Did your business hire an ERC consultant?

[SeattleCPA]

Hey, this may not be applicable to many small business owners. It should only apply if you've started a business and hired non-family-member employees.

But one of the things we CPAs are seeing a lot of, unfortunately, are situations where sometime after we did the tax return last year, a tax "consultant" came in, sold a small business on the idea to claim big employee retention credits, and then through a vague process that clients seem to not understand, got the business giant refunds based on justification that a government order impacting either the business or the upstream supply chain partially suspended operations.

The problem with this story (often): No government order actually exists. I.e., there is no proclamation from the governor. No order from the county health officer. No mandate from the mayor.

If this at all sounds like something you experienced, I'd say you want to confirm there really is a government order, save that if you find it, make sure it makes sense. (You'd only be eligible for ERC for the interval the order was in effect.)

If you find this is a "he said, she said" situation where "consultant" says you told them there was an order but you don't know enough to know that, I'd think you want to look at amending the amended 941 returns, returning the money to government.

Sorry to be a nervous accountant. But like I said, we're seeing just terrible stories unfold here. What will happen to tens of thousands of small employers is that they've paid giant fees to the "consultants" but will need to return the ERC refunds, pay penalties and interest, probably in many cases pay tons of legal and accounting fees for the audits, and then also in many cases, find they've been taxed on the ERC refund (in effect) even though in the end they have to return the money.

[Michael in ABQ]

My CPA charged about $700 to file amended 941-X forms to get us about $7,000 in ERC. The paperwork was submitted to the IRS a couple of months ago so I'm still waiting on the money.

I actually had to go back and correct them because they didn't realize we were a new business started in 2021 so we qualified for both Q3 and Q4 of 2021.

I felt like it was a reasonable amount for someone else to do the paperwork and submit it correctly. I had a couple of other offers for a 15-25% commission (including Gusto who wouldn't do it but would refer me to someone who would do it on commission).


Thanks to your info @SeattleCPA I was able to look directly at the language of the bill and felt very confident in our numbers and eligibility for 70% of our W-2 payroll from Q3 and Q4. There were no worries about claiming we suffered a loss - because we didn't. The pandemic was great for ecommerce businesses (as long as you could get inventory).

[SeattleCPA]

My CPA charged about $700 to file amended 941-X forms to get us about $7,000 in ERC. The paperwork was submitted to the IRS a couple of months ago so I'm still waiting on the money.

I actually had to go back and correct them because they didn't realize we were a new business started in 2021 so we qualified for both Q3 and Q4 of 2021.

I felt like it was a reasonable amount for someone else to do the paperwork and submit it correctly. I had a couple of other offers for a 15-25% commission (including Gusto who wouldn't do it but would refer me to someone who would do it on commission).


Thanks to your info @SeattleCPA I was able to look directly at the language of the bill and felt very confident in our numbers and eligibility for 70% of our W-2 payroll from Q3 and Q4. There were no worries about claiming we suffered a loss - because we didn't. The pandemic was great for ecommerce businesses (as long as you could get inventory).

You're welcome, @Michael in ABQ . And it's great you could use the recovery startup business ERC. That was truly one of the cleanest ways to qualify if you were a small business. Good job!

[Michael in ABQ]

My CPA charged about $700 to file amended 941-X forms to get us about $7,000 in ERC. The paperwork was submitted to the IRS a couple of months ago so I'm still waiting on the money.

I actually had to go back and correct them because they didn't realize we were a new business started in 2021 so we qualified for both Q3 and Q4 of 2021.

I felt like it was a reasonable amount for someone else to do the paperwork and submit it correctly. I had a couple of other offers for a 15-25% commission (including Gusto who wouldn't do it but would refer me to someone who would do it on commission).


Thanks to your info @SeattleCPA I was able to look directly at the language of the bill and felt very confident in our numbers and eligibility for 70% of our W-2 payroll from Q3 and Q4. There were no worries about claiming we suffered a loss - because we didn't. The pandemic was great for ecommerce businesses (as long as you could get inventory).

You're welcome, @Michael in ABQ . And it's great you could use the recovery startup business ERC. That was truly one of the cleanest ways to qualify if you were a small business. Good job!

I just got a certified letter from the IRS that my ERC claim was denied because the person filling out the Form 941-X forgot to check block 31b stating that we were a recovery startup business. Even though I specifically mentioned that as a correction to my CPA. Someone else in her firm handled the form who specialized in that kind of stuff - though they could have fooled me. They originally used an older version of the form and didn't check that box along with a few other minor mistakes that I had to point out. It's a bit frustrating when you're paying someone for their expertise and then having to correct them.

I didn't catch that in the final version (the other corrections were made). So now we get to file an appeal and potentially wait a few more months. I submitted it back in mid-October, so it's taken four months already.

[SeattleCPA]

My CPA charged about $700 to file amended 941-X forms to get us about $7,000 in ERC. The paperwork was submitted to the IRS a couple of months ago so I'm still waiting on the money.

I actually had to go back and correct them because they didn't realize we were a new business started in 2021 so we qualified for both Q3 and Q4 of 2021.

I felt like it was a reasonable amount for someone else to do the paperwork and submit it correctly. I had a couple of other offers for a 15-25% commission (including Gusto who wouldn't do it but would refer me to someone who would do it on commission).


Thanks to your info @SeattleCPA I was able to look directly at the language of the bill and felt very confident in our numbers and eligibility for 70% of our W-2 payroll from Q3 and Q4. There were no worries about claiming we suffered a loss - because we didn't. The pandemic was great for ecommerce businesses (as long as you could get inventory).

