Terry D EA

Yeah I forgot the TaxBook. I too have used them. I think you get like 7 courses with your subscription??? Can't remember but whatever it is, I use it. This year I accumulated 39 hours. I have two years left to renew my EA so a good start to the 72 total.

Yes, I did prepare those returns. I had no idea until recently the client had applied for the ERC. Their payroll company is Paychex which is a pain in the %^$ to work with. Their software is ridiculous to navigate. The company gave me access one year and it took me forever to find copies of the 941's that were filed. Not saying anyone has done anything wrong. I think they got the ERC retroactively which means there are some adjustments needed with the 941 and 1120S as well. I'm not sure when they got the refund check, I'm thinking sometime in 2023. The bookkeeper called me and asked me "where do we record this income?" Well, I stated it is not income per say, so create an asset account to put it in for now and leave it there until we determine how much has to be paid back due to the adjustments that need to be made. Apparently Paychex got on the contingency bandwagon. Their fees, like others, were deducted from the refund. I almost can't wait to see the P&L to see what they charged for this. Paychex is not cheap, this company has anywhere between 95 to 125 employees at any given time. Paychex charges this company in the middle five digit figures for their services annually.

Tom, I am with you. I may not hate google sheets as much now but when I first started with it, I hated it and did the same as you. The $9.95 a month for the Office 365 isn't too bad cause you can use it on five different machines. I use a laptop, and a MS Surface pro along with my desktop. I guess in a way it does pay for itself. Like kathyc2, I too have many templates setup, especially various depreciation and amortization schedules. I'll probably stay with excel.

Just wondering what folks prefer here. I am currently looking at reducing costs everywhere I can. I have used MS Office 365 for several years. Also, I pay for google suites. I have used both but sometimes question the depth of google sheets. I am an old excel guy and have used if for years. Personally, google seems to easy to share and I question the security. What are your opinions?

No, doesn't apply not farm workers <<<<<<Wages are not reduced on form 941, just the employer's deposit liability by the credit.>>>>>> Thanks for correcting me. You are correct. For form 1120S, it would have to be amended to reflect the credit amount taken against the PR liabilities as well correct?

A general random question. As I read all of the info on this credit which is overwhelming to say the least, I realize what the employer who received the credit has to do. As an example; Employer A - for tax year 2020 has qualified wages of 800,000.00. Credit is 50% so $400,000.00 in wage reduction. If employer A did not reduce the wages on form 941 for the affected periods, they must file form 941X to amend the wage deduction. Also, if Employer filed form 1120S with the full wage deduction and did not reduce the wages by the credit amount, form 1120S MUST be amended also. Am I correct in my thinking so far? I have a client that receive large amounts of the credit but were not told to reduce anything and of course, here it comes. FYI- This is a major battle with one of the national payroll processing companies. I have asked the bookkeeper to get a copy of all of the 941 forms filed and any 941X forms, ERC calculations to check everything against the tax returns for both 2020 and 2021. The bookkeeper was told 941s were not available and because they were a certain type of employer the 941 wasn't used. That blew my mind as I have no idea what the hell that means. I don't care who this employer uses or what the company classifies them as, they are not exempt from filing 941 forms. This company has over 4 mil in payroll each year. I just want to be sure my thinking so far is in the right direction as I will openly admit I am not an expert in the ERC area.

Correct me if I'm wrong, but don't you have to renew by Jan 31st? The November 1, 2023 - January 31, 2024 renewal cycle is for SSNs ending in 7, 8, 9, or no SSN Drake, CCH, NAEA, Gleim, CPA Academy and a few others are offering CE classes. It will be a crunch to get them in by December 31. I hope you are not just starting, 72 hours is a lot.

JohnH, Yes, I always use certified mail with return receipt. Just know that is not 100% fool proof or guarantee of anything. On October 26, 2023, I mailed a 941-X to the IRS. November 9th, it ended up back in my mailbox, green card attached, and without any explanation. i took it back to the post office and no one there could figure out what was wrong or why it was returned. They decided to send it again. As of this moment, the location of that envelope is unknown. I had to resend it and I keep praying the first one comes back to me. If that form hits the IRS twice, who knows what will happen.

No longer works there. Yes, we are looking into that and the whistle blower form as well. As far as I can tell, there are a number of other folks that could be affected by this.

