Due to Covid-19, several federal and state relief programs were designed to help dentists and other small businesses survive the pandemic. Three of the most popular programs were:
- The Paycheck Protection Program (PPP) administered by the SBA
- The Provider Relief Fund administered by HHS
- The Employee Retention Tax Credit (ERTC)
All these programs provided financial relief in the form of grants, loans, and tax credits. Each program had its own set of rules for qualifying for relief funds. In some cases, the rules changed throughout the pandemic, which confused accountants and dental clients. In addition, to fully benefit from the receipt of these funds and avoid being required to pay them back, there were specific reporting requirements and deadlines for proving the use of the funds. For instance, in the case of the ERTC, the IRS extended the statute of limitations for assessing penalties related to the ERTC to five years from the date of the original filing.
While practice owners were thrilled to receive relief funds and tax credits, many began to worry about their liability for repayment or audit if, for some reason, they did not report the use of the funds properly or promptly.
Covid-19 was no different from any other natural or man-made disaster. It gave rise to companies or “experts” that preyed on the fear of business owners to charge exorbitant fees or provide unnecessary services to provide “peace of mind” to those who received relief funds. The rules that went along with these programs were confusing, even for accountants who worked on these issues day in and day out. For practice owners, the rules became overwhelming, making them far too willing to pay whatever asked just to have the reporting or application for credits handled. In some cases, the professionals calculating the credits or preparing forgiveness applications charged amounts that substantially reduced the benefits received.
Practice owners should “shop” these services to ensure they receive sound advice at a fair price. We suggest doing the following before settling on someone who will help you navigate the Covid benefit minefield.
- If you use a payroll company to file your quarterly and annual payroll tax returns and you are applying for a payroll tax credit, check with them to see what they would charge. In many cases, they can do it less expensively than a tax professional because all they deal with is payroll. In addition, the payroll company already has most of the information needed to calculate payroll-related credits. They typically charge a base fee plus a cost per employee. One caution here is that some payroll companies may not have a great deal of experience dealing with ERTC issues.
- Be leery of “pop-up” companies that just came on the scene to prepare ERTC, PPP Forgiveness Forms, or HHS Provider Relief Fund Reporting. They tend to have predatory fee structures that will absorb a lot of the benefit you could get for the ERTC.
- Check with colleagues who have already gone through the process of obtaining relief funds or tax credits with the aid of a professional advisor.
- If you have a tax professional (including the accountant you use for ongoing accounting services), be sure you have them explain what is involved in determining the calculations. Also, make sure you are not paying them to obtain records they already have.
- You should not be paying your accountant to “research” how to complete applications or prepare amended tax returns.
- Ask the accountant what they will be delivering to you at the conclusion of the engagement.
- Go with a professional willing to provide the services on a fixed fee basis instead of a fee-for-service arrangement. Avoid contingent fees; they aren’t needed in most situations and are simply a way to gouge the taxpayer.
- Prior to submitting them, be sure to review any forgiveness applications or amended returns you have given your accountant permission to prepare. Ultimately you are the one that must attest to the information submitted.
While it is understandable that accountants and other professionals providing services should be paid for work completed outside your original engagement’s scope, you should not be overpaying for those services. It’s “buyer beware” on firms wanting to charge a contingent fee for these services, it’s usually a way to gouge the client.
About The Author
Lance Jacob is one of the partners of the Dental CPAs, Lance provides accounting, tax, and consulting services for individuals and businesses which include dentists, other healthcare providers, retail, and equine.