R&D Tax Credit News

The Government Accountability Office (GAO) released a report on May 17 identifying ways the IRS can strengthen its compliance plan in response to tax relief benefits (paid sick and family leave credits, Employee Retention Credit (ERC) and payroll tax deferrals) instituted during the COVID-19 pandemic.

In the report the GAO says, “IRS took some steps to identify and plan for compliance risks associated with the leave credits and the ERC. As IRS continues to plan for examinations of both credits—which expired in 2021 but will be subject to examination for several years after filing—GAO found IRS could strengthen these efforts by expanding its use of selected project management practices.

IRS began creating new processes to research and address compliance risks associated with tax credits claimed on adjusted returns and employers who claimed multiple credits with wages that are restricted from use for more than one type of credit. However, IRS has not documented how it developed those processes or how it would implement them in practice. Documentation increases transparency and can inform future compliance efforts.”

As part of the report, the GAO made five recommendations to the IRS in which the agency agreed with two and disagreed with three. The five recommendations can be found here.

Hull & Knarr will continue to monitor further developments. To speak to a Hull & Knarr expert, click here to schedule your conversation.

Full GAO Report (74 pages)