Firmus Tax Service

05/08/2025

01/29/2025

02/13/2024

IRS Issues ERC Alert and Your Responsibility
NATP has your back this tax season

Today the IRS issued a news alert regarding the employee retention credit (ERC). As the March 22, 2024, deadline nears for the ERC Voluntary Disclosure Program, individuals who mistakenly filed a claim and received payment should take note. This program enables businesses to repay only 80% of the claim amount.

Taxpayers who filed a claim that hasn’t been processed should also review the guidelines and quickly pursue the claim withdrawal process if they now see their claim is ineligible.

The news alert, IR-2024-39, encourages taxpayers to talk to a reputable tax professional for help with an ERC claim. If a taxpayer used an ERC promoter, they should review these warning signs to determine if they should participate in the disclosure program.

7 suspicious signs an ERC claim could be incorrect

Too many quarters being claimed
Government orders that don’t qualify
Too many employees and wrong calculations
Business citing supply chain issues
Business claiming ERC for too much of a tax period
Business didn’t pay wages or didn’t exist during eligibility period
Promoter says there’s nothing to lose
What is your responsibility?
As you begin to see more of these clients come to your door, we want to remind you of your responsibility as a preparer.

The Office of Professional Responsibility (OPR) took the position that a preparer of a return is responsible for, and must have accurate knowledge of, all information impacting the submitted return. Further, OPR stated it does not believe a practitioner can rely on third-party advice provisions as provided under Circular 230, §10.37, since the firms submitting ERC claims do not meet the definition of tax preparer.

In the event a client has filed an ERC claim that you disagree with, you have two choices:

Inform the client that you do not agree with their eligibility for the credit and take corrective action to amend the claim for credit, or
Disengage from the client
Failure to take responsibility for the ERC claim, provide knowledge to the client as to why the ERC claim is erroneous, or to ignore it completely may subject practitioners to potential penalties and sanctions for filing frivolous returns, understating a clients’ tax obligation, failure to be sufficiently educated, etc.

Support this tax season

01/04/2024

IRA, 401(k) contribution limit increases 2024

Americans can contribute up to $23,000 into 401(k), 403(b) and most 457 plans — $500 more than the $22,500 contribution limit for 2023, the IRS said in a November news release.

The limit on annual contributions to an IRA increase to $7,000, up from $6,500.

The IRA catch-up contribution limit for individuals aged 50 and over remains at $1,000 for 2024, the IRS said.

01/04/2024

Standard tax deductions for 2024 tax year

For single taxpayers, the standard deduction is $14,600, an increase of $750 from the 2023 deduction of $13,850. For heads of households, the standard deduction will be $21,900, an increase of $1,100 from the amount for tax year 2023

02/06/2023

Employee Retention Credit
The federal government established the Employee Retention Credit (ERC) to provide a refundable employment tax credit to help businesses with the cost of keeping staff employed.

Eligible businesses that experienced a decline in gross receipts or were closed due to government order and didn't claim the credit when they filed their original return can take advantage by filing adjusted employment tax returns. For example, businesses that file quarterly employment tax returns can file Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for RefundPDF, to claim the credit for prior 2020 and 2021 quarters.
Employee Retention Credit
With the exception of a recovery startup business, most taxpayers became ineligible to claim the ERC for wages paid after September 30, 2021. A recovery startup business can still claim the ERC for wages paid after June 30, 2021, and before January 1, 2022. Eligible employers may still claim the ERC for prior quarters by filing an applicable adjusted employment tax return within the deadline set forth in the corresponding form instructions. For example, if an employer files a Form 941, the employer still has time to file an adjusted return within the time set forth under the "Is There a Deadline for Filing Form 941-X?" section in Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund.

Reminder: If you filed Form 941-X to claim the Employee Retention Credit, you must reduce your deduction for wages by the amount of the credit, and you may need to amend your income tax return (e.g., Forms 1040, 1065, 1120, etc.) to reflect that reduced deduction.

