The Dangers of Inaccurate Filing Deadlines for the ERC
Thought Leadership by KBKG
Beware of Dubious Tax Advisors
Tax season can be stressful for individuals and businesses alike, as the intricacies of tax laws and regulations can often be overwhelming. Unfortunately, unscrupulous tax advisors take advantage of this confusion, employing dubious tactics to market inaccurate filing deadlines around important tax credits. Recently, one such credit that has garnered attention is the Employee Retention Credit (ERC or ERTC). Always be leery of aggressive marketing tactics that urge immediate filing for the ERC—potential financial and legal consequences may result, as has been reported widely across several news outlets.
Is there a June 30 Second Quarter Deadline?
No. Emphatically, there is not a filing deadline on June 30th of 2023 for the second quarter. This is one of many scams currently being marketed by tax advisors of questionable repute. We urge all of our customers and readers to beware of promises such as these.
We urge you to read the IRS law
Sourced from the IRS ERTC Credit:
1. Presumptive Rule Forms 941-X are filed quarterly. Forms 943, 944, 945, and 1042 are filed annually. For purposes of the statute of limitations, IRC 6501(b)(2) provides a “deemed” filing date for taxes imposed by the following chapters of the Internal Revenue Code:
a. Chapter 3: Withholding of Tax on Nonresident Aliens and Foreign Corporations.
b. Chapter 21: Federal Insurance Contributions Act.
c. Chapter 24: Collection of Income Tax at Source on Wages.
Any Form 941, Form 943, Form 944, Form 945, or Form 1042 filed for any period ending with or within a calendar year before April 15 of the succeeding year is deemed filed on April 15th of the succeeding year, even if the return is required to be filed prior to that date. If the return is filed after April 15th of the succeeding calendar year, the period of assessment is three years from the date the return is filed. See IRC 6501(b)(2) and Treas. Reg. 301.6501(b)–1(b).
Withholding tax returns under Chapter 3, (e.g., Form 1042), are income tax returns under Subtitle A and not employment tax returns under Subtitle C. Revenue agents use Form 4549, Income Tax Examination Changes, as the report form.
Is The Employee Retention Credit (ERC) a Scam?
No, the Employee Retention Tax Credit (ERC) is not a scam. The government provides a legitimate tax credit to support businesses during the COVID-19 pandemic. The ERC aims to provide financial relief to eligible employers who retain their employees during specified periods. However, being cautious of unscrupulous individuals or companies that may use dubious marketing tactics or provide inaccurate information about the ERC is crucial. Employee Retention Credit scams are prevalent right now. Engaging with reputable tax professionals and referring to official sources such as the IRS website will help ensure you access accurate information and utilize the credit appropriately.
Dubious Marketing Tactics
Unfortunately, some tax advisors seeking to exploit the urgency and uncertainty surrounding the ERC (or ERTC) employ aggressive and misleading marketing tactics. They may falsely advertise shortened or inaccurate filing deadlines, instilling a sense of urgency and fear into unsuspecting individuals and businesses. By design, these tactics pressure taxpayers into engaging their services immediately, potentially leading to costly consequences.
The Risks of Engaging with Suspicious Tax Advisors:
- Inaccurate Information: Unscrupulous tax advisors may provide incorrect information about the filing deadlines, leading to improperly filed claims. Delays, penalties, or legal repercussions for taxpayers who unknowingly submit inaccurate documentation can cause irreparable harm.
- Non-compliance with IRS Guidelines: Engaging with dubious tax advisors who provide inaccurate filing deadlines can result in non-compliance with the guidelines set forth by the Internal Revenue Service (IRS). Failing to adhere to the proper procedures and deadlines may jeopardize the eligibility for the Employee Retention Credit.
- Financial Consequences: Incorrectly claiming the Employee Retention Credit or missing essential filing deadlines can have severe financial consequences. It may result in underpayment or overpayment of taxes, leading to additional penalties, interest charges, or even audits by the IRS.
- It is essential to adopt a cautious approach when engaging with tax advisors. Here are some measures you can take:
1. Research and Due Diligence
- Before engaging with any tax advisor, conduct thorough research to verify their credentials, reputation, and track record.
- Seek recommendations from trusted sources and check for any disciplinary actions or complaints against them.
2. Consult with Multiple Professionals
- Seek advice from multiple tax professionals to get a broader perspective on the filing deadlines and requirements for the Employee Retention Credit.
3. Directly Refer to Official Sources
- Rely on official sources such as the IRS website.
- Please consult directly with the IRS helpline to obtain the most up-to-date and accurate information regarding the ERC and its filing deadlines.
Navigating the complexities of tax regulations requires caution and diligence. In the case of the Employee Retention Credit, it is crucial to remain vigilant and avoid falling prey to questionable and aggressive marketing tactics employed by dubious tax advisors.
By educating yourself, seeking reputable professionals, and relying on official sources, you can protect yourself from the potential financial and legal consequences associated with inaccurate filing deadlines. Remember, sound advice and accurate information are invaluable when it comes to navigating tax obligations responsibly and ethically. To claim the credit, we urge our readers (CPAs and small businesses) to do their homework.
About the Employee Retention Credit
The Employee Retention Credit is a valuable tax credit provided under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and subsequent legislation. It aims to support businesses financially during the COVID-19 pandemic by offering a refundable tax credit for eligible employers who retain their employees during specified periods. Claiming the ERC credit can help alleviate the burden of payroll taxes and serve as a lifeline for struggling businesses.
KBKG is providing the following services to assist with ERC:
- Determine if the employer qualifies, and if so, for which quarters,
- Determine which employee wages qualify
- Calculate credits, including analysis of PPP interplay, and
- Reconcile actual credits with advance credits requested
- Prepare reconciled data for Form 941-X
- Prepare documentation supporting a business’ qualifications