Some of you responded to me in another post regarding a client making payments on known balance due to the IRS. The replies said to make the payments now to avoid any additional penalties and interest. I agree and this was generally very good advice. Nevertheless, each circumstance is different and sometimes may require a different approach. Background, client is young and has never filed any tax returns. Client worked for a company as an employee and was paid under the table to avoid payroll taxes; etc. This took place for 6 years. Client wants to pay the tax he would owe on the wages paid to him as cash payments. (Because this is a public forum, I'm leaving out details) My first step was to file form SS8 for a determination which is a slam dunk in my opinion. I have not ever met a waiter, server or whatever they maybe called, working in a restaurant that was or could be classified as a sub-contractor. Again, leaving out details. Anyway, the tax payments. For filing the tax returns, form 8919 is used and must include the firm's EIN to e-file. Did everything possible to obtain the EIN and could not get it so per the instructions the word UNKNOWN was inserted for the EIN. Thus, negating any possibility of e-filing. Client owes for 2019, 2020, & 2022. TY 2017 and 2018 were filed by mail with a very small refund that will be forfeited. However, the IRS still does not have record of the client existing. Because of this, no payments could be made using DirectPay, EFTPS or through the ID.Me account. The only solution is to include payment with the respective returns and mail it in. Scary but the only way. The penalties charged are already at the maximum 25% so no additional penalties should be assessed. The interest could be adjusted. But the argument of the post mark date as the filing date could apply here if needed. Most people who would end up in this situation would take the cash and run. I think this speaks volumes for this young person desiring to do the right thing regardless of the cost. When they first came to me for help, I could only tell them what they had to do by law. Kudos to this person.

There is one other important thing I have learned from this. Be careful of the webinars you register for or attend. The NAEA offers a lot and some are very good. On more than one occasion, I have noticed the webinar was put together to sell a product. Just give you enough information in an attempt to get you hooked. I didn't need the CE for this as I have gone well past the minimum requirements for this year. My curiosity got me as reasonable compensation is a good topic and something we all face. This webinar was two hours long, good court case information, the supposed horror story I mentioned, and at the end there it is, buy our software to calculate reasonable compensation. I don't know about anyone else, but I do not want my inbox to be plugged up every day with marketing messages that takes some time to delete.

I too question the mailing, post mark and actual processing. I know the post date is supposed to be the official filing date. I send everything certified mail and keep all receipts with the stamped post date. It has worked in the past when an IRS agent accused me of not sending a check back to them and insisted they never got it. I faxed in copies of the green card showing the signature and the receipt with the post date. Never heard anything again about they as they miraculously found the check. Imagine that, harass first, then look for it. BTW- efiling with a DCN number, transmission number whatever you call it doesn't always satisfy some states. I had a go round with NC where they claimed they never received the client's return. The agent from NC said the DCN number meant nothing and didn't prove anything. After arguing a bit, they caved and asked for a copy of the return but still denied the client their refund based on the statute of limitations had expired to claim a refund. Client gave up the fight. I was more than ready and willing to keep marching on. Short summary, nothing is guaranteed.

This is a great discussion. I am thinking more and more the presenter in the webinar made the story up. No court case, never mentioned "understatement of taxes" and now I am inundated with advertisements to buy their reasonable compensation software with a $400.00 price tag. A scare tactic maybe to get people to jump on the software??? To calculate a reasonable wage is not brain surgery. It seems that most of the court cases reviewed the shareholder was indeed providing services and taking a very low salary presenting a large gap between what it should have been and what they were doing. The presenter never even mentioned taking distributions without sufficient basis. Maybe this should be mentioned to the NAEA as they were the one providing the webinar.

The $5,000 penalty falls under sec. 6694(b) for understatement due to willful or reckless conduct on behalf of the preparer. Have you seen an actual "Reasonable Compensation" case where sec 6694(b) was imposed on the preparer? I have not. I cannot answer that. What I did find a bit concerning is the presenter in the webinar gave the story of the CPA/Preparer did get the penalized under 6694(b) for each year mentioned. However, there was not any court case cited to back up the story. I'm sure the penalties are highly possible but was this a real case???? Not sure, but stuff like this really gets my attention to make sure I'm in complete compliance.

I'm well aware of the penalties. I agree completely with kathyc2. I've following those rules. I have prepared some S-Corp returns as an overload from a CPA that I was not the signer. Some of those returns lacked the proper information while others did not contain any reasonable compensation for the shareholder. I questioned too much apparently and got pulled from those assignments which was 100% fine with me. if it's not accurate then I'm not signing it. But... what course do you take if your client says okay let's get it right? Recharacterize the distribution, advise of the payroll penalties and related issues, then prepare the return? I don't see any other way to do so.