You're welcome, @Michael in ABQ . And it's great you could use the recovery startup business ERC. That was truly one of the cleanest ways to qualify if you were a small business. Good job!

I just got a certified letter from the IRS that my ERC claim was denied because the person filling out the Form 941-X forgot to check block 31b stating that we were a recovery startup business. Even though I specifically mentioned that as a correction to my CPA. Someone else in her firm handled the form who specialized in that kind of stuff - though they could have fooled me. They originally used an older version of the form and didn't check that box along with a few other minor mistakes that I had to point out. It's a bit frustrating when you're paying someone for their expertise and then having to correct them.

I didn't catch that in the final version (the other corrections were made). So now we get to file an appeal and potentially wait a few more months. I submitted it back in mid-October, so it's taken four months already.

Ugh. That's really terrible. Sorry you're experiencing that. Seems like a crazy mistake to make. There was just that checkbox... that one checkbox... the whole reason you qualified.

[Padonak]

Do you have to have employees (other than yourself if you are self employed) to qualify for ERC?

[SeattleCPA]

Probably you can't get ERC to work in that situation.

But there is a special situation where if you've got no living living relatives you can maybe qualify. Dan Chodan did a guest blog post for me on this "special situation" a couple of years ago:

https://evergreensmallbusiness.com/when-owner-wages-become-ineligible-for-the-employer-retention-credit/

[Michael in ABQ]

My CPA charged about $700 to file amended 941-X forms to get us about $7,000 in ERC. The paperwork was submitted to the IRS a couple of months ago so I'm still waiting on the money.

I actually had to go back and correct them because they didn't realize we were a new business started in 2021 so we qualified for both Q3 and Q4 of 2021.

I felt like it was a reasonable amount for someone else to do the paperwork and submit it correctly. I had a couple of other offers for a 15-25% commission (including Gusto who wouldn't do it but would refer me to someone who would do it on commission).


Thanks to your info @SeattleCPA I was able to look directly at the language of the bill and felt very confident in our numbers and eligibility for 70% of our W-2 payroll from Q3 and Q4. There were no worries about claiming we suffered a loss - because we didn't. The pandemic was great for ecommerce businesses (as long as you could get inventory).

You're welcome, @Michael in ABQ . And it's great you could use the recovery startup business ERC. That was truly one of the cleanest ways to qualify if you were a small business. Good job!

I just got a certified letter from the IRS that my ERC claim was denied because the person filling out the Form 941-X forgot to check block 31b stating that we were a recovery startup business. Even though I specifically mentioned that as a correction to my CPA. Someone else in her firm handled the form who specialized in that kind of stuff - though they could have fooled me. They originally used an older version of the form and didn't check that box along with a few other minor mistakes that I had to point out. It's a bit frustrating when you're paying someone for their expertise and then having to correct them.

I didn't catch that in the final version (the other corrections were made). So now we get to file an appeal and potentially wait a few more months. I submitted it back in mid-October, so it's taken four months already.

Ugh. That's really terrible. Sorry you're experiencing that. Seems like a crazy mistake to make. There was just that checkbox... that one checkbox... the whole reason you qualified.

We did eventually get the ERC. About a week later I saw that the IRS was basically stopping the processing of new claims due to the rampant fraud. Fortunately we squeaked in before that. A short time later we also got a refund for our late filing penalty for 2021 since it was our first year filing as an S-Corp.

[SeattleCPA]

My CPA charged about $700 to file amended 941-X forms to get us about $7,000 in ERC. The paperwork was submitted to the IRS a couple of months ago so I'm still waiting on the money.

I actually had to go back and correct them because they didn't realize we were a new business started in 2021 so we qualified for both Q3 and Q4 of 2021.

I felt like it was a reasonable amount for someone else to do the paperwork and submit it correctly. I had a couple of other offers for a 15-25% commission (including Gusto who wouldn't do it but would refer me to someone who would do it on commission).


Thanks to your info @SeattleCPA I was able to look directly at the language of the bill and felt very confident in our numbers and eligibility for 70% of our W-2 payroll from Q3 and Q4. There were no worries about claiming we suffered a loss - because we didn't. The pandemic was great for ecommerce businesses (as long as you could get inventory).

You're welcome, @Michael in ABQ . And it's great you could use the recovery startup business ERC. That was truly one of the cleanest ways to qualify if you were a small business. Good job!

I just got a certified letter from the IRS that my ERC claim was denied because the person filling out the Form 941-X forgot to check block 31b stating that we were a recovery startup business. Even though I specifically mentioned that as a correction to my CPA. Someone else in her firm handled the form who specialized in that kind of stuff - though they could have fooled me. They originally used an older version of the form and didn't check that box along with a few other minor mistakes that I had to point out. It's a bit frustrating when you're paying someone for their expertise and then having to correct them.

I didn't catch that in the final version (the other corrections were made). So now we get to file an appeal and potentially wait a few more months. I submitted it back in mid-October, so it's taken four months already.

Ugh. That's really terrible. Sorry you're experiencing that. Seems like a crazy mistake to make. There was just that checkbox... that one checkbox... the whole reason you qualified.

We did eventually get the ERC. About a week later I saw that the IRS was basically stopping the processing of new claims due to the rampant fraud. Fortunately we squeaked in before that. A short time later we also got a refund for our late filing penalty for 2021 since it was our first year filing as an S-Corp.

Great news. Thanks for sharing.

Obviously, lots (most?) of the tax accountants just didn't know enough to handle the credits competently. And then too many (most?) of the ERC consultants were some combination of negligent or willfully fraudulent which is even worse.