How to Talk to Your Clients About ERC Audit Risk (Without Scaring Them)

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With client-safe language, clear next steps and a framework you can use in 10 minutes.

Start with context, not fear

‍Clients don’t need a scare tactic; they need a reasoned explanation of how the landscape has shifted. A simple, credible way to set the context is the recent action in Minnesota.

A simple, credible way to set context is Minnesota: in early January 2026, the SBA announced it suspended 6,900 Minnesota borrowers, as part of a broader PPP investigation, tied to 7,900 PPP/EIDL loans totaling about $400 million from eligibility for new SBA loan programs while suspected PPP fraud is reviewed, as reported by CBS News.

The Client-Safe Takeaway: Federal agencies haven't "moved on" from pandemic relief; they have simply moved from the distribution phase to the verification phase. Because the government is focused on rooting out a few "bad actors," they are now using data analytics to conduct large-scale screening for risk patterns across pandemic-relief filings."

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The 30-second script‍

Use this when a client asks, “Should I be worried?”

“I’m not saying you did anything wrong. What’s changed is the Federal enforcement posture. Because of a few bad actors in the marketplace, agencies are now revisiting pandemic-era programs using mass data screening—and they’re doing it years later. Our goal is to make sure your ERC file is organized and defensible today so you aren't scrambling if you get a letter tomorrow.”

And if they ask, “Why now?”

“The rules have recently changed. With the passage of the One Big Beautiful Bill (OBBBA) in 2025, the IRS now has up to six years to audit certain ERC quarters. Since the clock has been extended, 'wait and see' is no longer a viable strategy. We want to move you into 'audit readiness' while the information is still fresh.”

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What to say vs. what NOT to say

Say:

• “This is about readiness and audit documentation.”
  
• “We’re separating tax outcome risk from defense-cost risk.”
  
• “We’re building a file that survives a skeptical reviewer.”
  
  

Don’t say:

• “The IRS is coming for you.”
  
• “Everyone who filed ERC will be audited.”
  
• “You’re in trouble.”

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A simple 3-bucket framework (keeps the tone calm)
This prevents the conversation from spiraling and helps you address common audit triggers without sounding alarmist.

Bucket A — Confident claim and clean file

Message: “Let’s organize and confirm your support package.”
Action: build a defensible file and identify who responds to notices.

Bucket B — Likely eligible, but documentation is messy

Message: “We’ll tighten support so you’re not rebuilding this under deadline.”
Action: reconstruct timelines, payroll support, eligibility narrative.

Bucket C — Red flags / aggressive promoter involvement

Message: “Let’s review options and reduce exposure responsibly.”
Action: consider corrective pathways with counsel; the IRS has published programs like ERC-VDP for certain periods and situations.

Use Minnesota as a “process example,” not a threat

Avoid saying, "Look what happened to them!" Instead, say:

"Minnesota is a live example of the new batch action model. The government did not target any individual; instead, it flagged thousands of borrowers simultaneously based on data patterns. Our goal is to ensure your payroll records, wage calculations, and eligibility narratives are perfectly aligned so your business is not swept up in a broad filter."

Talking points by audience (so you don’t trigger defensiveness)
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For CPAs/EAs

• “We’ll confirm the eligibility basis and compile support as if we had to explain it to a third party.”
  
• “We’ll document wage allocation and payroll tie-outs cleanly.”
  
  

For payroll providers/PEOs

• “Our role is operational support, but clients need a defense plan that doesn’t turn payroll into the ‘bad guy.’”
  
• “We’ll help the client prepare so your team isn’t absorbing the blame or the burden later.”
  
  

For banks/lenders

• “This is client care: we’re helping clients be prepared without relitigating past decisions.”
  
• “Whether you encouraged ERC education or advised caution, the next step is the same: a readiness plan.”

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The “next step” that keeps you in control

Once the client understands the posture shift, transition them to a solution.

The Transition Line: > "Readiness is a project. Defense is a plan. We can handle the documentation, but we should also talk about transferring the risk of the defense costs themselves."

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Where Harbor Shield ERC fits 

Harbor Shield ERC is the "risk transfer" layer. It ensures that if the IRS uses its new six-year window to ask questions, the client already has a funded, attorney-led defense team in place. It turns a potential legal "scramble" into a predictable, professional process.

Get a Harbor Shield ERC Coverage Walkthrough

Professional, non-alarmist readiness, so you’re prepared if questions come later.

Compliance notes: This article is for educational and operational overview purposes only and does not constitute tax or audit legal advice. You should consult qualified tax and legal professionals regarding your specific facts and circumstances.