Notices from the IRS are more common than you may realize. Each year, the IRS mails millions of letters to clarify information, confirm changes or request additional documentation.
Continue readingWhat to Know If You Receive an IRS Notice
Facilitate IRS Transactions With a Business Tax Account
The IRS Business Tax Account provides information to sole proprietors, partners of partnerships, and shareholders of S corporations and C corporations.
Continue readingDon’t Believe the Myths
The IRS has posted a list of common refund myths on its website. For example, if the online Where’s My Refund tool or automated hotline doesn’t specify when a refund will be approved, there’s no point in calling the IRS. The tax agency won’t have additional details yet.
Also, don’t assume that Where’s My Refund is wrong if the refund amount is less than anticipated. The IRS may have adjusted your refund. If so, it will send you a letter explaining the adjustment.
While most refunds are issued within 21 days, some may take longer because the IRS requires additional information. If so, the agency will contact you.
Wheeler has a dedicated team assigned to IRS correspondence. If you are a client and have additional questions, don’t hesitate to contact us!
408-252-1800
Photo by Jack Moreh from Freerange Stock.
Does the Corporate Transparency Act Apply to Your Business?
On March 1, 2024, the U.S. District Court for the Northern District of Alabama ruled that the CTA is unconstitutional. Does that mean that businesses no longer need to comply? Not necessarily. The federal government filed an appeal on March 11, 2024, in the U.S. Court of Appeals for the 11th Circuit. That same day, FinCEN announced that the law’s requirements are still in effect for those not involved in the court case.
Continue readingErroneous Refund?
Mistakes happen. What if you receive a refund from the IRS that you’re not entitled to? Or what if you receive one that’s more than you’re entitled to? How you must handle it depends on the details. A paper check refund should be voided and returned within 21 days of receipt to the address in the link below. But suppose you cashed the check. In that case, submit a personal check within 21 days to that address.
If the refund was by direct deposit, contact your bank to have them return the deposit. Also contact the IRS at the phone number in the link. Be aware that if the IRS intentionally changed your refund amount from what was on the return you filed, it will mail you a notice of explanation.
You can find more information here: https://www.irs.gov/taxtopics/tc161
Photo by Matt Moloney from Freerange Stock.
ERC Voluntary Disclosure Program Available for a Limited Time
As part of an ongoing initiative to combat questionable Employee Retention Credit (ERC) claims, the IRS has launched a voluntary disclosure program. It allows eligible businesses to pay back money they received after filing ERC claims in error.
The disclosure program runs through March 22, 2024, and requires only 80% of the claim received to be repaid. It’s part of a larger IRS effort to stop aggressive marketing around the ERC that misled some employers into filing claims they were ineligible for.
The IRS has another program that allows employers to withdraw pending ERC claims with no interest or penalty. More than $100 million in withdrawals has already been received.
Withdrawing ERC Claims
Recently, the IRS halted processing of claims for the Employee Retention Credit (ERC), due to a high volume of fraudulent claims. The moratorium is through at least the end of 2023. ERC claims that were already filed are now subject to longer processing, including heightened scrutiny to weed out fraud.
Now the IRS is creating a path for businesses that are concerned they may be victims of aggressive ERC marketing schemes. Eligible businesses can opt to withdraw unprocessed claims that they now believe may be invalid. Among other things, to be eligible, the business must have made the claim on an adjusted employment return that included no other adjustments and must want to withdraw the entire amount of the ERC claim.
Withdrawing a claim can allow the business to avoid receiving a refund for which it’s ineligible (and that would have to be repaid) as well as interest and penalties. Businesses that aren’t eligible to use the withdrawal process may be able to reduce or eliminate their ERC claim by filing an amended return.
IRS Suspends Processing of New ERC Claims
The IRS is continuing to warn businesses about aggressive marketing by nefarious actors involving the Employee Retention Credit (ERC). It has suspended the processing of ERC claims until at least year end because of a spike in the number of fraudulent claims.
The IRS has now issued a series of red flags businesses should bear in mind. Warning signs include:
- Unsolicited calls mentioning an “easy application process,”
- Claims that a business qualifies for the ERC even before any discussion of the business’s tax situation, and
- Large upfront fees and additional fees based on a percentage of the refund claim.
Eligible employers can claim the ERC on an original or amended employment tax return for qualified wages paid between March 13, 2020, and Dec. 31, 2021. But there are very specific eligibility requirements; careful review is required to determine eligibility. The IRS recommends businesses work with a trusted tax professional.
Please contact us if you have any questions:
San Jose: (408) 252-1800
Watsonville: (831) 726-8500
Tax Season Is Ending, but Tax Scams Are Thriving
The IRS is warning taxpayers about emails and text messages that promise refunds and credits, but that actually result in identity theft. Many current schemes involve the third Economic Impact Payment (originally made in 2021). Messages may also reference the Employee Retention Credit, assert that the taxpayer is owed a refund or say there’s problem with a return that must be fixed. They encourage recipients to click links that download malware.
The fake messages usually contain misspellings and typos and come from a suspicious-looking email address. If you receive one like this, don’t click on anything! Report it to phishing@irs.gov.
What Certain IRS Notices Mean
What does it mean if a business receives a Notice CP2100 or CP2100A from the IRS? These notices tell recipients that the Form 1099 information returns they’ve submitted contain missing or incorrect Taxpayer Identification Numbers, names or both.
To respond, payers need to compare accounts listed on the notice with their own records and make corrections, if necessary. They may also need to amend backup withholding for payments made to payees. Typically, the IRS sends these notices twice a year, in April and in either September or October. As always, you should promptly respond to any IRS communication. Contact the office with questions.
San Jose: (408) 252-1800
Watsonville: (831) 726-8500