<p data-start="41" data-end="366">A client claimed ERC for 2020 and received the funds in 2023. They filed an amended return to reduce their wage expense for 2020. In 2024, the ERC claim for 2020 was disallowed, and the IRS assessed repayment. The client has made installment payments totaling $20,000, while the assessed liability is approximately $185,000.</p>
<p data-start="368" data-end="750">According to the IRS FAQ, it seems the client can increase their wage expense on the 2024 S-Corp tax return. However, my question is: since the client is cash basis and has only paid $20,000 toward the repayment, can they increase their wage expense by the full $185,000? They are making good faith payments, awaiting final IRS confirmation, but plan to accept the proposed changes.</p>