Christopher M. Ferguson was quoted extensively in a recent Tax Notes article titled “IRS May Face Constraints in Quest to Curb ERC Abuse,” published on July 28, 2023. The article focuses on the IRS’s increased scrutiny of Employee Retention Credit (ERC) claims in response to concerns over widespread abuse of the credit.
In the article, Mr. Ferguson discusses the tools available to the IRS to penalize and deter promoters of dubious ERC claims, including through injunctions under sections 7047 and 7048 of the Internal Revenue Code. Mr. Ferguson notes that section 7048, in particular, is “a useful tool for the IRS because it doesn’t specifically apply to tax preparers, but it proscribes specific conduct.”
According to Mr. Ferguson, one of the advantages of seeking an injunction is that such a lawsuit would be a matter of public record, which could deter other promoters, whereas an administrative promoter investigation is subject to taxpayer privacy protections.
Mr. Ferguson also said that he would not be surprised to see a class action lawsuit against one of the larger promoter companies, once the IRS has completed taxpayer audits and imposed penalties.
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