Fraud Claims and Client Trust

Dave Gribben shares insights on how his firm navigated ERC complexities through client communication, staff training, and establishing trust to overcome questionable third-party fraud claims.

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• (00:00) - Welcome To Federal Tax Updates
• (04:30) - Communicating with clients at the start of the pandemic
• (08:11) - Making information available as a service to the community
• (10:03) - Transitioning to a remote work model
• (17:18) - Handling client expectations around ERC
• (26:42) - Preparing for audits and potential repayment
• (36:54) - Importance of staying informed on programs like ERC
• (43:51) - IRS guidance delaying Form 1099-K requirement

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Roger Harris
Annie Schwab

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The full transcript for this episode is available by clicking on the Transcript tab at the top of this page

All content from this podcast by SmallBizPros, Inc. DBA PADGETT BUSINESS SERVICES is intended for informational purposes only.

Creators & Guests

Host

Annie Schwab, CPA

Franchisee Operations Manager at Padgett Business Services

Host

Roger Harris, EA

President at Padgett Business Services

Guest

Dave Gribben

Dave joined the Padgett Business Advisors Barrington® family in 2011. The reason for his move to Padgett was clear: It offered him access to some of the best tax minds in America while providing systems and people with outstanding service and support, allowing him to help his clients succeed. Dave graduated from Northwestern University and earned an EMBA from Case Western Reserve University, receiving a Distinction in Academic Excellence. Dave has more than 20 years of experience in a broad range of positions, from finance, mergers & acquisitions, and operations to sales and marketing. Over the years, he’s worked with small business startups, long-time family businesses, and large, multinational corporations. In addition, Dave has served in an adjunct faculty role at the Weatherhead School of Management at Case Western Reserve University, and he has taught multiple classes in Entrepreneurship and Business Management. Dave is passionate about using his background and experience to help his small business owners create stronger, more profitable businesses. He understands the importance of building meaningful and productive relationships, and he knows that his role involves more than just providing clients with information.

What is Federal Tax Updates?

CPAs, Enrolled Agents, and Tax Preparers can keep up-to-date with the latest federal tax information while earning NASBA approved CPE credits and IRS approved CE credits by listening to the bi-weekly Federal Tax Updates podcast. The hosts Roger Harris and Annie Schwab have over 75 years of tax experience between them, which has been featured in various media outlets including Wall Street Journal, USA Today, The Morning Business Report, Bloomberg Business News, and Accounting Today.

Warning: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Roger: Hello again everybody. Welcome to another federal tax Updates podcast. This is Roger Harris. And as always I'm joined by Andy Schwab. Andy, how are you today?

Annie: I'm doing great. Roger I do have a bit of a cold, so I hope, uh, the audience can handle my raspy voice, but it's a pleasure to be here, as always.

Roger: Always good to be back. And we didn't plan this as a backup [00:00:30] to you, but we have a guest today in case your voice completely, uh, quits on you. Uh, how about introducing. This is another one we've talked about bringing in some of our, uh, local office owners to talk about the real world. Andy and I probably deal in the theoretical world more than the real world. So we're happy to have another office owner join us today. And why don't you introduce our guest for today's podcast?

Annie: I'll be happy to. Today we have Dave Gribbin with us. He's one of our larger firms. He's been with us for quite a few [00:01:00] years. Um, really innovative, um, easy to work with. One of our office owners who just is always ahead of the game. Um, and with that, Dave, I'll let you introduce yourself, give yourself a little bit of background, but thank you for being here today.

Dave: Well, thanks, Annie, and thanks Roger as well. So hi, I'm Dave, I have an office in northwest suburban Chicago in a community called Barrington. Um, I'm actually not a traditional accountant. I grew up, uh, business wise, uh, working [00:01:30] for a large multinational firm in operations and finance and worked up to a, you know, a pretty good position, but just the culture and the travel just wasn't wasn't a fit. But one of the things that that, uh, was part of my career is that I always viewed the difference between accounting and finance as accounting kind of traditionally was backward looking. But finance really, you like to use information and draw conclusions and do advisory. And that's part of what my personality is. Uh, and it was actually my brother who recommended [00:02:00] Padgett. So I joined, uh, right after the first year of the year, 2012. And I tried to bring the mindset of working with clients throughout the course of the year and be very hands on with the numbers. And I just think that approach has helped, uh, helped my office do extremely well. Uh, and quite frankly, I wish I'd done that ten years earlier. I love working with Padgett and just love the whole small business interaction with her. Well, Dave, we wish.

Roger: You joined us ten years earlier as well. So we can we can we can agree on that, because Dave has built [00:02:30] a very successful practice. And and a key part of it is his ability to communicate with his clients and be forward looking, not backward looking. You probably heard Andy and I say many times before that every product we deliver looks backwards, but we're being paid to look forward. And you've also heard Andy and I talk incessantly about the employee retention credit, and we're going to do it again today, but we're going to use Dave to talk about it in a different way. We want to talk a little bit about his experience, kind of from the beginning [00:03:00] up to now, and how he has dealt with the challenges that the employee retention credit faced, the opportunities that it gave us. Um, and, and Dave's way of handling what all of us have been through and are going to continue to go through, uh, when things like the employee retention credit, because I think Dave's comments today will apply to things more than just the employee retention credit, but the IRC gives us a good way to look back and and learn from it, which I think we all need to do. So, Dave, first [00:03:30] of all, um, when the employee we're back in a pandemic, we have to all remember back when all of this stuff started, we had PGP, we had pandemics, we had employee retention credits, we had sick pay. We had all kinds of things coming down on us at a time that really was hopefully unique to all of us in our lives, that we were in the middle of a pandemic. So first of all, how did you deal with communicating to clients, you know, in a pandemic, what was [00:04:00] your overall strategy of thinking? What do I need to do and what's important to my clients? As we were going through times we've never seen before.

