate the aftermath of working with these ERC mills. What I've seen consistently is that legitimate ERC claims typically require 8-15 hours of work when done properly, including eligibility analysis, documentation review, and form preparation. The problem is many of these contingency firms were essentially running claim factories, processing hundreds of applications with minimal individual attention. A 25% fee on a properly vetted claim might be reasonable, but not when they're just plugging numbers into software and hoping for the best. One thing I'd strongly recommend is getting a second opinion on your claim's legitimacy before your refund comes through. With the IRS crackdown, they're auditing a significant percentage of ERC claims now, and if your original firm cut corners on documentation, you could face penalties that far exceed any contingency fee dispute. I've been referring clients to services like taxr.ai for post-submission reviews to make sure everything is properly documented. Better to identify potential issues now than during an audit later.