"Unfair and un-American"— Shark Tank's Kevin O'Leary shares concern over hidden IRS rule impacting small businesses

A recent statement by Shark Tank investor Kevin O’Leary on Fox Business has brought attention to a specific IRS-related provision in a newly passed federal bill that impacts small businesses that used the Employee Retention Credit (ERC) during the pandemic.

When asked why he described the bill as problematic for small businesses, O’Leary pointed out a section that allows the IRS to extend audit powers up to nine years for those businesses that claimed the ERC. During the interview posted on his Instagram on May 20, 2025, he explained,

“Now that is going to cause chaos and valuations, if you have that hanging over your head. It almost seems unfair and un-American to do that to small business.”

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Shark Tank's Kevin O’Leary raises red flag on IRS audit rule targeting ERC recipients

Background of the ERC and the new audit provision

During the COVID-19 pandemic, several relief programs were introduced to support businesses, including the Paycheck Protection Program (PPP) and the Employee Retention Credit (ERC). The Shark Tank investor recalled the role of these programs.

“The PPP and ERC programs— they were the only bills available during the pandemic to small business,” he stated.

He highlighted that other major bills, such as the CHIPS and Science Act or the infrastructure bill, did not allocate funds for small businesses. However, the new bill contains a clause that grants the IRS extended powers to audit businesses that received ERC benefits. Kevin O’Leary described this provision as possibly “a cut and paste” from a prior bill that may have been overlooked.

The key concern is the IRS’ ability to audit ERC claims for up to nine years, a timeframe much longer than typical audit periods. He warned that this could introduce prolonged uncertainty and “cause chaos in valuations” for affected businesses.

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Implications for small businesses and financial decisions

Extended audit windows affect how small businesses manage their financial planning, particularly when seeking investments or loans.

“If you’re trying to do a deal or get financing or raise capital and you know you’ve got that uncertainty for nine years, that’s going to cause chaos,” the Shark Tank investor said.

He explained that this uncertainty could impact business valuations, complicate negotiations with investors, and create hesitancy among lenders. O’Leary further noted that many small business owners reached out to him, expressing confusion and concern over the new audit rule.

“Every small business in my portfolio has called me and said, 'what the hell is this? Where did this come from?'” he stated.

The Shark Tank investor emphasized that most businesses had used the ERC as a necessary means to survive during the pandemic, underscoring the challenges they face under this new audit rule.

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Calls for legislative review and potential changes

O’Leary has made clear his intent to address this issue directly with lawmakers. He described plans to raise awareness by physically going to Capitol Hill and making his concerns heard.

“I'm heading down to the Hill to get a gong and walk down the halls banging it, saying, ‘What are you guys doing here? You can’t do that to small business’,” he stated.

The Shark Tank investor expressed uncertainty about how the provision was included.

“I don’t know how it got in there. It could have been a cut and paste from a previous bill,” he said.

Nonetheless, Kevin underscored the urgency for correction, calling on policymakers to fix this aspect of the bill before it takes effect. He remains “very optimistic that this will get fixed before this big beautiful bill passes.”

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