Dave: That's a great question, Roger. So I guess I'd start with how we organize our firm. I've kind of organized the firm into three main sections. We have an income tax preparation part. We had kind of a back office accountant compliance part. But I ended up hiring somebody five years ago [00:04:30] was going to hire them for a staff academic position. But they had a great personality. And the course of the interview realized, hey, this person can be maybe a good client facing, uh, person. And that kind of changed the approach for how we structure the firm where we're trying to. I'm trying to bring in people now who not only understands the accounting law or the tax laws that are out there, but also have an ability to interact with the clients, relate, and kind of build a rapport with the clients. So with that [00:05:00] in mind, we've built, I think it's 5 or 6 people on staff now who do that, and it allowed me to take time away from being directly involved with the clients to more working on the business and training the team. So that's that's part of what will what will allow me to answer your question. And the other part, I think has to do with how Paget took time early on in the pandemic when PGP came out, when the IRC came out, right from the very beginning, you and Annie took time to educate me [00:05:30] and to educate our peers. So as soon as we knew what was going on, we learned right from the beginning, hey, we've got hundreds of clients out there. We wouldn't have time to pick up the phone or get on a zoom call, or have a face to face meeting with each one of them. So we decided from the right, from the beginning to do social media, webinars, Facebook, and we created kind of downloadable or, you know, webinars where clients could log in or we could record them and post them on Facebook [00:06:00] so we could get the message out to as many clients as possible up front.

Dave: Hey, here's what the law says. Here's what it means for your business. And at the same time, we reaffirmed with our clients through the webinars and through emails that we would do the analysis up front, determine if they qualified, and then let them know. Uh, so part of it was, I guess, you know, the proverbial headed off at the pass, if you will. So we tried to do that, uh, and [00:06:30] so that, you know, hiring people who can interact with, uh, with our clients and explain and develop that ongoing forward looking report, doing the analysis and doing some broad communication with our clients, I think took care of a large portion of it. And I'm even going to go back to the PGP. Obviously, you know, when the pandemic hit, nobody knew what was going to happen. So we made all of this available not just for our clients, but anybody who was a small business owner that needed to know bankers and the person down the street that wasn't [00:07:00] even a client. We made this information available to them because really was no extra time on our part, but we thought it was important because we didn't know what was going to happen within the industry. We didn't know what was going to happen, you know, with our small business clients out there. But that mindset of educating our clients and then doing the analysis behind the scenes, I think, went a long way towards the clients believing that we were looking out for their backs, I guess.

Annie: And, Dave, um, give a brief kind of overview of how your office [00:07:30] is set up because you're not set up in the traditional sense, where, you know, everyone's in a building and you can walk back and forth and your clients are coming through the door. So tell our audience a little bit about how you're structured, because I think that does come into play.

Dave: It certainly, you know, when the when the pandemic started helped us a lot. So it starts with the fact that my wife is in the editor or she's retired now. But when she was working, she was an editor. And for most of her career she worked from home. So I grew up in a work environment where I was next to somebody [00:08:00] who worked remotely the entire time. And when I hired my first employee, I hired her to work remote. And from that point, everybody that we've hired works remote. So even though I'm physically located in suburban Chicago, I have people in Kentucky and Ohio and Wisconsin and Massachusetts. I even have a dual US and Canadian citizen who lived in Buffalo and now lives in the far northeast corner of Canada. So we built [00:08:30] the infrastructure to work with zoom, with our clients and to have secure, uh, encrypted storage and communication of all of our information back and forth with clients. So when the pandemic hit, that allowed us to just ramp up very quickly because we already had that infrastructure in place so we didn't have to meet face to face with our clients, we already were able to set up webinars and zoom calls and mass emails and things like that, because we already had that in place, uh, [00:09:00] from the first person that we hired. Yeah, you kind.

Roger: Of were ahead of the.

Annie: Game so much easier. Yeah. Yes.

Roger: I mean, you don't think about that. But, you know, when the pandemic hit, most firms had to adjust. And you didn't from that standpoint, you were.

Dave: Yeah. And it's interesting, a big part of the advisory that we provide is tax projections for our clients. And one of the things that was kind of an unexpected benefit of doing Zoom is that when you meet with a client face to face at their location, it's really hard to adjust to tax projection on the fly [00:09:30] because you don't have your accounting software or your tax software open. And we learned early on that when we were doing a zoom with our clients, we could interact with the software and we could make changes on the fly. So it actually allowed us to have a more powerful advisory experience by working remote with our clients than by working.

Annie: I want to know, Dave, how many screens do you have in your office?

Dave: I have three screens. I actually want to get one screen. I want to get one large screen that I can partition, but I have three screens because.

Annie: I mean, but.

