Teri's Tax & Business Services, LLC

07/24/2023

Learn the warning signs of Employee Retention Credit scams

Businesses and tax-exempt organizations should watch out for telltale signs of misleading claims involving the Employee Retention Credit. Scammers and unscrupulous promoters continue to run aggressive broadcast advertising, direct mail solicitations and online promotions for the credit. Many of these ads wildly misrepresent and exaggerate who can qualify for the ERC, which is sometimes also called ERTC or the Employee Retention Tax Credit.

Anyone who improperly claims the ERC will have to pay it back, possibly with penalties and interest. The IRS doesn’t want that to happen. Employers should know what the credit is and who qualifies and be on the lookout for the warning signs of a scam. And they should rely on the advice of a trusted tax professional, not aggressive marketing or unsolicited proposals.

About the ERC
The ERC is a refundable COVID-era tax credit designed for employers that kept paying employees while shut down because of a COVID-19 related government order or that had a requisite decline in gross receipts during the eligibility periods. The credit can be claimed only by eligible businesses and tax-exempt organizations that had employees during specific time periods.

Anyone considering claiming the ERC should carefully review the specific eligibility requirements at IRS.gov/erc. Eligible employers who need help claiming the credit should work with a trusted tax professional.

Warning signs of an ERC scam include:

Unsolicited calls or advertisements mentioning an “easy application process.”
Statements that the promoter or company can determine ERC eligibility within minutes or before any discussion of the employer’s tax situation. The Employee Retention Credit is a complex credit that requires careful review before applying.
Large upfront fees to claim the credit.
Fees based on a percentage of the refund amount of ERC claimed.
Promoters telling businesses to claim the ERC because they have nothing to lose. Those who improperly receive the credit could have to repay it – along with substantial interest and penalties.
Promoters telling businesses to ignore the advice of their trusted tax professional.
These promoters may lie about eligibility requirements. In addition, anyone using these promoter’s services could be at risk of someone trying to steal their identity or use their information to take a cut of the improperly claimed credit.

How the promoters lure victims
The IRS continues to see a variety of ways that promoters can lure businesses, non-profit groups and others into applying for the credit.

Aggressive marketing. ERC ads are appearing almost everywhere, including radio, television and online as well as phone calls and text messages.
Direct mailing. Some ERC promoters are sending letters to taxpayers from non-existent groups like the “Department of Employee Retention Credit.” Scammers will create these letters to look like official IRS correspondence or an official government mailing with language urging immediate action.
Leaving out key details. Third-party promoters of the ERC often don’t accurately explain eligibility requirements or how to calculate the credit. They may make broad arguments suggesting that all employers are eligible without evaluating an employer’s individual circumstances. In addition, many promoters don’t tell employers that they can’t claim the ERC on wages that they reported as payroll costs if they received Paycheck Protection Program loan forgiveness.

12/13/2022

We are now accepting appointments for this upcoming tax season. Be sure to schedule your appointment as soon as you can, we book up fast!

06/14/2022

Here’s what businesses need to know about the enhanced business meal deduction

The IRS encourages businesses to begin planning now to take advantage of tax benefits available to them when they file their 2022 federal income tax return. This includes the enhanced business meal deduction.

For 2021 and 2022 only, businesses can generally deduct the full cost of business-related food and beverages purchased from a restaurant. Otherwise, the limit is usually 50% of the cost of the meal.

To qualify for the enhanced deduction:
The business owner or an employee of the business must be present when food or beverages are provided.
Meals must be from restaurants, which includes businesses that prepare and sell food or beverages to retail customers for immediate on-premises or off-premises consumption.
Payment or billing for the food and beverages occurs after December 31, 2020, and before January 1, 2023.
The expense cannot be lavish or extravagant.
Grocery stores, convenience stores and other businesses that mostly sell pre-packaged goods not for immediate consumption, do not qualify as restaurants. ¬

Here’s what business owners need to know about certain costs:
The cost of the meal can include taxes and tips.
The cost of transportation to and from the meal isn’t part of the cost of a business meal.
Entertainment events
Business owners may be able to deduct the costs of meals and beverages provided during an entertainment event if either of these apply:

the purchase of the food and beverages occurs separately from the entertainment
the cost of the food and beverages is separate from the cost of the entertainment on one or more bills, invoices, or receipts.
Businesses should review the special recordkeeping rules that apply to business meals.

