ERC reduces otherwise deductible wages.  You need to reduce wage expense in the relevant year.  Perhaps you need to amend prior tax returns.

Perhaps  ?

I would insist on the amending, & probably disengage if the client refused.  And if the entity that received the ERC is a partnership/S-Corp there should also amended returns for the partners/shareholders.

The IRS did issue a notice that the penalties & interest could be waived on the tax due on these amended downstream returns - I don't remember the specifics.

Yes reduce wages in the year paid, 2020 and 2021.  Then new net income increase and amend related s corp  owner personal return too. 

Reduce wages or payroll tax expense?  

Thank you for reply

Reduce gross wages or payroll tax expense?

Thank you for reply.

Thank you

Perhaps.... because perhaps the original tax returns are currently being filed (late)  🙃