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Tax Notes Quotes Christopher M. Ferguson On ERC Contingency Fee Arrangements

Christopher M. Ferguson was quoted in a Tax Notes article titled “ERC Abuse Revives Debate Over Contingency Fees” on March 12, 2024. The article discusses recent debates and concerns over contingency fee arrangements related to tax refund claims.

In the article, Mr. Ferguson explained that the IRS views contingency fee arrangements as a “harbinger of firms who may be providing advice to taxpayers to claim the credit where it’s not sustainable, because the fees present a potential conflict of interest.”

Mr. Ferguson elaborated that the potential conflict of interest is “exacerbated in the ERC context, because the firm is not just purely preparing the ERC claim forms, but in many of these cases they’re make determinations as to eligibility.”

Ultimately, however, Mr. Ferguson noted that “what this is going to come down to isn’t the fees per se, but the advice that’s been given and whether the IRS is going to be able to show that there were false statements or that the people at the ERC firms are encouraging taxpayers to take positions that are not supportable,” noting that the firms who will have problems are the ones whose advice is not supportable.

Mr. Ferguson added that, while the fees led to problems with the ERC, they also helped raise awareness about the ERC program, which initially had a limited uptake. Once firms determined they could make a profit from the claims, they began to promote it. But, “the IRS got more than it bargained for,” he noted.

Click here to read the full article.

Published with permission from Tax Notes © 2024