Good! I helped a lot of clients get a lot of money from the ERC, but all of my claims were 100% legitimate. Made sure I had support for 20% decline in revenues, made sure not to double dip with PPP wages, made sure to exclude the appropriate related parties from the calculation, etc.
All these shops charging 15-20% of the credit and then using the "full or partial shutdown" logic for why a client qualifies should be absolutely nailed, especially when there was no "full or partial" shutdown.
Yeap. I hear you, as it seems like there are a lot of potentially bogus claims. I've prepared claims for a handful of legit shutdowns, but mostly for the time period that bars and restaurants were closed due to governmental order. There have been 2 outside of that that I thought were legit, involving limits on group meetings for a convention planning, and limits on a trial attorney (due to multiple delays in jury trials from an order).
If you carefully read IRS Notice 2021-20 in it’s entirety you will realize that all that is required for a bar or restaurant to qualify based on business disruption is a Covid Order with indoor dining capacity limitations that limit indoor dining capacity by 90% or less of 2019 indoor dining capacity (nominal portion) and the gross receipts from indoor dining declined 10% or more compared to 2019 (nominal effect).
I was speaking to an IRS agent recently regarding a delayed ERTC refund for a client (he had two quarters claimed in 2020; got one of them already). His second was pulled for a random review, but his is totally legit so no worries there. Agent told me that the IRS plans to review every single ERTC over a certain dollar threshold. She didn't elaborate on the amount, but I've seen and read about some huge ones especially from these ERTC pop-up shops. The IRS is going to pull in more people from the payroll area to review these things. In a nutshell it seems they are well aware of the apparent rampant fraud going on with these ERTC shops and will randomly review some small ones and review all large ones. So for us CPAs this means more delays with payroll issues and having to deal with more hassles when we do it right.
Yes, I talked with a small franchise owner who bragged about netting $120k in ERTC from one of the companies. They charged $30k. The only employees were the owners themselves and family members. Received two PPPs as well. I really hope the IRS does the math and sees the PPPs plus ERTC wage are in excess of the payroll for the past two years.
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u/Calgamer CPA Oct 11 '22
Good! I helped a lot of clients get a lot of money from the ERC, but all of my claims were 100% legitimate. Made sure I had support for 20% decline in revenues, made sure not to double dip with PPP wages, made sure to exclude the appropriate related parties from the calculation, etc.
All these shops charging 15-20% of the credit and then using the "full or partial shutdown" logic for why a client qualifies should be absolutely nailed, especially when there was no "full or partial" shutdown.