Dave: I but great. [00:10:00]

Annie: That you can do that with your clients. You know, share your screen, show your projections, make something in real time, but still have the ability to have face to face.

Dave: It is. I do like to meet with the clients if possible. You know, when they're coming on board. Certainly. You know, I think there's eye contact and vibe you need to be able to have. But our clients also like like the remote because they they can be in their gym shorts if they want and they don't have to worry about having their office neat when we stop by. So I think that they find it to be really convenient. I do like to bring my team in at least [00:10:30] once a year for an on site, because I do think there's there's some element of, you know, get to know each other, go out and have a good time, even go bowling together, things like that, that build some camaraderie. Uh, but there's no doubt that that the infrastructure that we built and our focus on forward looking relationship advisory allowed us to get ahead of the curve with PGP and more importantly, with the IRC. Yeah.

Roger: And you mentioned something that we hear a lot of practitioners say, and you've proved it's not always true that clients [00:11:00] don't like this arrangement. It may be great for you. Did you have much client pushback on the fact that most of your meetings were going to be virtual? Um, because that, again, that's the excuse a lot of people well, my clients want to come to my office, my clients want me to come to them. It sounds like you didn't. If you had pushback, how did you deal with it?

Dave: I can think of maybe one client that we have. Uh, and it was more because she was uncomfortable with technology. [00:11:30] People joke. I'm. I'm in my middle 60s right now, and sometimes people joke, hey, people are 65 and older, don't understand technology. I don't buy that at all. Uh, we have one client who was a little uncomfortable with technology and kept having Zoom crash that was frustrated. Beyond that, I can't think of a single person who's done a pushback on this. Uh, I think when they realize that they get what they want and they can participate in the discussion as opposed to just being given a piece of information, we [00:12:00] can have a discussion. Hey, how do you think the rest of the year is going to go, oh, I've got a big order coming in. We can change the tax projection on the fly that makes that experience so much more meaningful for the client. So to me, the positives far outweigh the perceived negatives on this.

Annie: Well. So you got through the pandemic and here you are still with us, talking about IRC two and a half years later or more. Um, tell us how how did you manage [00:12:30] to navigate all the changes, all the updates? Um, the volume of people who qualified for IRC. Tell us a little bit about your, I guess, method to the madness. And remember.

Roger: All this started in the middle of a tax season. Uh, you know, this all came in the middle of the tax season. It certainly did prioritize. And how did what made you choose to do one thing versus the other? Annie. Great question. Because you have to remember back when not IRC, but when PGP came, it was the middle of tax season.

Dave: Right? [00:13:00] Yeah. So when when PGP came, I actually thought that that was more, uh, there was more upheaval on our firm than there was with the IRC, because the rules for what was qualifying payroll. And did you include, uh, Suda did not include Suda. And what about health insurance and things like that from the very beginning? Uh, we determined that we were going to do all of the analysis for our clients. For the vast majority of our business clients, we do the bookkeeping and we do the payroll. So we already had [00:13:30] access to the information. So we determined we were going to set taxes aside, and we were going to go through every single one of our clients and determine whether or not they qualified for PGP creates all of the analysis documentation and create the application forms. One of the benefits we have is we're in Chicago, and the majority of our clients have major banks like Chase or Fifth Third and those banks. The application process was a lot easier. So we got ahead of the curve by [00:14:00] making the decision that we were going to do the analysis. But I spent my time teaching the team how to do the analysis as opposed to me doing it myself. So I go back to when I made the mind shift from working in the business to working on the business and hiring people who could do what I do allow me to take work off of my plate, to then train the team and teach the team about these new tax laws.

Dave: I spent my time learning from you and Roger. Uh, and, you know, from the very beginning, [00:14:30] you guys had great training. I think, you know, we were ready to go with the webinars on PGP before most of the country even knew what PGP was. It's one of the benefits. One of the big benefits I see out of working with a pageant. So as soon as we learn, we trained our team and we just stopped the tax preparation and refocused on PGP with the IRC, it was in the dark because the time frame to be able to apply. I know with the PGP dollars ran out, the dollar is out. But that's not. Yeah, there wasn't the case with the IRC, [00:15:00] so we felt we had a little more flexibility with the IRC. But but we took the same approach. You know, we knew we knew that if it was a revenue based decline that was easier to quantify. We had access. So we took every single one of our clients, and we did a quarter on quarter revenue based analysis to determine which clients qualify. And for the very beginning, we did a webinar and we did emails telling our clients, if you qualify, we will let you know and we will create the the [00:15:30] in effect, the 941 Nexus for you. And we did that for every one of our clients. On the revenue decline side, I don't believe we have any clients that that would have qualified on supply chain interruption, maybe one, uh, at that point, because they did have a major supplier that was shut down based upon the written governmental order.

Dave: The one that took us a little longer was the the the partial partial shutdown based upon written governmental order. We are most of our clients are Illinois based Illinois, you know, being, uh, uh, [00:16:00] a little more progressive when it comes to how they dealt with the pandemic. Um, had some shutdown restrictions and things, and we're still dealing I think there's a few clients left we're still doing analysis on. But that was a little more of a challenge because we had clients. I have a couple of clients that are insurance agents and they deal in the commercial side, and some of their clients are CPA firms. And the CPA firms were telling them, hey, you guys qualify and they didn't qualify. So I think the bigger [00:16:30] challenge for us was how we dealt with clients that believed that they qualified. Or one of the mills were telling them, hey, you've got $100,000 in the table here, and they didn't qualify. And that was a challenge for us. That's one where we abandoned the, um, approach of broad communication and webinars, and we picked up the phone and had zoom calls, and we talked to them case by case. Here's what the law says. Here's your situation and here's why we don't [00:17:00] believe you qualify.

