Taxpayer Alert: Significant Increase in Texting Scams

To date, the IRS has identified and reported thousands of fraudulent domains tied to multiple text scams, known as smishing, targeting taxpayers. Recently, IRS-themed smishing has increased significantly. As such, taxpayers are reminded to be on the lookout for scams and schemes that could put sensitive tax data at risk – especially this latest IRS-themed texting scams aimed at stealing personal and financial information.

Continue reading

Beware Third Parties Promoting Improper ERC Claims

Taxpayers are always responsible for the information reported on their tax returns. Businesses are encouraged to be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true.

As such, employers should be wary of third parties taking improper positions related to taxpayer eligibility for and computation of the credit – advising them to claim the Employee Retention Credit (ERC) when they may not qualify. These third parties often charge large upfront fees or a fee contingent on the refund amount. Further, they may not inform taxpayers that wage deductions claimed on the business’s federal income tax return must be reduced by the amount of the credit.

Improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest. Suppose the business filed an income tax return deducting qualified wages before it filed an employment tax return claiming the credit. In that case, the business should file an amended income tax return to correct any overstated wage deduction.

What is the Employee Retention Credit (ERC)?

The ERC is a refundable tax credit designed for businesses that continued paying employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020, to December 31, 2021. Eligible taxpayers can claim the ERC on an original or amended employment tax return for a period within those dates.

To be eligible for the ERC, employers must have:

  • Sustained a full or partial suspension of operations due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to COVID-19 during 2020 or the first three quarters of 2021,
  • Experienced a significant decline in gross receipts during 2020 or a decline in gross receipts during the first three quarters of 2021, or
  • Qualified as a recovery startup business for the third or fourth quarters Guidance on the Employee Retention Credit under the CARES Act for the First and Second Calendar Quarters of 2021 Notice 2021-2 of 2021.

As a reminder, only recovery startup businesses are eligible for the ERC in the fourth quarter of 2021. Additionally, for any quarter, eligible employers cannot claim the ERC on wages reported as payroll costs in obtaining PPP loan forgiveness or used to claim certain other tax credits.

To report tax-related illegal activities relating to ERC claims, submit Form 3949-A, Information Referral. You should also report instances of fraud and IRS-related phishing attempts to the Treasury Inspector General for Tax Administration at 800-366-4484.

Tips for Avoiding an IRS Tax Audit

Although the chances of taxpayers being audited have declined in recent years, with taxes becoming more complicated every year, there is always the possibility that a tax mistake turns into an IRS tax audit. Avoiding “red flags” like the ones listed below could help.

Continue reading

The WCPA Open Houses

October was a busy month at Wheeler Accountants, and not just because of the many extended returns we filed!

Following the conclusion of another busy October 15th deadline, WCPA hosted two open houses for the Watsonville and San Jose communities to mingle with the firm and get to know the team.

Both events featured tacos and burritos from Tacos El Jerry, an oyster bar from H&H Fresh Fish, and a variety of drinks and desserts. The Watsonville open house also doubled as a celebration for the retirements of Steve Stringari and Dennis Campbell.

Both events were a big success and we look forward to getting to see even more of our clients and friends next year!

Congratulations to Steve Stringari & Dennis Campbell!

Last week, Wheeler’s Watsonville office held a celebration acknowledging the retirements of Dennis Campbell and Steve Stringari.

Wheeler’s partners met Steve and Dennis the same way they met several other practitioners through Michael Bryant’s peer reviews. As is often the case, during their peer review the topic of retirement came up. After a few more meetings and lunches, the framework of a deal was in place.

For Steve and Dennis, an acquisition presented the opportunity for them to find a home for their clients. For Wheeler, it expanded our firm presence “over the hill” where we have a few partners and staff that live in Watsonville.

Steve and Dennis were clear from the outset that they wanted three things. First, they wanted their clients taken care of. Second, they wanted the reputation of their firm maintained. Third, they wanted to work less. The last one took a few years to get squared away, but we finally made it happen.

Dennis has been proactive and diligent with his work and a patient teacher and mentor to others in the firm. Steve was beloved by many of his clients, trusted completely, and he wanted to be able to help everyone.

Steve and Dennis were big shoes to fill, and if that’s the case then Evan Benevento must have four feet. Evan is unafraid of hard work, bright, a quick learner, passionate, and always willing to learn and improve. Evan has jumped right into getting involved in the community via Rotary, business networking events and other local causes.

We celebrate the conclusion of two incredibly successful careers, marked by a commitment to their clients and a strong connection with the Watsonville community. Congratulations to Steve and Dennis on your retirements!