BUSTED. Get it?
The report from KSL-TV in Salt Lake City we are about to share with you refers to a Department of Justice news release but we weren’t able to find one so we’re going to have to go off the TV station story. TL;DR Two guys and their accounting firm are accused of filing false tax returns and a touch of COVID relief fraud. Read:
A federal grand jury returned an indictment on Feb. 1 charging two Utah County men and an accounting firm with claiming an excess of $11 million in tax credits through a COVID-related fraud scheme.
Zachary Bassett, 39, of Provo, and Mason Warr, 37, of Vineyard, are both charged with conspiracy to defraud the U.S., wire fraud and filing false tax returns, district court records show.
Additionally, Provo-based COS Accounting & Tax LLC, doing business as 1099 Tax Pros, is facing the same charges.
If you swing by the Google business page for COS Accounting & Tax of Provo, UT you will find many, many glowing reviews from satisfied customers who can’t wait for next tax season so they get the chance to work with the firm again. Just kidding, it’s 1 stars all the way down. Like this one:
Find another company!! Really poor communication and service! I was with COS for multiple tax years, and it was the BIGGEST HEADACHE I’ve ever experienced with any company! First of all, I had signed up with another tax company, but COS I guess split from that company and took some of the clientele including me. Seemed a little weird because it wasn’t the company I had signed up with, but I had other friends who were with COS so I decided to give them a chance. I gave them multiple tax seasons and all the other bad reviews sum up my experience as well! Issues I had contacted them about got forgotten, I’d try and call in and the woman who answers the phone NEVER knows what she is talking about and gave me the wrong instructions to solving issues, making things even worse. I had a call scheduled with an accountant and he never called. Then the next day messaged me saying he had a meeting which is why he never called me. Keep in mind he never messaged me before hand explaining the situation and asking if we could reschedule. He then wanted to try and reschedule me 2 weeks out, after missing our call! Most of the accountants I talked to were rude and acted put out to answer my questions or help me. They never spent time to actually look into the questions I had. They just gave me vague answers. I requested copies of my return and they kept sending me the wrong file without even checking if it it was what I was actually asking for. So many stupid errors that could have been easily fixed if they were actually paying attention, and the whole staff was very accusatory, even when they were the ones who made the error. Honestly, worst experience I’ve ever had with any company. Total nightmare. Go somewhere else!!!
You always have to take reviews with a grain of salt because maybe it’s just a couple of disgruntled clients who are butthurt their tax person has informed them they owe the government money, ya know? That’s probably what’s happening here. Let’s check out another review.
This is my third year filing with COS and I sincerely don’t think I’ve ever had a smooth or easy experience with them. Their online tools are archaic, their communication is lacking, and their processes are messy. At one point they were being investigated by the IRS and that slowed things down for months. You’ll still be doing a large share of the work that you pay a firm to do and they’ll blame you when things go wrong, even though they don’t keep you informed. This is my last year filing with them, you’re better off going somewhere else, especially if you have an account with them for sales income. There are so many better options.
Oh, alright. Maybe that too is an isolated incident. Communicating with clients is tough, this person is probably just mad that they had to gather their own receipts. You know how clients are. Here’s one from two months ago:
Just received an automated email reply regarding this ERC Audit…are you kidding me?? No longer authorized, or no longer willing to do what we hired you to do?
“COS Accounting and Tax is currently undergoing a company restructure. This restructure is a direct result of the financial impact inflicted upon COS Accounting and Tax with the IRS interpretation of qualified wages for Single Member ERC refund claims.
During the ownership restructuring, COS Accounting and Tax is no longer authorized to assist or represent clients with Single Member ERC exams in which the qualified wages for ERC were paid to a shareholder or a shareholder relative.”
You get the idea. Jumping back to KSL, now we know why they sent out that email:
According to a news release from the U.S. Department of Justice, Basset, Warr and COS Accounting submitted more than a thousand tax forms to the IRS, claiming in excess of $11 million in fraudulent employee retention credits and sick and family leave wages credits for the firm’s clients.
The scheme took place from at least April 2020 through at least August 2021, the news release states. If convicted, the defendants will forfeit any property derived from proceeds traceable to the scheme, it continues.
Everyone reading this should know this already but the Employee Retention Credit (ERC) is a refundable tax credit for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020 to Dec. 31, 2021.
An employer is eligible for the ERC if it:
- Sustained a full or partial suspension of operations limiting commerce, travel or group meetings due to COVID-19 and orders from an appropriate governmental authority or
- Experienced a significant decline in gross receipts during 2020 or a decline in gross receipts during the first three quarters of 2021 or
- Qualified in the third or fourth quarters of 2021 as a recovery startup business.
Wages reported as payroll costs for PPP loan forgiveness or certain other tax credits can’t be claimed for the ERC in any tax period.
“During the pandemic, the defendants allegedly took advantage of a program intended to provide critical relief for businesses impacted by the COVID-19 outbreak,” said IRS Criminal Investigation Special Agent in Charge Albert Childress. “IRS (Criminal Investigation) is committed to bringing justice to those who have exploited the pandemic for personal gain and have stolen from America’s taxpayers.”
Let’s throw this comment from the KSL story in here too:
In October, the IRS published a warning to proceed with caution when pursuing these credits. If it sounds too good to be true, it probably is.
The Internal Revenue Service today warned employers to be wary of third parties who are advising them to claim the Employee Retention Credit (ERC) when they may not qualify. Some third parties are taking improper positions related to taxpayer eligibility for and computation of the credit.
These third parties often charge large upfront fees or a fee that is contingent on the amount of the refund and may not inform taxpayers that wage deductions claimed on the business’ federal income tax return must be reduced by the amount of the credit.
If the business filed an income tax return deducting qualified wages before it filed an employment tax return claiming the credit, the business should file an amended income tax return to correct any overstated wage deduction.
Businesses are encouraged to be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true. Taxpayers are always responsible for the information reported on their tax returns. Improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest.
This case is not the first we’ve heard of improper ERC claims, nor do we anticipate it will be the last. Over the summer, the IRS CI raided the Houston headquarters of Alliantgroup, an organization known for aggressive sales tactics, overpromising, and liberal interpretation of ERC rules. See also: this r/taxpros thread.