Roger: Yeah, you mentioned something earlier and you just kind of focused back to it. I think we sometimes forget how important communication and the ability to communicate with our clients is. It's not just that we know how to do a calculation or fill out a form, it's how well do we communicate. And because you're right, when we had others, whether they be CPA firms or mills or guys on TV and the radio telling our clients that you are entitled to, in many cases, hundreds of thousands of dollars after we've said nothing, [00:17:30] it stressed the relationship, you know, because they wanted to believe the other people, but they trusted you. So your ability to communicate with these people and have been ahead of the curve probably saved you some problems. And we'll get to them later that a lot of people are faced today when they have people show up with huge refunds. But communication is a huge, huge part of this. I do have to ask you one question. When you made the switch in the pivot to focusing on PGP one year. An ERC the next year. How many [00:18:00] of your clients called you and said, would you stop helping me and do my tax return?

Dave: Not one. Absolutely not. One. And then it's interesting because, you know, one of the things that I've heard is, is, uh, a frustration that accounting firms had was how upset their clients were with the accounting firm because they didn't get the ERC money for them, even though they didn't qualify. And we had two clients who, out of hundreds of clients that we had, business clients we had we had two clients that [00:18:30] expressed frustration. Uh, one, I remember having a phone call with them, and there was one of my team members was in the background, and I was pretty clear in the phone, you don't qualify and here's why and here's the consequence. And I was very direct and they were fine with it. And there's one other client that over a course of about a year, about once a month would say, hey, you haven't gotten this for me, you haven't gotten this for me. And multiple conversations. I was almost like a broken record. But eventually they said thank [00:19:00] you, because I think when the IRS did the moratorium and they realized that, hey, this is pretty serious out there, that they were happy that that we saved them in that case. But I don't have a single client that I'm aware of that was upset that we did not get the ERC because every one of our clients knows either they got the ERC or if they didn't, that we did the research for them. So I don't think there's a single client that I'm aware of that at this point believes that we dropped the ball with them, but it's because we got ahead of the curve.

Annie: Out [00:19:30] of curiosity, were you charging for the upfront research part or were you doing that pro bono? And then if they qualify, charging for the ERC preparation?

Dave: We did all the research pro bono. Our uh, billing system is subscription based. We don't bill by the hours. So the analysis determining if they qualified was all part of the regular routine, what I call, you know, monthly subscription. But if they did qualify, we would then charge based upon filling out the forms and do the amendments and [00:20:00] things like that and the complexity of it. And, and the analysis was pretty complex because you had to look at qualified wages, use for PGP and qualified wages. If you had their, you know, you know, sick pay out there and things like that, and you had to look at the time frame that the, uh, that the they qualify the, the periods and quarters that qualified. So there's a lot of work with that.

Annie: And it doesn't sound like you lost any clients through this process, but did you get new clients or were some of your efforts have just sort of distributing information to the public, [00:20:30] not necessarily just to clients? Was that helpful?

Dave: Absolutely. You know, I'll start with the PGP. Uh, again, none of us knew what was going on with with the economy, with businesses even survive. So we opened up all of our webinars to anybody who wanted to be able to join. And I think we probably had maybe a 20% increase in revenue from 20 to 21, just based upon our openness to be able to assist small businesses. And we when we did it, it [00:21:00] wasn't because we wanted to grow the practice. We didn't know at this point and we didn't feel as appropriate back in, you know, March or April of 2020 to be billing clients or whatever else, if we didn't even know they were going to stay. So we did it for, I guess, for the good of society at that point. I love it. Uh, and we got a lot of referrals as a result of it when it came to IRC. Yeah. I mean, the bulk of our practice is in the suburban Chicago, but we've had, you know, businesses as far as California and Arizona reach out to us because we work with local clients. And [00:21:30] they told their friends because their friends weren't able to get assistance from their local providers. So we did pick up from from IRC as well. Absolutely. So I can't think of a single client we lost. Uh, but probably as it stands now, 20 to 25% of our revenue, uh, our regular ongoing revenue has come from the work that we did either through PGP or IRC clients.

Annie: Do you think you filed for the IRC for.

Dave: How many clients? I would say [00:22:00] we probably filed $8 million in IRC, uh, and at least 150 clients.

Annie: Any audits, any audits yet?

Dave: Uh, no audits yet? Uh, absolutely. No. I mean, I'm going to expect some, but we were we were pretty diligent. You know, the bulk of them were based upon revenue decline. Uh, a lot of our clients are professional service and a professional service. It's tough to qualify based upon partial shutdown or based upon, uh, you know, governmental [00:22:30] order restricting, you know, shutting down suppliers. So it's our retail clients, uh, you know, medical practices, things like that, where the, uh, you know, the Illinois bridge phase orders one through five, for example, that had restrictions on waiting rooms and things. We have to look at that, that have a material impact and where their clients required. So we've talked with the clients individually to try to scope out, uh, what was the impact, and was there a written order and did the health department. Official rules and things like that. Now [00:23:00] that that took a little longer. But from the revenue perspective, it was number crunching. Yeah, I think.

