August 8, 2022

Employee retention credit: SMEs and tax breaks are billions minus

I was finally able to travel on business and had the opportunity to hear from public accounting firms, SME owners, and managers of tax-exempt organizations across the country about their work and growth prospects.
Most of the news is exciting, because tax-exempt companies and agencies want to weather the economic storm caused by the pandemic. However, it is shocking how many commercial companies (usually CPAs) and tax-exempt organizations do not use the Employee Withholding Credit (“ERC”), designed to help tax-exempt companies and organizations keep their doors open and in business. these difficult situations Maintain employment during the economic period, or better develop and expand (and create more employment opportunities).
The failure of business owners and tax-exempt managers to use ERC is due to a fundamental misunderstanding and confusion about credit. The Congressional Tax Committee (JCT) rated the ERC for providing approximately $ 80 billion in temporary tax benefits for small and medium-sized businesses and tax-exempt organizations. In light of what I have heard, I am concerned that business owners and tax-exempt managers will not consider whether they are eligible for ERC, leaving billions of dollars on the table.
I have written before about the top ten mistakes made by business owners and their consultants in ERC, but now I realize that the main problem is that business owners and tax exempt managers (and many CPAs) do not understand that goal Congress intends to spend the $ 80 billion tax credits to complete.
ERC is about work
ERC is about work. Incentive measures are put in place to help tax-exempt businesses and institutions keep jobs and keep jobs, but more importantly, increase and expand jobs. Congress passed the ERC not just to help tax-exempt businesses and institutions frustrated by the pandemic. However, Congress also hopes to support and assist tax-exempt businesses and agencies that find ways to maintain or create new jobs during the pandemic. When Congress issued an $ 80 billion check to ERC, it was to help create jobs across the board, create jobs through troubled businesses, businesses that move on water create jobs, and businesses that have the luck to advance creates jobs. For Congress. It’s all about work.
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ERC has expanded
One source of confusion or uncertainty regarding ERC is that since the first implementation in the spring of 2020, people’s understanding of the law is out of date. The ERC has expanded and expanded significantly since it was first created. As part of the 2020 COVID19 Relief Act in the spring of 2020, the same legislation includes the Salary Protection Program (“PPP”) loan program (the PPP loan program has received the most attention and is considered the same as CKD). Since the spring of 2020, the ERC has been extended and expanded twice, making it more generous (and easier) for businesses and tax-exempt businesses to qualify. This is not your grandmother’s ERC. Now every employee can get up to $7,000 in credit per quarter for the entire year of 2021, and friendly rules for interacting with PPP loans.
ERC – The Second Way to Qualify
I have repeatedly found that business owners, tax-exempt managers, and certified public accountants mistakenly believe that businesses must reduce their income by 50% to qualify; that’s not true. There are two different ways to score the income test; or, prove if your business or tax exemption is subject to government orders (including partial or total closure due to federal, state, municipal, county, or other local government orders). in a more than nominal impact on the operations of your business or tax-exempt entity. (Note: In response to the pandemic, more than 10,000 federal, state, municipal, county, or other local government orders have affected businesses.)
So, while reducing revenue is one way to qualify for ERC, in our own work, we’ve seen hundreds of tax-exempt businesses and organizations qualify for ERC because they meet the alternate test: impact on operations rather than nominal is affected by government orders (including partial or full government shutdowns). The IRS has issued a 102-page notice on how to qualify, which is very helpful. Key: Immediately record in detail how your tax-exempt business or organization is eligible for ERC.
Which tax-exempt companies/companies are good candidates for ERC? In Chapter
, we found ERC-qualified board companies and tax-exempt companies in various industries, including manufacturers; construction; engineering; architecture; dentistry; doctors; hotels and restaurants; churches; schools; beauty salons; agriculture; food and Drinks; hospitals; charities. Even for very small or tax-exempt companies, the savings are considerable.
is just to give you a sample; I’ve seen: 1) a food and beverage company with 317 employees received a credit of US $ 1.03 million in the first quarter of 2021; 2) a dental laboratory with 17 employees in 2021 Received a credit of US $ 60,000 in the first quarter;
3) The construction business with 425 employees received a loan of US $ 1.61 million in the first quarter of 2021; and 4) Agricultural food company, 33 employees, first in 2021 $ 123,000 in credit for the quarter. For all these companies, credit is very important to maintain jobs, maintain jobs and create new jobs – good news for workers. As Congress expected.
As far as I know, due to the publicity surrounding the program, many businesses have avoided PPP loan programs. For those who care about being the center of attention,

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