ERC amendments creating a lot of tax

[schirallicpa]

I'm doing amended returns for ERC credits. I reduce payroll expense for the credit coming and income goes up significantly. My client is an Scorp. He will be paying back a ton of tax on this. What kind of dumb tax game is this?  Yes - he will net ahead, but this is nuts.

 

[Lee B]

It's the way the law was written, to avoid "Double Dipping"

[ILLMAS]

Amen to this and I cannot wait for ERC recipients to realize the company that charged them 25% to get the credit DID NOT amend the business tax returns.  @schirallicpa charge them another 25% to amend it 

[schirallicpa]

OMG - it just occurred to me that we had carried back the 2020 loss - good grief.  And my client doesn't know if he got the refund from that.  Why don't clients know these things?  Anyway - now I will be pulling transcripts to see if NOL was accepted and applied and if refund was issued. We filed the 1045 in 2021.  Maybe it was destroyed???....

[Medlin Software, Dennis]

I am (not really) amazed business owners neglected to claim ERC "on time".  Those that did not, usually pay a fee for their inattentiveness, usually to some sort of forensic payroll "expert", and to their (likely new) tax preparer.  I also wonder how they missed the timely ERC, self prepared payroll with pen and paper (software vendors were likely to have sent several reminders to check out ERC) and also self prepared tax returns?

It would have been worse for me had I not informed/reminded ERC was available.  I still get, maybe only weekly now, requests for creating 941x because of an "accountant" helping them claim ERC.

As preparers, did you mention it at all to your business owner with employee clients?  If not, why not at least as an FYI?

As preparers have you revisited your client records and looked at clients missing ERC as an opportunity (some % of the ERC and some $ for amended return(s))?  Tough one though, as the client may or is already asking why you did not point this out earlier.  Or are your ERC amend clients mostly/all new?

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ERC still gripes me, the after the fact cancellation of the last quarter ERC so the numbers/$ could be shifted to another program.  Many emplyoers had to scramble to come up with deposits when they thought the money would be covered by ERC.

[WITAXLADY]

My biggest issue is I have 2 clients that objected to the price I charged.

One is a new client and his former CPA would not do it and he clearly qualified. and the other said it was too simple! I still argue with the 2nd - I said do it yourself and the 1st only paid me for 2 of 6! And I doubt he will pay me for the last 2 as the IRS grabbed the 1st 2!! However, they will also not get sent!

They both said I charged too much and it was under 10% -

Letters coming thru are about 20-25%

 

D

[Terry D EA]

I agree the ERC gripes me as well. The ads always put out the amount of the refund, but never was there ever a mention of having to amend the filings or reduce the payroll expenses by the amount of the credit. I only have one client that Paychex did the ERC for them. I don't know if the payroll expenses were reduced or not. What I don't know or have knowledge of is ok. I just prepare the return. I wasn't told anything about the ERC until I asked if they got it. I also asked if they understood all of the facts surrounding the credit. They said yes and Paychex did a great job so there you go. Sometimes I wonder if the increase in income is anywhere near the credit amount. Folks always have to remember there is no such thing as a free lunch. All of those stimulus checks weren't free either or any advanced child tax credit. I'll be long dead before any of that gets paid back. but, my great grandchildren will pay for it and maybe their kids too.