Roger: There's some great lessons.

Dave: It was pretty easy.

Roger: Great lessons for our audience to learn from. From Dave's experience, number one, having knowledge of things is obviously valuable because this took some knowledge and it took some time. But maybe more importantly, the two things that that he kept saying without saying it throughout his discussion is, number one, he was proactive with his clients and he was doing things the right way. You know, a lot of the [00:23:30] mills were motivated by. I'll be kind and say confusion, confusing the public and stretching the rules. And and Dave, you never felt like you were doing that. You were straightforward, honest. If they were eligible, you got them the money. You never felt like you had to push the limit. But more importantly, you were proactive and had established a credibility with your clients that allowed you to probably overcome the pressure of the advertising [00:24:00] when it got at its heaviest. That I'm guessing I'm speaking for you and I'll ask you to comment, but I'm sure you got a few people calling you and saying, hey, I'm hearing this on the radio, but I think the most people they said, Dave told me no. So I believe Dave, uh, am I right in that?

Dave: That's exactly right, Roger. I can think of one client in particular. A real estate agent out there who was convinced that they qualified. And this is just an email exchange. And they said, do we qualify? And we said no, and here's why. And they say, oh, [00:24:30] if you say no, I believe you. Uh, and I would say for every one client that really challenged us on that, we probably had ten clients that said, okay, but a lot of that comes from our approach of developing relationships with our clients, talking with the clients what, the course of the year. Um, I like to use the terms translating tax into English. We work really hard on trying to use soundbites that our clients can relate to at this point. Uh, so I [00:25:00] spent time working with the team and how to use those soundbites. And what are the phrases to use with our clients to say, hey, you qualify, but here's why we have to amend or you don't qualify and here's why. And with again, just a couple of exceptions, almost everybody said, okay. And even the ones that were challenging a sonnets eventually said okay, because we took the time to work with them individually on it. So to me, it's about clients interest at heart and working with them and words they can understand and [00:25:30] a little bit of like feeling okay about it, you know, how do you deal with feeling okay? I think some of that just comes with they wanted to hear.

Roger: I can get the money. I mean, that's what they all wanted to hear. But yeah, that wasn't applying to everybody.

Annie: Do you have any that are that have been affected by the moratorium or you do you have any you're holding or sent in?

Dave: Postdate I have a handful that were holding that were going to be releasing within the next week or so. Uh, and some of that was, uh, information that I got coming out of the Patriot tax conference that we just had in San Antonio, uh, [00:26:00] where the where we had, uh, you know, we're originally going to hold them until after the first of the year and the IRS came out, hopefully comes out with, with the new instructions. But based upon information that I heard in San Antonio, we're going to be releasing the remainder of ours sometime either this week or next week to make sure that they are postmarked before December 31st of this year.

Roger: Now, I'm just going to clarify for the audience that may not know what you know, we there was some uncertainty when the moratorium was put in place [00:26:30] as to whether we should submit things or hold them, and was the IRS going to change what they asked for? And we were told by some speakers from the IRS in San Antonio that go ahead and submit them. They're not going to ask for more in the application, but you will have more instances of asking you for more once they receive the application. They couldn't come up with a system or forms or whatever to change the initial application process, but on the back end of receiving those, [00:27:00] they expect to ask a lot more questions at that point. So the application process has not changed, so you might as well go ahead and get them in. But I would say and we don't know yet because the moratorium hadn't been lifted. But I would expect that we'll get more questions after the submission now because the fraud is still out there.

Dave: Mhm. Oh there's no doubt they're frauds. I'm still getting emails and phone calls. Uh, there was actually uh, you know, there's a prominent Am news radio [00:27:30] station in Chicago. Uh, and there's an ad that I'll hear when I'm either commuting to work or from the office or back home. And it's for irk. In the gist of it is, hey, I'm an accounting firm, but I don't understand IRC, so I use this professional outsourcing firm to be able to run my IRC. So the whole position is accountants. Cpas don't understand that use these bills. Uh, and uh, and that that commercial is actually still going. They're still out there. Uh, so I think [00:28:00] it, it does create a bit of a challenge. Uh, I think if we had not been proactive to talk with our clients, complete the filings for the ones that did qualify, and explain to the ones that didn't, why, I think it would have been a lot bigger issue for us. But I think because I think it's probably said this three times already because we got ahead of the curve, if you will. I think it made things a lot easier for us and eased some client concerns. Given everything that you hear and news [00:28:30] and write spam calls and things like that. Yeah.

Annie: Well, here we are in a moratorium with the guidance that that has told us how to withdraw a claim. We haven't received anything yet, although I do believe it's forthcoming. Um, as to, you know what, if you want to repay the money or you can get on some sort of payment plan. Have you looked into withdrawing any claims? Have you had comments or questions from your clients regarding that, or what are your thoughts on the on the process of the withdrawal?

