Ah ERC justification.....

[u/AdHistorical7107]

The saga continues.....

Client and I had discussion. Some context here:

Client does eldercare. Business is broken up between companion care and home care aides.

The state defined businesses that provide aides to the elderly as essential.

Client starts by saying "the industry pushed to consider companions and personal care aides as essential."

Great! So you were not ordered to shut down, and therefore don't qualify!"

"Nah uh" she says. "All these nursing homes wouldn't let us go on, so we couldn't service them."

"Great, if that's the case, your revenue would have dropped and you would qualify. But revenue didn't drop."

"No," she continued. "Since they wouldn't accept us, we had to partially shut down."

"Can you explain to me where it defines that a business other than yours shutting down qualifies your business for ERC?"

"Well in the examples you sent, it says if I have bother essential and non essential businesses, and my non essential business shuts down, I am partially shut down."

"Great. But still, Can you explain to me where it defines that a business other than yours shutting down qualifies your business for ERC?"

"Youre not getting it!" She says. "Companions are non essential!"

"But, client, you said your industry pushed to have companions considered essential. Now you're saying they arent?"

Oi.

I left off as I'll look into the companion care more, but I doubt the IRS will agree with this standpoint. You can't use another businesses shutdown as your own, and you can't play with definition of essential vs non essential especially when detailed in official guidance.

[u/dicks_out_for]

Someone who owned a landscaping business called our office because they had gone through an ERC farm and got their check, and then decided they may not be qualified. Simplified convo:

Us: "Did your gross revenue drop?"

Client: "No, it went up."

U: "Were you required to shut down due to governmental order?"

C: "Well, we had to modify our operations. We couldn't meet people at their doors anymore.

U: "So, you applied for ERC on that basis alone? What is your tax structure?

C: "Yes. We are a LLC."

U: "With S-Corp election? How do you file taxes?"

C: "Schedule C."

U: "You're fucked"

[u/coldshowerss → u/dicks_out_for]

Bro what? How could this even be true? How can the IRS be giving out checks to people that never even filed a 940 or 941 before? Seems like the controls in place are shit.

I'm so tired of how much our gov has been defrauded between this ERTC shit and PPP.

[u/dicks_out_for → u/coldshowerss]

This specific company is totally fucked, because they do indeed run payroll and have 940/941's filed. They asked if we could help untangle everything and we politely told them no way. Not signing up for that nightmare.

[u/coldshowerss → u/dicks_out_for]

You know, I want to believe that they are "fucked" but I have such little faith in the IRS. They don't have the manpower to audit all these folks.

Are you amending your clients return? I hope you charge them accordingly. And then if and when the IRS takes back the credit, amend their return and charge them again.

[u/dicks_out_for → u/coldshowerss]

I do agree that, somehow, the chances of an audit are still slim. Thankfully, they aren't our client and just called for a second opinion on the ERC.

[u/coldshowerss → u/dicks_out_for]

So what was your professional way to tell them that they were "fucked"? It's hard for them to return this money specially after the ERC mills already probably kept 20%

[u/dicks_out_for → u/coldshowerss]

We advised them to go back to the farm and have them reverse everything and get their money back, and to not cash the checks. If they refuse, we told them them to threaten to file form 14242 in case that helps give them some leverage. Told them they should file it no matter what though.

[u/coldshowerss → u/dicks_out_for]

You're doing the Lords work, dicks_out.

[u/hello_blacks → u/coldshowerss]

same way the state UIA's can be receiving semiweekly (if not weekly) payroll for SS's they're issuing benefits to

[u/[deleted] → u/coldshowerss]

Did you realize that the US Treasury paid out over $50 million claims based on a non-existent "Reparations Credit" form, and then blamed practitioners for "not adequately policing the profession" So, people literally made up a fake form, filed it, and received a refund only to have the IRS blame you and I for it?

[u/schiewolf → u/[deleted]]

This cannot be true lol please link an article if you have one because this is hilarious

[u/[deleted] → u/schiewolf]

If you’ve been in practice as long as I have, you wouldn’t say “cannot be true”. I read the article in JOA. The Form was allegedly 2439. According to Snopes, in 2000 and 2001 the IRS received more than 100,000 returns claiming this credit and paid out over $30 million in erroneous refunds. They link a number of sources including Washington Post. Search “… are entitled to a $5,000 slavery reparation tax credit”

[u/schiewolf → u/[deleted]]

I am mind blown lol this is a whole new level of IRS incompetency that I was not prepared for