This is slightly off-topic, but has anyone been audited for ERTC claims? My S-Corp got the refund for 2020-2021 (about $62k), and I'm working on the amendments now, but I'm hearing horror stories about aggressive audits specifically targeting ERTC. I'm reducing the wage expense by the full amount as others have said, but I'm worried about whether our original claim will be scrutinized. We had a 37% revenue drop in the qualifying quarters, so I think we're solid, but these rumors about audits have me nervous.

I went through this exact same situation with my S-Corp last year! The key thing to remember is that you reduce wage expenses by the FULL ERTC amount you received (minus any interest). This includes both the refundable and nonrefundable portions. When I was doing my amendments, I made the mistake initially of only reducing by the refundable portion, but my CPA caught it and explained that the IRS considers the entire credit as essentially reimbursing wages you already deducted. You can't get a tax benefit twice for the same expense. Make sure you're amending the correct tax years - so if you got credits for 2020 Q2-Q4 and 2021 Q1-Q3, you'll need separate amended 1120S forms for each year. Also, don't forget that these wage expense reductions will flow through to your K-1 and affect your personal return too. Good luck with getting everything sorted before your accountant gets back! Having all your documentation organized will definitely make that meeting go much smoother.

Think of the 'still processing' message like a waiting room at a doctor's office. You're in the building, but not yet with the doctor. Your return is like a patient in that waiting room - it's in the IRS system, but not actively being reviewed by an agent yet. Have you tried checking your tax transcript instead? Sometimes it shows more detailed status information than the WMR tool, similar to how a nurse might check your vitals before the doctor sees you.

I've been dealing with this same situation for about 12 weeks now. Filed my amended return in December to claim some missed deductions, and it's been stuck on "still processing" ever since. What I've learned from calling the IRS (after multiple 3+ hour wait times) is that the message really is just a generic placeholder. The agent told me my return is actually in their "Error Resolution System" which handles all amended returns, and they work through them in the order received. She couldn't give me a specific timeline but confirmed it was moving through their system normally. The frustrating part is that unlike regular returns where you get status updates, amended returns basically stay silent until they're done. I've started checking my transcript weekly instead of the "Where's My Amended Return" tool since it sometimes shows processing codes before the online status changes.

Small tip for J1 physicians: when filling out Form 8843 line 4, I learned from my tax advisor that it's helpful to be specific about your J1 category. So instead of just "J-1, 01/15/2023" you might want to write "J-1 Alien Physician, 01/15/2023" to be extra clear. Also, make sure you're keeping track of all your entry/exit dates if you travel internationally during your program. This becomes really important for calculating your substantial presence test in future years!

Just wanted to add my experience as someone who went through this exact same confusion last year! For Form 8843 line 4, I ended up putting "J-1, 06/12/2022" (using my actual entry date) and it was accepted without any issues. One thing that really helped me was creating a simple timeline of all my entries and exits from the US since starting my J1 program. Even though line 4 only asks for the initial entry date, having that complete record made filling out the rest of the form much easier and helped me understand my substantial presence test status. Also, don't forget that as J1 physicians, we're considered "exempt individuals" for our first two calendar years in the US for substantial presence test purposes, which is different from other visa categories. This status affects not just Form 8843 but also how you calculate your tax residency status going forward.

One thing nobody's mentioned yet is state tax considerations. I'm a Brazilian with a Wyoming LLC and discovered that even though I don't have federal tax filing requirements as a non-resident alien (beyond the Form 5472 already mentioned), some states might still require filing. Wyoming is great because there's no state income tax, but if you formed your LLC in a state with income tax, you might have state filing requirements even without US-source income.

This thread has been incredibly helpful! I'm in a similar situation as a Canadian citizen with a Delaware LLC (mistake on my part - should have gone with Wyoming!). Just wanted to confirm something based on what I'm reading here: if I'm providing digital marketing services to US clients entirely from my home office in Toronto, I would use W-8BEN-E and NOT claim any effectively connected income, correct? My services are performed 100% remotely with no US physical presence. Also, the Form 5472 requirement is news to me - I've been operating for 8 months and had no idea about this filing obligation. Is there any relief for reasonable cause if you genuinely didn't know about the requirement? That $25k penalty is absolutely terrifying for a small business owner. Thanks to everyone who shared their experiences - this is exactly the kind of real-world guidance that's impossible to find in IRS publications!

The enforcement reality is that the IRS has audited exactly ONE church for political activities in the last decade due to budget cuts and the special church audit rules. Churches know this and that's why you see more blatant political activity. Unless something changes with IRS funding or Congress modifies the law, don't expect much enforcement regardless of what the tax code says. Your best bet is public pressure and media attention if you see violations, not expecting the IRS to step in.

This is really eye-opening. I had no idea about the Church Audit Procedures Act creating those extra barriers for IRS investigations. It explains why I've seen some pretty obvious political endorsements from pulpits in my area with seemingly no consequences. The fact that they've only audited ONE church in the last decade despite hundreds of complaints really shows how toothless this enforcement has become. It's frustrating because the Johnson Amendment seems like it should be straightforward - stay out of candidate endorsements or lose your tax exemption - but the reality is much more complex. @Giovanni Martello makes a good point about public pressure being more effective than expecting IRS action. Maybe that's the real deterrent these days - the potential for bad publicity rather than actual tax consequences.