Dave: Yeah, [00:29:00] so that's the one area where where I would say I'm concerned, but we have had one client reach out to us and say, hey, I got this money. We were surprised because we did not realize that they had reached out. So one of the things we still need to do is confirm with our clients. Have you received any IRC funds that we're not aware of? Right. Uh, at this point, in the case of this, this client that did receive, uh, I believe that they did not qualify or they do not qualify for it. Uh, and, uh, you know, we're [00:29:30] this is pretty recent that they got the funds. So we'd like to have those funds, if possible, returned before the end of the year. Um, but we did we did instruct the client right away. Don't spend the dollars. Put them in the bank and leave them alone. Don't touch them at this point, uh, but I think they're probably better off sending it back before the IRS comes up with the, uh. But but beyond that, I'm not aware of any outside of the one of any of.

Annie: Those, because I feel that, you know, there's probably practitioners out here, out there who their clients went [00:30:00] to, somebody else, they're not even aware that they got the money and could perhaps now get that phone call that says, well, I went to ABC down the street and here, here I am. And now what do I do? I'm not sure. You know, you told me I didn't qualify or I'm not sure I qualified. But you know, what's my threshold here for for the pain. For the pain that's coming. Um, so.

Dave: Yeah, it's a little bit easier for us, uh, because for the bulk of our business clients, we do monthly accounting for them or monthly bookkeeping. [00:30:30] So we'll see when the dollars show up and we'll say, hey, what's this for? Uh, you know, if we have a client, we don't have many, but there are some that we wait till the end of the year, or they wait to the end of the year to get stuff to us. We may see some things then, uh, but but I don't I don't think so.

Roger: And I think you hit what's going to be a huge problem. And we're still waiting, you know, on how to repay money, but that presumes you have money to repay. And the longer you've had this money. I think human nature says the less [00:31:00] amount of it you're still going to have to repay. So, um, again, this proactive approach of monitoring and catching things in real time is probably going to pay a benefit there. If some of your clients do feel the need to repay it, they'll hopefully still have it. Now we may get some super wonderful, sensitive approach to this that says you don't have to pay it all back or you've got ten years to pay, who knows what it'll be. But clearly every day that passes is one more [00:31:30] day to spend some of that money. So again, another example of having a proactive business model that allows you to to watch this thing in real time will make it easier for those that need to pay it back. And I think that's going to be I'll ask Dave you to comment. I think the withdrawal is going to impact a small percentage compared to those that are going to have to pay it back because because most people, as soon as they got the money, they cashed the check so well, they needed.

Annie: It to stay, stay afloat. [00:32:00] So and that was the whole purpose of the funds to begin with. So it's hard to well, I think it's unrealistic to think that the money is just sitting there.

Dave: Yeah, I would agree. I think in the case of this one client, the last I checked, the money was still sitting there. You know, from the moment that they reached out to me, I said, don't spend it. Keep it in the side until we figure out what to be able to do. But but I would agree that especially businesses that were told they qualified, they needed the money. [00:32:30] They didn't realize that they didn't qualify there. The businesses that that that I'm I would be most concerned about because, you know, they've given maybe 25 or 30% is is a cut to the to the mill at that point they spent the rest. And now what do they do at that point. And not because they knew it was a bad claim, but everybody else was doing it. It's because they were told it was a legitimate claim and they needed the dollars. Uh, and so I do hope that the IRS comes back with, I won't [00:33:00] say favorable terms, but, but easier terms to be able to get this repaid, uh, as opposed to, let's say you've got a penalty for, for a trust fund, you know, hopefully it's not. And I think.

Roger: They recognize well, from discussions I've had with them, they recognize that a lot of these businesses, you know, were tempted by these mills, you know, with big checks and large sums of money. And, um, you know, eventually they said yes, now you got to be careful. Some people probably knew they weren't qualified and thought that, [00:33:30] you know, well, this they'll never catch me, you know, they'll never catch me. But and I don't know how you separate those two, but I think there's something that that we as an industry have to learn. And again, let's hope we never have another pandemic. And I don't think any of us want to go through that again. But we may have another program like this when we have other things like this that, that we have to learn. If we were in the tax business that did tax returns for small businesses. We thought we could just say, I'm not going to deal with the IRC. You know, [00:34:00] I'm just going to stay away from it because I don't want to learn it. I just want to do taxes. Well, now we're we're faced with people coming to us to get their taxes done. That got irks. And there's all kinds of revenue rulings, guidance that if we didn't, we probably should have paid more attention to it, even if all we did was tax returns and not think that, well, it'll never impact me. So I'm going to ignore it, because now we're caught in probably the worst [00:34:30] part of this program of having to go back now and determine, did they get a real were they entitled to it? What do I do? Can I'm in the tax return? Can I give the money back? Can I withdraw the claim? So you may have thought you weren't going to have to deal with IRC, but guess what? If you prepare taxes for small business, I'm going to guess sometime during this next tax season, you're going to be dealing with IRC from somebody.

Dave: And I think that's a great metaphor for I as well. [00:35:00] Roger, I think if you're in a business that prepares tax returns as opposed to a business that advises and consults, in addition to preparing tax returns, whether it's IRC now and you have to deal with it or it's I moving forward, your practice is going to be at risk. You know, again, to how we started the whole conversation here, the fact that we tried to develop rapport with our clients, you know, try to use common English or everyday English. I say to be able to communicate [00:35:30] these, these tax issues out there and, and anticipates the impact for our clients. That's what allowed us to really grow the business and have great relationships and kind of what I call sticky relationships with our clients. You know, we don't lose many clients at that point because we have such good interaction, and that's all part of the same thing. Yeah.

