Over the past year, the IRS has intensified its review of Employee Retention Credit (ERC) claims, leading to a significant increase in audits across the country—including right here in South Carolina. Many small business owners who filed for the ERC in good faith are now receiving notices, while others are discovering that third-party “ERC mills” may have improperly filed claims on their behalf.

If your business claimed the ERC—or you’re unsure whether the credit was filed correctly—November is the ideal time to review your records, understand your risk, and prepare for potential IRS communication.

Peavy & Associates supports Conway businesses through IRS audits, ERC reviews, and compliance issues. Here’s what you need to know about the current ERC audit wave and how to protect your business.

What Is the Employee Retention Credit (ERC)?

The ERC was created during the pandemic to help businesses that retained employees during economic shutdowns. While the credit offered valuable relief, its complex eligibility rules opened the door for errors—and, unfortunately, widespread abuse by aggressive marketing firms.

Because of this, the IRS is now taking a closer look at many claims filed between 2020 and 2021.

Why ERC Audits Are Increasing in 2025–2026

The IRS has launched new initiatives prioritizing ERC enforcement, including:

  • Targeting suspicious filings by third-party promoters
  • Identifying businesses with incomplete eligibility documentation
  • Conducting in-depth reviews of refund claims still pending
  • Requesting repayment from businesses who filed incorrect claims

For South Carolina employers—especially small businesses in sectors like hospitality, retail, medical, and construction—this means increased scrutiny of prior filings.

Signs Your ERC Claim Could Be Audited

While any claim can be reviewed, certain patterns increase the likelihood of an audit:

1. Your ERC was filed by a third-party “ERC company”

Especially those who guaranteed large refunds, charged contingency fees, or didn’t review your payroll or revenue records thoroughly.

2. Your business claimed the ERC for all eligible quarters

Aggressive filings draw more attention from the IRS.

3. You lack supporting documentation

This includes payroll reports, revenue comparisons, and evidence of government-mandated shutdowns.

4. Your refund amount was unusually large

Higher-than-average credits often undergo additional review.

What To Do If Your South Carolina Business Receives an ERC Audit Notice
If the IRS contacts you about your ERC claim, don’t panic—but take action quickly.

1. Don’t ignore the notice

IRS deadlines are strict. Missing one can trigger penalties.

2. Gather all documentation

This includes payroll reports, PPP loan records, revenue comparisons, and shutdown orders.

3. Avoid contacting the IRS directly on your own

ERC audits involve technical tax rules, and miscommunication can complicate your case.

4. Contact a trusted CPA immediately

Peavy & Associates handles IRS correspondence and represents businesses throughout the entire audit process.

What If You Used an ERC Promoter?

Many South Carolina businesses were encouraged to file ERC claims through marketing companies that:

  • Overstated eligibility
  • Filed incomplete or inaccurate forms
  • Did not explain IRS requirements
  • Pushed businesses to claim the maximum amount regardless of qualification

If this describes your experience, a professional ERC review is strongly recommended.
Peavy & Associates can:

  • Review your claim for accuracy
  • Prepare documentation you may be missing
  • Correct improper filings
  • Represent you in an audit or IRS inquiry
  • Help you determine whether repayment or withdrawal is advised

How Peavy & Associates Supports Conway Businesses Through ERC Issues

Our team provides:

  • Full ERC claim reviews
  • Documentation audits
  • IRS notice response support
  • Audit representation
  • Amended return preparation
  • Guidance on voluntary withdrawal or repayment programs

With deep experience supporting local South Carolina businesses, we ensure you are protected, compliant, and confident moving forward.

Concerned About Your ERC Claim? We Can Help.

If you filed for the Employee Retention Credit—or you’re unsure how your claim was prepared—now is the time to review your eligibility before the IRS reaches out.

Peavy & Associates is here to help Conway business owners navigate ERC audits with clarity, confidence, and professional support.

Need an ERC review or help responding to an IRS notice? Contact Peavy & Associates today to schedule a consultation.