Salt Lake City, Utah - In my last Blog I discussed the steps that most taxpayers are taking to make an ERC Claim. The purpose of this post/blog is to finish up that outline. Currently if a taxpayer is making an ERC Claim, the taxpayer is amending its past payroll tax returns to claim the ERC. In my outline I left off with the Taxpayer receiving a percentage of the ERC after the ERC Mill received its share of the refund. Below is a continuation of what we are seeing when it comes to problematic amended payroll tax returns:
- After the taxpayer receives a percentage of its ERC anywhere from 70.00% to 95.00% of the credit, the taxpayer is now in a waiting game with the IRS.
- If the IRS chooses to audit the taxpayer’s payroll tax return, the IRS could reduce the credit, or in a worst-case scenario, disallow the credit all together.
- The taxpayer will then need to hire a tax attorney, a CPA or an EA to deal with the audit.
- Then the question is whether the ERC Mill is still around. This is especially a big concern since the ERC Mill usually will take anywhere from a 5% to 30% cut. Note: not all ERC promoters are bad, I have spoken with several ERC companies who are holding funds in reserve if there is a problem with the credit.
- If the IRS disallows a portion or all of the credit, then the Taxpayer will need to go back to its CPA to amend the business returns as well as the business owners personal returns.
- A concern for the business owner is that if the audit runs outside the 3-year period for the business owner to claim a refund on his or her personal return, then the business owner will not receive the refund.
As you can see, those who claim the credit but are not eligible for it can end up with a tax liability. Tax problems are legal problems, and we solve both. If you or someone you know has an issue with paying their federal or state taxes and needs help to end their IRS nightmare, please contact Kent Brown at Strong & Hanni by either phone at (801) 532-7080 or email at: kbrown@strongandhanni.com or go to https://activerain.com/profile/kbrowndad for additional information, or my personal Strong & Hanni webpage at: https://strongandhanni.com/attorneys/attorney-kent-brown/
Note: I have been asked if I assist taxpayers in making a claim for the ERC. I do not, what I do is assist taxpayers when they have issues with the IRS, both civil issues as well as criminal issues.
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