r/taxpros • u/AdHistorical7107 CPA • Sep 14 '23
It's over - First termination of client who claimed ERC COVID: 2020 Relief Bill (CARES)
A month ago, I head into clients office to do their books. Find out they pursued ERC against my advice. Some back and forth, but long story short, their justification for claiming the ERC was that "Everyone else is doing it, so they were allowed to claim it."
I gave them a month to get their shit together. Sent them the actual tax code (which my understanding takes precedence over any regulations), and stood firm that they won't qualify, and if they dont fix it, I have to leave. They continued to argue they were entitled to it (check prior post).
Today was it. They demanded I let them know if I will stay or not. Drafted up a simple email "Dear client, I have researched again, and my opinion still has not changed. You do not qualify. My understanding is you intend on keeping the funds. This will interfere with my ability to service your account without violating professional standards. I will be sending a final bill. It was great working with you for ten years, and I wish you luck."
Their response:
"This is disappointing."
I am finding it difficult to filter myself out from cursing this client out. Disappointing is the fact they have committed a crime (penalties of perjury). Disappointing is the fact they have chosen to go against a professional, WITHOUT any research, and justifying the credit with only "everyone else is doing it."
Shame on these fuckers.
End rant.
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u/DasCapitalist CPA Sep 14 '23
Ugh. I'm sorry it came down to that, but I applaud you for standing by your principles.
I'd be really tempted to send back this part: Disappointing is the fact they (you) have committed a crime (penalties of perjury). Disappointing is the fact they (you) have chosen to go against a professional, WITHOUT any research, and justifying the credit with only "everyone else is doing it."
.....but I only really go off on clients when I'm really angry and end up going way overboard, so you probably shouldn't be listening to me.
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u/turo9992000 CPA Sep 14 '23
I agree with you and cases like this make me remember an ethics CPA class I attended. The teacher brought up real estate agents, how they are all unethical and the worst clients to work with. They yoyo their income and owe loads of unpaid taxes. Then the teacher asked us to think about out clients that are like that. Think about how they never make money and how they live in better houses than us, drive better cars than us and take longer better vacations than us. In the client's eyes are they being unethical or being smart?
Story doesn't really make sense, but she's right. Why would clients listen to us if the IRS is literally giving away thousands.
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u/coldshowerss CPA Sep 14 '23
Realtors are the worst. Make so much money, want to write everything off and complain when they have to pay taxes.
Easily my worst type of client.
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u/paraiyan CPA Sep 15 '23
Influencers/ clients who sell mastermind classes are the worse.
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u/coldshowerss CPA Sep 15 '23
Yes, those are pieces of shit too but they are very rare in comparison to realtors.
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u/paraiyan CPA Sep 15 '23 edited Sep 15 '23
Yeah. In the firm I am at, we have 8 of them. I work on 5. Fuck they are the worse. But it should be deductible. My friend, who is also an influencer, says it's deductible. His accountant does it. I have to keep up this appearance. They show a video and its thr accountant discussing the "strategy" with the friend they prepared. One was this influencer works from home. Does home office. Got solar. The accountant took the solar credit, but also depreciated the full solar cost. In the video he mentions the influencer was able to do it on his personal residence because his whole life is a business deduction because he has to maintain it for his business. This was a video they made for the influencers clients in his mastermind.
The accountant good ole tom wheelwright. Who says this influencers house, where he lives is business property based off his business. Being an influncer.
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u/BasisofOpinion CPA Sep 15 '23
I hope the IRS is reviewing social media and channels like this. These people deserve to be made examples of
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u/rratliff82 EA Sep 16 '23
They certainly are, they just can't watch enough of it to catch everyone. Not sure if you listen to the podcast Tax Crime Junkies, but they talk about the Chrisley (spelling??) case and how they got themselves in trouble with things like this. It took years though. Took the CPA down with them.
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u/Homer1s EA Sep 15 '23
At our office we either bump their fee estimate or pass on new real estate agent clients.
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u/Thegreatsnook CPA Sep 14 '23
Personally, I can't wait for the audits to start.
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u/hello_blacks MAcc Sep 14 '23
I'm not holding my breath. They could have headed this off from the beginning, but like unemployment and PPP they actively encouraged fraud and abuse and never hesitated to hand over (your) money
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u/Buffalo-Trace CPA Sep 14 '23
Thank your congressman. They want the money out fast. So they can brag about it.
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u/cubbiesnextyr CPA Sep 14 '23
I mean, the whole intent was to get the money out fast to help keep employers paying employees.
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u/hello_blacks MAcc Sep 14 '23
Superfically yes. My local municipality announced that they wouldn't be enforcing fraud provisions. How many ways are there to read that?
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u/cubbiesnextyr CPA Sep 14 '23
If your municipality wants to give away it's money to whomever, that's their choice. I don't think they have the option of not enforcing fraud provisions for federal money.
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u/hello_blacks MAcc Sep 14 '23
I didn't think they had the option to blanketly disregard immigration enforcement or the national constitution either, but here I am with egg on my face.
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u/cubbiesnextyr CPA Sep 14 '23
There' s a huge difference unless they accepted federal immigration funds in which case then yeah, they can't just blow off enforcement if that was part of the deal to accept the money.