Roger: It's all about, again, caring about your clients, being proactive with them. You know, I've [00:36:00] heard this. I've done this for a long time. And every time people change accountants, one of the things I hear is they never tell. They never give me advice. They never talk about the future. They're always talking about the past and the things I already know. You know, you know, talking to me about my business and what happened last month. I lived through it, you know? I know what happened last month. I need help looking forward. And so I think there's just, you know, again, none of us want to go through a pandemic. None of us want to do this. But there's so many business lessons to learn from [00:36:30] when opportunities presented themselves in the middle of tax season. First of all, prioritizing what's important to our clients. Being proactive as Dave was, learning that you can work in a virtual environment just as well as you can work in an office training your staff, prioritizing not only communication, but understandable communication. There's just so many lessons to learn about running a successful firm that Dave, you are probably the poster child for doing that. And so first of all, congratulations [00:37:00] on on taking the lead on something like that, because I think all your hard work and building a firm like that was, was definitely rewarded during, uh, Covid and even today.

Roger: Well, I.

Dave: Yeah, and it may be a small commercial for Panzer, but one of the things that makes my affiliation with Paget's so meaningful helpful is that when the CARES act came out and when the original, I don't even remember the name of whatever authorized the PGP, [00:37:30] those bills were 700 800 pages long, and within a couple of days, um, you and Annie had created the webinars for us, and you'd comb through it and were teaching us everything out there. Uh, on my own, I never would have understood. I would have taken me weeks to read that thing and appreciate it. And then what? I have been comfortable giving that level of advice to our clients. Absolutely not. So the fact that we were given the training and I could walk away knowing what to do has, you know, allowed us to do this, uh, [00:38:00] some of it's mindset. I mean, that's the mindset I'd like to be able to bring, you know, get ahead of the curve with our clients. But a lot of it was you and Annie trained me so I could train my team and we could train our clients.

Roger: Thank you.

Dave: So so that's a thanks.

Roger: To you, but my.

Roger: Eyesight will never recover from reading all those bills. I think the strength of my readers has doubled since the COVID, and I'm going to blame all of that on reading all those bills not getting older.

Roger: Yes, yes of course.

Annie: So where how do you think this next tax season's going to go for you, Dave? [00:38:30]

Dave: You know, uh, it's I think it's going to go much better. Uh, and part of it is that I go back to how I've organized the firm. We really have, you know, three different, three different parts to the firm. We have a tax preparation part. And I have historically acted as the tax manager and that I review all the returns. Um, but I've also been one of the primary deliverers of the returns. And I spent a lot of time over the past couple of years as if, for example, our we [00:39:00] we have a role we call senior accountant, and the senior accountant is the relationship, the adviser, the person that does the tax projections. And even though they're not, there's some CPAs in the years within the group, they weren't hired to be able to do taxes the first year they went. I always have them do 10 or 15 s-corp returns, because I want them to be able to see how the S-corp returns and the K-1 and basis limitations and things flow into the payable to the personal and to me, that brings the light bulb on and that [00:39:30] makes the team more powerful advisors when they can see the taxes in action, not just off of a PNL. So we're shifting this year towards if we have a business client where we have ongoing throughout the year interaction, and they also do the personal return, even though the tax is going to prepare the return, our senior advisors are going to deliver the return. So a lot of the interaction with the clients delivering the returns, particularly the 1040, should be a culmination of the meetings we had [00:40:00] throughout the course of the year, and we've done our job right.

Dave: There's going to be no surprises. I think that there's two things. Uh, first thing is it takes a lot of work off my plate. So I hopefully I'm going to have a little better, uh, realistic life during tax season. But I also think it strengthens the relationship with our clients because we've got one go to person for each client, whether it's mid-year, business return, personal return, all the stuff's going through the one client. So for me, my busy time is now is we're training our team [00:40:30] and we're working through scenarios of how to deliver and how to read the tax return and all the different forms to anticipate the questions. Other thing that we're going to be doing, uh, is for our standalone 1040 clients, we don't have a lot, but we do have enough as we have a subscription for loom, and we're creating loom videos, and we're sharing them through our encrypted communication with our clients. So we're going to try to get ahead of that curve as well. And sort of just delivering an encrypted email with your tax [00:41:00] return. We now have a 5 to 10 minute video. Maybe look at the two year comparison and talk about changes. Uh, if we see some things like under withholding, we can speak to that. And we think that that just making the experience become a little more alive. So for us, those are the two big changes. But the big one for me, the big one for me is, is having the delivery with our seniors and a little bit less of that on my plate.

Roger: And the IRS just will hopefully have with an announcement depending on when you're listening to this. But about a week ago, the IRS [00:41:30] announced a delay in the 1099 K reporting, which had the potential to be a real, um, problem with tax season, with people getting forms that that they didn't get before. So if you don't know about the announcement, they have delayed it completely for 24 and well, for this filing season. And then it goes to 5000 and then the law would kick in. And I think they're hoping that Congress, despite talking about changing the rules, will actually change it to make it a more [00:42:00] manageable number, because I think everybody realizes that the $600 number was going to create some massive problems, but leave it to Congress have, despite them having multiple bills and talking about it, uh, recognizing that 600 is not the right amount. I read this morning that they were critical of the IRS because they think their guidance was unconstitutional. Well, maybe it is, but you could have fixed it and you didn't. So Commissioner Werfel and the IRS actually [00:42:30] did something to prevent the problem. So if you think they shouldn't have done it, why don't you do it? Because you can do it and Congress created it. They can change it. But so I find it really humorous that Commissioner Werfel, who I, uh, praise for making this change or the leading the IRS to make the change, he didn't personally make it, but I think he drove it to then be criticized by the body who actually could fix it, criticizing them for doing something that's positive because that was going to be a [00:43:00] correct me if I'm wrong, but I think that was a potential nightmare this coming tax season. And going down the road, either getting the forms and not knowing what to do with them or not getting them when they should have, and years later getting.