01/30/2022

If you are wanting a February appointment, I would recommend that you contact me soon. I have limited availability.

05/18/2021

04/23/2021

https://www.yahoo.com/money/irs-holds-over-29-million-tax-returns-delaying-refunds-192532885.html

The Internal Revenue Service is holding 29 million returns for manual processing — delaying refunds for many — because of pandemic-related law changes, processing errors, and fraud detection.

02/19/2021

The Internal Revenue Service today provided greater flexibility, due to the pandemic, to employee benefit plans offering health flexible spending arrangements (FSAs) or dependent care assistance programs. Under the COVID-related Taxpayer Certainty and Disaster Tax Relief Act of 2020, these plans now have additional discretion in 2021 and 2022 to adjust their programs to help employees better meet the unanticipated consequences of the public health emergency.

Notice 2021-15 responds to unanticipated changes in the availability of certain medical care and dependent care. As a result of COVID-19, participating employees are more likely to have unused health FSA amounts or dependent care assistance program amounts at the end of 2020 and 2021. Generally, under these plans, an employer allows its employees to set aside a certain amount of pre-tax wages to pay for medical care and dependent care expenses. Amounts spent by the employee are then reimbursed from their designated health FSAs or dependent care assistance programs.

Notice 2021-15 provides flexibility for employers in the following areas related to health FSAs and dependent care assistance programs:

Provides flexibility for the carryover of unused amounts from the 2020 and 2021 plan years;
Provides flexibility to extend the permissible period for incurring claims for plan years ending in 2020 and 2021;
Provides flexibility to adopt a special rule regarding post-termination reimbursements from health FSAs;
Provides flexibility for a special claims period and carryover rule for dependent care assistance programs when a dependent “ages out” during the COVID-19 public health emergency; and
Allows certain mid-year election changes for health FSAs and dependent care assistance programs for plan years ending in 2021.
Prior guidance provided flexibility to employers with cafeteria plans through the end of calendar year 2020, during which employers could permit employees to apply unused health FSA amounts and dependent care assistance program amounts to pay for or reimburse medical care or dependent care expenses. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, signed into law on Dec. 27, 2020, provides similar flexibility for these arrangements in 2021 and 2022.

Millions of employees have access to health FSAs and dependent care assistance programs, sponsored by employers under “cafeteria plans.” The decision to adjust these employee benefit programs is at the discretion of the employer that sponsors the plan.

The amounts properly spent are not subject to federal income tax. Typically, account funds that are not spent by the employee within the plan year, subject to limited grace periods or certain carryover amounts, are forfeited. In accordance with the Taxpayer Certainty and Disaster Tax Relief Act of 2020, Notice 2021-15 gives employers the option to amend their plans to provide greater flexibility for employees to elect and use these programs during the pandemic without risking the forfeiture of the amounts they have set aside.

02/05/2021

Educators can now deduct out-of-pocket expenses for COVID-19 protective items

Eligible educators can deduct unreimbursed expenses for COVID-19 protective items to stop the spread of COVID-19 in the classroom. COVID-19 protective items include, but are not limited to:

face masks
disinfectant for use against COVID-19
hand soap
hand sanitizer
disposable gloves
tape, paint or chalk to guide social distancing
physical barriers (for example, clear plexiglass);
air purifiers
and
other items recommended by the Centers for Disease Control and Prevention (CDC) to be used for the prevention of the spread of COVID-19.

The educator expense deduction rules permit eligible educators to deduct up to $250 of qualifying expenses per year ($500 if married filing jointly and both spouses are eligible educators, but not more than $250 each).

Eligible educators include any individual who is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during a school year.