I'm working on a case where filing past year(s) by mail is required. This is due to a missing EIN for the firm on form 8919. yes, everything under the sun was tried to get the EIN so we ended up with the word "UNKNOWN" which prevents the return from efiling. I've told the client to wait until we know the IRS has received the return(s) and then use the direct pay to pay the balance due. Would it be better to have him pay what is due now for the remaining years? By this discussion, it sounds like a better idea to do so.

I attended a webinar from the NAEA regarding S-Corp officers and reasonable compensation. I have had a good understanding of this for a number of years but the part that caught my attention the most was the onset of preparer penalties that was discussed. I don't think we need a huge discussion on how to determine the amount of S-Corp officers compensation if he/she provides some type of services, including administrative, should be, or whether the S-Corp officer is taking a distribution or salary. I'm well aware the IRS can and will recharacterize a distribution as wages. Recently, I've worked with a number of S-Corp owners/officers that do not pay themselves a wage and indeed provide services to the S-Corp, and have had the reasonable compensation discussion. I currently have two S-Corps that cannot provide sufficient books or accounting records. One has receipts in excess of the 250K and is required to complete Sch L and M-1, M-2. This officer does not take a salary either. My position on this is for this client to seek other help and break the engagement. During the webinar I mentioned above, there was discussion where an IRS auditor pulled one S-Corp return from a CPA but later pulled an additional 25 returns. 20 of those returns, the officer did not take any reasonable compensation. The IRS recharacterized the distributions as wages and penalized the preparer (CPA) 100,000 for negligence, reckless disregard and assisting clients in evading taxes. The CPA/preparer provided copies of letters to the IRS explaining to his clients they must take a reasonable wage or the IRS will recharacterize it. The IRS said the letters proved the preparer knew. My questions are: 1. If you take on a new S-Corp client and he/she is taking distributions only, do you or should we attempt to get the client to allow us to recharacterize the distribution before preparing the return. I realize all of the penalties for late payroll filings; etc, will be explained. If the client refuses, do you or should we send him packing?? 2. I've tried, but not extensively, to find out what our responsibilities are in this situation.

With both of your questions, I had a 2553 denied for improper signature from Verifyle who is approved by the IRS. They required a wet signature. I had this looked into by an upper level person from the IRS whom I met in a tax update class and the response was "wet signature" For the 2848 I have had them accept a digital signature and reject a digital signature. I've not ever been successful using the online method or the account method to obtain a 2848. so again, to save headaches, I just get a wet signature and be done with it.

The initial release of Drake 2023 is now available.

I'm using Hiscox. Different rates for different states. My rate in SC is approximately 47.00 per month with 1M coverage, no deductible. Covers me for E & O and notary.

This is a partnership organized in Delaware with foreign (Canadian partners). The company is an investing company and each partner shares in the profits & Losses equally. I'm not real familiar with form 1042 or form 1042-S nor the 8805. I'm trying to understand when these forms are needed? There is income distributed to the partners by the partnership equally. Would that in and of itself make the partnership a withholding agent? The previous year form 1065 had the boxed checked NO for any payments made that would required filing form 1042 under ch 3 or 4. Because form 1065 is a pass through entity, no distributions were taken and no wages paid is this the reason the prior CPA checked the box no. Doesn;'t seem right to me. The way I read the rules with the section 1446 tax, makes me feel the form is needed. Help please.

I'm coming in on the tail end of this. I logged into EFPTS during the first week of October and had no issues, notices, memos or email. Already setup with ID.me as well. Yes, it seems to be an inconvenience but to further protect the information that is already there is a welcomed idea. I think we all should have been better informed.

Tom, For what its worth, it is very honorable for you to be compassionate and concerned about a loyal long-time client. I think everyone of us has faced something like this in our line of work. I know I certainly have. While these folks may not have taken all of the available funds from their retirement accounts, they may need those funds to survive in the foreseeable future. Knowling what you know about these folks, I sure wouldn't want to be the one to take the last dollar and have that on my conscience that I may have caused them to fall further when I could have helped. I'm not saying this applies to every person who is down on their luck. Different circumstances require different actions. I agree to have them file the return and seek the CNC status. The bill will not go away but no collection activity will take place either. The ones I have no sympathy for are the ones that sit and complain about my fees and how hard it is to pay them and find them sitting at the Longhorn steak house for dinner right after they picked their return up from me. As you said, I think we can tell when the story we are given fails the smell test. You apparently know these folks very well so go with your heart on this one.

The real funny thing about Social Security increases, is Medicare premiums go up and eats up the cost of living increase. Last year was an exception. I'm assuming Medicare costs will go up this year.

Thanks I did that.