Memorandum — ERC Today, LLC v. McInelly, No. 25-2642 (9th Cir., March 17, 2026)

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A Memorandum filed March 17, 2026 in ERC Today, LLC v. McInelly, No. 25-2642, in the United States Court of Appeals for the Ninth Circuit, on appeal from the District of Arizona (D.C. No. 2:24-cv-03178-SMM). Two tax preparation firms, ERC Today, LLC and Stenson Tamaddon, LLC, allege that the Internal Revenue Service acted unlawfully in implementing the "Disallowance During Processing" program to disallow taxpayer claims for the Employee Retention Credit. The district court denied a preliminary injunction for lack of Article III standing, and the memorandum affirms. It concludes that the Appellants did not make a clear showing of financial injury and that their other asserted injuries are insufficient, and it remands, noting they could potentially cure the shortcomings with leave to amend.

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“Memorandum — ERC Today, LLC v. McInelly, No. 25-2642 (9th Cir., March 17, 2026).” Original at cdn.ca9.uscourts.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/erc-today-llc-v-mcinelly-9th-cir-no-25-2642-memorandum-mar-17-2026-ac66131e56/, SHA-256 3f42896f7e0250284390878bc3bff28c5c0408f2cffff5b544504f4679d226f5.

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NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 17 2026
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT

ERC TODAY, LLC, a North Carolina No. 25-2642
Limited Liability Company; STENSON D.C. No.
TAMADDON, LLC, an Arizona Limited 2:24-cv-03178-SMM
Liability Company,
MEMORANDUM*
Plaintiffs - Appellants,

JOHN MCINELLY, in his official capacity
as Director Examination-Cincinnati (IRS);
UNITED STATES INTERNAL REVENUE
SERVICE; UNITED STATES OF
AMERICA; BILLY LONG, Commissioner
of United States Internal Revenue Services,

Defendants - Appellees.

Appeal from the United States District Court
for the District of Arizona
Stephen M. McNamee, District Judge, Presiding

Argued and Submitted March 4, 2026
Phoenix, Arizona

Before: HAWKINS, BYBEE, and FRIEDLAND, Circuit Judges.

*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
In this case, two tax preparation firms, ERC Today, LLC and Stenson

Tamaddon, LLC (collectively, “Appellants”), allege that the Internal Revenue

Service and two of its officers acted arbitrarily, capriciously, unlawfully, and against

agency policy by implementing a new process—referred to as the “Disallowance

During Processing” or “DDP” program—to screen and categorically disallow

thousands of taxpayer claims for the Employee Retention Credit (“ERC”)

established under the Coronavirus Aid, Relief, and Economic Security Act, see Pub.

L. 116-136, § 2301, 134 Stat. 281, 347 (2020) (codified as amended at 26 U.S.C.

§ 3134). Appellants moved for a preliminary injunction that would require the

agency to, among other things, pause the DDP program and vacate all disallowances

issued under the program. The district court denied the motion based on its

conclusion that Appellants lacked Article III standing. We review issues of standing

de novo, see Isaacson v. Mayes, 84 F.4th 1089, 1095 (9th Cir. 2023), and affirm.

Article III standing requires “(1) an injury-in-fact, (2) caused by the

defendant’s acts, (3) that likely would be redressed by the requested judicial relief.”

Coastal Env’t Rts. Found. v. Naples Rest. Grp., LLC, 158 F.4th 1052, 1057 (9th Cir.

2025). “At the preliminary injunction stage, the plaintiffs ‘must make a clear

showing of each element of standing’ . . . .” LA All. for Hum. Rts. v. County of Los

Angeles, 14 F.4th 947, 957 (9th Cir. 2021) (quoting Yazzie v. Hobbs, 977 F.3d 964,

966 (9th Cir. 2020)).

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Appellants primarily rely on financial injury to establish standing. More

specifically, they allege that, because they work under contingency fee agreements,

they (1) do not get paid when their clients’ claims are disallowed, and (2) incur

additional expenses representing their clients in post-disallowance proceedings. But

the record does not bear out Appellants’ allegation that they have incurred a financial

injury as a result of the DDP program. Indeed, Appellants offer no evidence that

they are making less money based on the aggregate rate of approvals versus

disallowances of their clients’ claims or that they spend more money on their client

representations under the DDP program. Although Appellants point to a handful of

specific client ERC claims denied through the DDP program, they never allege—

much less demonstrate—that the overall rate of denials affecting their clients has

increased under the program. They further fail to demonstrate that post-

disallowance proceedings are more costly to them than pre-disallowance

examinations. Without such evidence, Appellants have not made the requisite “clear

showing” of financial injury. See id. (quoting Yazzie, 977 F.3d at 966).

Appellants’ remaining forms of injury—procedural, reputational, and

regulatory—are similarly insufficient. For example, Appellants argue that they face

procedural harm under the DDP program because their clients are at a procedural

disadvantage when they are forced to substantiate their ERC eligibility in a post-

disallowance review posture rather than in a pre-determination review posture. To

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the extent Appellants are relying on a loss-of-process form of injury, Appellants

simply cannot show that the procedures at issue are intended to protect the financial

interests of tax preparation firms. See Sterling v. Feek, 150 F.4th 1235, 1246

(9th Cir. 2025) (“A plaintiff establishes ‘procedural standing’ by showing that he

was accorded a procedural right to protect his interests, and that he has concrete

interests that are threatened.” (emphasis added) (quoting Ochoa v. Pub. Consulting

Grp., 48 F.4th 1102, 1107 (9th Cir. 2022))). The relevant procedures are intended

to protect the rights of Appellants’ clients, yet Appellants expressly disavow that

they seek to vindicate their clients’ rights. And Appellants have offered no proof

that they suffered a cognizable reputational injury as a result of DDP denial letters

that do not identify or refer to Appellants. See, e.g., Sweet v. Cardona, 121 F.4th

32, 42–43 (9th Cir. 2024) (recognizing that a statement creates a concrete

reputational harm if “it is disparaging or impugns the professional integrity of its

subject,” or “if it would subject a person to hatred, contempt, or ridicule” (emphasis

added) (citation modified)). Nor have they shown a concrete, non-speculative

regulatory injury as a result of the DDP program. Clapper v. Amnesty Int’l USA,

568 U.S. 398, 410 (2013) (rejecting a regulatory injury based on future risk when it

rested on a plaintiff’s “highly speculative fear” based on “a highly attenuated chain

of possibilities”).

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Because we conclude that Appellants failed to make the clear showing of

injury necessary to establish Article III standing at the preliminary injunction stage,

we need not reach their remaining arguments. We remand for further proceedings

consistent with this disposition, recognizing that Appellants could potentially cure

the injury-in-fact shortcomings in their Complaint if given leave to amend. Fed. R.

Civ. P. 15(a)(2) (“The court should freely give leave [to amend] when justice so

requires.”).

AFFIRMED.

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