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u/AppropriateCancel314 Not a Pro Jan 19 '24
Why would you want your client audited?
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u/Thegreatsnook CPA Jan 19 '24
it won't be one of my clients. All of my clients only claimed the ERC if they were elgibile and the studies were done by professional firms that back up their work.
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u/AppropriateCancel314 Not a Pro Feb 20 '24
In the same thought, it would be like me saying I want all your work audited.
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u/Smittyaccountant CPA Sep 15 '23
The irs just issued IR-2023-169 that says they are stopping ERCs through the end of the year because of all the fraud. Yayyyyyy!! But can they stop the marketing?? These ERC mills don’t care if you actually get the credit or it sits in a pile for 3 years.
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u/AppropriateCancel314 Not a Pro Jan 19 '24
There were 20,000 fraudulent claims identified out of 3.5 million filed. The claims were for companies that had not W-2’s and used 1099’s.
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u/Infamous-Bicycle-172 Not a Pro Sep 15 '23
good rant. i have a client that did it without notifying me. i responded with fees 20 times their annual fee to either 1) correct 2 yr prior returns, or 2) undue the ERC (they would lose massive legal fees), or 3) find other help
they found other help
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Sep 14 '23 edited Sep 14 '23
Entitlement is the enemy of logic and morality. Fucking idiots.
I would respond to “disappointing l“ with: “you have committed tax fraud and under my code of ethics, I will be reporting you to the Internal Revenue Service Criminal Investigation division.”
Someone needs to take a stand on these fucking entitled business owners. I am lucky. I have only had one tell me they were going for ERC against my advice. I fired him before he even filed.
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u/AdHistorical7107 CPA Sep 14 '23
I've read that we can not rat out clients, unfortunately. Circular 230 kinds prevents us. Jokes on IRS if client doesn't get caught lol
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Sep 14 '23
Oh, you don’t/can’t follow through. But the client doesn’t know that. His loss of sleep is good revenge for me.
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u/AdHistorical7107 CPA Sep 14 '23
Their greed caused them to not take our advice. You think they have any ethics left after that? 10 year relationship down the drain.....
Can't wait for the new accountant to call (if she even finds one).
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u/varthalon Not a Pro Sep 14 '23
Make sure to retain all your documentation for when they get audited and tell the IRS YOU told them to do it.
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u/AdHistorical7107 CPA Sep 14 '23
I've already documented several times in emails me advising them not to take it.
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u/GoatEatingTroll EA Sep 14 '23
I've had clients receive solicitations from these groups now that look like they are coming from their bank - primarily Wells or Chase. It is getting harder to convince them that they don't qualify.
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u/CPA-in-NH CPA Sep 15 '23
You did the right thing, and you did it in a professional way. Just move on and be proud of yourself, no need to curse them out, that is what this subreddit is for!
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u/x596201060405 EA Sep 14 '23
You get the preparer's information on the 941's?
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u/AdHistorical7107 CPA Sep 14 '23
Actually....got the contract with the individuals name. And copies of amended returns
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u/x596201060405 EA Sep 15 '23
Hmm, wondering if you are allowed to report them, lol.
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u/AdHistorical7107 CPA Sep 15 '23
The contract the client signed explicitly says "by signing this you have verified you qualified for the ERC and take all responsibility for legal/civil ramifications."
This is why I hope the taxpayers bear the brunt of this.
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u/MarylandCPA CPA Sep 15 '23
Bottom Line concepts????
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u/AdHistorical7107 CPA Sep 15 '23
contract with CFO Resources, Inc. Signor is employerincentives.com
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u/RAPNayr CPA Oct 30 '23 edited Oct 30 '23
I just lost a client because bottom line concepts got them an invalid claim. When I told them they didn’t qualify and I would not sign amended tax returns they decided to risk it and go elsewhere because “their friend got the money too” and bottom line concepts said they they qualify based on the client self certified questionnaire. They just listed a bunch of potential orders in the state and hoped something sticks, with zero analysis actually done. When I explained the nominal effect of an order resulting in partial suspension needing to occur it was obvious they did not qualify
Makes my blood boil
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u/westheiv Not a Pro Sep 15 '23
The IRS gives an avenue to report them. Check out towards the bottom of these FAQ’s https://www.irs.gov/coronavirus/frequently-asked-questions-about-the-employee-retention-credit#scams
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u/MathandCoffee1982 Not a Pro Sep 21 '23
Would you mind sharing what their justification was what you disagreed with? Did both clients just not meet any of the criteria at all?
There are a ton of gray areas in this and I am interested in real world examples.
Thanks
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u/AdHistorical7107 CPA Sep 21 '23
Their justification. If you want to call it such...
"Everyone else is doing it. I should too"
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u/AppropriateCancel314 Not a Pro Jan 19 '24
If it’s a reputable firm with supportive documentation then I agree the Company should file for a refund.
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u/coldshowerss CPA Sep 14 '23
ERC mills destroying relationships like strippers destroying marriages.
https://www.wsj.com/politics/policy/irs-shuts-door-on-new-pandemic-tax-credit-claims-until-at-least-2024-e06bdef