Memo – If You Paid Your ERTC Preparer A % Of Your Tax Credits, You May Have Been Ripped Off

If you are reading this on a phone or tablet, it is best viewed in Landscape Mode.

The ERTC (Employee Retention Tax Credit) gave employers, under certain circumstances, a refund of payroll taxes they had paid in previous quarters.

This entailed some analysis of sales and payroll records and then preparation of form 941-X, which is an amendment of the quarterly form 941.

Form 941 reports an employer’s quarterly payroll figures and related income and FICA tax withholdings to the government.

I did my first tax return in 1987, and I have never charged a percentage of a proposed refund or credit on a personal or business tax return. It is unethical.

Many business owners, uneducated and desperate, were approached by unscrupulous con artists who not only charged them fees to do the sales and payroll analysis, but also charged a percentage, sometimes 15% or higher, of the credits the business owners so desperately needed.

This is unethical and unprofessional and in some cases criminal.

Did you know there was criteria that employers needed to meet in order to qualify for the ERTC? Some employers were NOT eligible but some preparers did not warn employers of this and filed for the credit on their behalf anyway.

Please take some time and force your preparer to prove to you that you were eligible. You don’t want to be complicit in a fraud.

These are nefarious business practices where desperate taxpayers could not act in their own best interest.

My firm did many ERTC related 941-X returns. The time we spent varied from three hours per quarter up to twenty five hours for the most complex cases. 

The more complex the case, the higher the ERTC received.

We billed this by the hour as we do most of our work. The amount of the ERTC credit did not impact my billing of the work. 

To make matters worse for the business owners, amended tax returns must be filed as these credits must be added back to their income and taxes paid on them. Many business owners are unaware of this.

If using a phone or tablet, you may want to switch to Landscape Mode to view the next section.

Remember, that the business owner has to pay their accountant to amend the income tax returns, further reducing their net credit received.

Even if this took up to ten hours of work, the preparer was making $1,500 per hour.

The disconnect here is the amount of total payroll and the ultimate credit should have nothing to do with how the preparer gets paid. This is an abusive use of value billing which is predatory in nature.

These companies preyed on desperate, vulnerable and unsuspecting business owners.

As always, this work should be billed by the hour.

I hope these scam artists eventually meet with justice.

If you were a victim of such a practice, I urge you to get a lawyer and fight these scam artists before you pay them a dime.

Please share your stories with me in the comments section.

Questions? Concerns? Call me on (732) 673-0510.