08/20/2022

As a result, the child tax credit reverts back to its pre-2021 form for the 2022 tax year. That means the 2022 credit amount drops back down to $2,000 per child (it was $3,000 for children 6 to 17 years of age and $3,600 for children 5 years old and younger for the 2021 tax year). Children who are 17 years old don't qualify for the credit this year, because the former age limit (16 years old) returns. For some lower-income taxpayers, the 2022 credit is only partially refundable (up to $1,500 per qualifying child), and they must have earned income of at least $2,500 to take advantage of the credit's limited refundability. And there will be no monthly advance payments of the credit in 2022.

06/08/2022

IRS ALERT
Issue Number: IR-2022-119
Inside This Issue
Dirty Dozen: IRS urges anyone having trouble paying their taxes to avoid anyone claiming they can settle tax debt for pennies on the dollar, known as OIC mills

WASHINGTON – As the 6th item on the 2022 "Dirty Dozen" scams warning list, the Internal Revenue Service today cautioned taxpayers with pending tax bills to contact the IRS directly and not go to unscrupulous tax companies that use local advertising and falsely claiming they can resolve unpaid taxes for pennies on the dollar.

“No one can get a better deal for taxpayers, than they can usually get for themselves by working directly with the IRS to resolve their tax issues,” said IRS Commissioner Chuck Rettig. “Taxpayers can check online for their best deal, as well as calling a specialized collection line where they can get fast service by using voice and chat bots or opting to speak with a live phone assistor."

Offer in Compromise (OIC) "mills" make outlandish claims usually in local advertising regarding how they can settle a person’s tax debt for pennies on the dollar. The reality usually is that taxpayers pay the OIC mill a fee to get the same deal they could have gotten on their own by working directly with the IRS.

The IRS has compiled the annual Dirty Dozen list for more than 20 years as a way of alerting taxpayers and the tax professional community about scams and schemes. The list is not a legal document or a literal listing of agency enforcement priorities. It is designed to raise awareness among a variety of audiences that may not always be aware of developments involving tax administration.

OIC mills are a problem all year long but tend to be more visible right after the filing season is over and taxpayers are trying to resolve their tax issues perhaps after receiving a balance due notice in the mail.

For those who feel they need help, there are many reputable tax professionals available, and there are important tools that can help people find the right practitioner for their needs. IRS.gov is a good place to start scoping out what to do.

These "mills" contort the IRS program into something it's not — misleading people with no chance of meeting the requirements while charging excessive fees, often thousands of dollars.

An "offer," or OIC, is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. However, some promoters are inappropriately advising indebted taxpayers to file an OIC application with the IRS, even though the promoters know the person won't qualify. This costs honest taxpayers money and time.

Before taxpayers start investing time to do the paperwork necessary to submit an offer, they’ll want to check out the IRS’s Offer in Compromise Pre-Qualifier Tool to make sure they’re eligible to file one. (Note: even though individuals and businesses can submit an offer, the tool is currently only available to individuals.)

The IRS also created an OIC video playlist that leads taxpayers through a series of steps and forms to help them calculate an appropriate offer based on their assets, income, expenses and future earning potential. Find these helpful, easy to navigate videos at irsvideos.gov/oic.

The IRS reminds taxpayers that under the First Time Penalty Abatement policy, taxpayers can go directly to the IRS for administrative relief from a penalty that would otherwise be added to their tax debt.

OIC mills are one example of unscrupulous tax preparers. Taxpayers should be wary of unscrupulous “ghost” preparers and aggressive promises of manufacturing a bigger refund.

Ghost preparers: Although most tax preparers are ethical and trustworthy, taxpayers should be wary of preparers who won't sign the tax returns they prepare, often referred to as ghost preparers. For e-filed returns, the "ghost" will prepare the return, but refuse to digitally sign as the paid preparer.

By law, anyone who is paid to prepare, or assists in preparing federal tax returns, must have a valid Preparer Tax Identification Number (PTIN). Paid preparers must sign and include their PTIN on the return.

Inflated refunds: Not signing a return is a red flag that the paid preparer may be looking to make a quick profit by promising a big refund or charging fees based on the size of the refund.
Unscrupulous tax return preparers may also:

Require payment in cash only and will not provide a receipt.
Invent income to qualify their clients for tax credits.
Claim fake deductions to boost the size of the refund.
Direct refunds into their bank account, not the taxpayer's account.
Choose wisely. The Choosing a Tax Professional page on IRS.gov has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.

Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else.