Roger: Duplicates or.

Roger: Duplicates and it was going to be a.

Roger: Nightmare. Mhm.

Dave: And one of the things that I'm much happier about this year is we learned in November, whereas this past season I think we learned in the middle of January after we had gone through and all the work, the prep 1099 because we didn't want to be [00:43:30] issuing ten. 90 nines for our clients to their vendors. If it was also going to be in the 99 K, for example, or something delivered through Venmo or PayPal. So we had to go back and start over from scratch middle of January. So I'm so much happier this year that the news.

Roger: Came out and I didn't really.

Annie: Think that was coming because, you know, we had already had one extension and we were getting close to the end of the year. I was when the when the announcement came out, I was like, oh, this is like an early Christmas present. This is fantastic. Yeah. So, um, the.

Roger: Only people I've [00:44:00] heard criticize it are people on Capitol Hill because it made them look bad, but.

Annie: Well, the taxpayers are going to be happy about it. The tax professionals are going to be happy about it.

Roger: So it's.

Dave: Certainly going to make tax preparation a lot easier.

Roger: For us. Yeah.

Roger: Um, we're running out of time. But Dave, first of all, thank you so much for joining us today. This has been a great learning experience. But, um, what if you had to give again, you've got people out there listening. This may be their first tax season or may [00:44:30] be their 50th, but, um. What would you tell people that you've learned? Because you're unique. You're not the the but you're also very successful. So I don't want people to think unique means something negative. You've been very successful in building a firm that has done a great job for your clients. It's given you a work life balance that that you can can. I think people should realize you. You don't, not even in your office during tax season. [00:45:00] Many times you're. In better.

Roger: Weather traveling. Yeah, we're.

Dave: We we we travel and and you talked about how many monitors I have. I actually have a nice backpack. And I slipped my laptop in. And I've got a couple of portable monitors that are thinner than a laptop and a couple of cords and the docking station. And anywhere in the world I have secure internet, I can do work. And for the past, what, ten years now? And we're going to be in Arizona and California for ten weeks starting the end of December [00:45:30] through almost the almost filing date for a scope return. Be working the whole time, but certainly in.

Annie: A run in from the snow.

Roger: Warmer climate.

Dave: Absolutely.

Roger: Yeah.

Dave: Running from the snow, there's no doubt about that. Um, you know, what piece of advice would I give? Um, probably more. This is more Roger and Andy, I think, for offices that are growing, not a sole practitioner at that point is trust your team. Uh, you know, is the owner of the business, spend your time working on an organization [00:46:00] and structure and training that allows the people to be able to do the job themselves. My experience is if you give responsibility and authority both and the training you give, the challenge to the team, the team's going to be a lot happier and more invested than if you're micromanaging things. So I can say we travel a lot and I'll check in with the team only when I have to, because I fully trust that the team has the tools and the training and the authority to be able to make the decisions. And I also remind [00:46:30] them, if you make a mistake, that's fine. We just learn from it. That's my issue, not the team's issue. I really tried to kind of take that, take that fear away at this point. Uh, and I think that, uh, you know, I can't think of anything I would say more than invest in the team, trust the team, and spend your time working on developing the team, not just on working. Working with the clients. Uh, to to me, that that has really helped me get much more. And it'll be.

Roger: Better for your clients, not worse. So don't use [00:47:00] them as an excuse.

Roger: Right?

Dave: Yes.

Roger: Any any final comments? You want to take us home and wrap us up for today?

Annie: Uh, I would be happy to. Um. Dave, it's been a pleasure, as always to have you. I know the audience, um, will be probably reaching out to you with additional guidance or email. Yeah, yeah. But, um, you know, we do talk about IRC on every podcast, but it's nice to get the perspective from an office owner. Um, and you definitely have [00:47:30] some, some great advice. So thank you so much for spending time with us today, Roger. As always, I'm sure we'll be back in the next couple of weeks, and I'm sure IRC will still be. I'm sure.

Roger: We will talk.

Roger: About IRC. We don't can't get around it.

Annie: Yeah, but thank you for, uh.

Dave: And Roger, uh, thanks for the invite.

Roger: Well thank you. Enjoyed it.

Roger: Thank you for sharing your your wisdom with all of our listeners. I'm sure they will. They're better off from having heard you today. They've heard Andy and I many times before, but they haven't heard you. So thank you for doing it.

Annie: All [00:48:00] right, well, if you want to like and subscribe and tell your friends about us, I think this is maybe podcast number 21 or something. So there's plenty of those out there. If you want to hear more from Roger and I and have a good one, we'll see you soon.

Roger: Thanks, everybody.