Two of my larger clients who entrusted their employee retention credits with their payroll processors are having their ERC’s examined.
This is the first time that I have either heard or even read about this phenomenon.
Both of these clients have more than 50 employees and the employee retention credits were handled incorrectly. The payroll services never seem to do any exclusions, especially the one where payroll is used for forgiveness on a ppp loan.
They seem to simply hit a button on their software telling the machine to claim the credit. The problem is that the government knows when you received a PPP Loan, and you aren’t supposed to be claiming the credit and using the same payroll for forgiveness on the PPP.
Think about it. Let’s say you received your PPP Loan on July 1st of last year, and your 941 claims the credit on all of the payroll for the 3rd Quarter of 2021. You put in for and received full forgiveness on the PPP showing that you are using most of the 3rd Quarter for forgiveness. Why wouldn’t they examine the return, seek a return of the money, and charge penalties and interest while they’re at it?
Both of these clients came to me asking what they should do. Since ignorance isn’t a defensible position, I told them to fire their payroll services and write a check.
Let me leave you with this.
We began the process of contacting all of our clients looking for Employee Retention Credits to ask them to have their payroll services file the state and unemployment tax returns leaving the Federal 941 for us to file. We’ve had a significant amount of push back.
Many of the services are suggesting that we supply them with the numbers necessary for them to electronically file for the retention credit. There’s only one problem with that.
I’ve never seen a Payroll Service file a 941 with an Employee Retention Credit that was auditable. Not one in the last sixteen months.
This isn’t something that I can recommend.
If your payroll service won’t comply with not filing your 941, then the safe thing is to leave it alone. Let them file it and we will amend it. We’ll have to wait the additional time it will take for the IRS to process the amendment, but that’s the safe thing to do. I wouldn’t want them to file it, have the IRS exam in, and then have a problem.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. If there is anything you need, whether you are a current client or not, you have but to ask. I’m here and I remain,
Accounting Solutions Ltd.
CONFIDENTIALITY NOTICE AND LEGAL DISCLAIMER. The information contained in this email message, including any attachments, is legally privileged and confidential and intended only for the addressee(s). If you are not the intended recipient, you are hereby notified that any reading, use, or dissemination of this message is strictly prohibited. If you have received this message in error, please notify us immediately and delete this message from your system.
Although this email and any attachments are believed to be free of any virus or other defect which may affect any computer system into which it is received and opened, it is the responsibility of the recipient to ensure it is virus free. Accounting Solutions Ltd. accepts no responsibility for any loss or damage arising from receipt and use of this email.
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.