The Numbers That Fueled the Fight
According to Ostroff’s complaint, the firm was financially walloped by the pandemic. It saw its gross receipts plunge from $5 million in Q3 2019 to just $1.7 million by Q3 2020, stagnating well into 2021. As a result, it claimed eligibility for over $790,000 in ERC refunds, more than $588,000 of which stemmed directly from its revenue losses.
On top of the refund, the law firm sought attorney fees and administrative costs associated with the drawn-out fight.
Nationwide Backlog, Mounting Pressure
Ostroff’s suit hit the IRS at a time when pressure to clear the ERC pipeline had reached a boiling point. As of April 2024, National Taxpayer Advocate Erin Collins reported that over 597,000 ERC claims were still stuck in the IRS queue. Another 11,000 cases remained in limbo within the Taxpayer Advocate Service itself.
Although the ERC expired in 2021, its lingering impact continues to stir political and legal controversy as employers—especially small businesses—await much-needed relief.
