Is it too late to capture the Employee Retention Credit?

Written by Stephanie Cornejo. Updated Aug 29, 2022.

The Employee Retention Credit, also referred to as ERC, is a refundable payroll tax credit that businesses can receive on qualified employee wages and certain employee benefits beginning March 13, 2020, through December 31, 2021. The program was first introduced by the Coronavirus Aid, Relief and Economic Security (CARES) Act. It was signed into law during March 2020 to assist businesses that were impacted by the COVID-19 pandemic and to encourage businesses to keep employees on their payroll. Since its inception, the program has gone through many revisions with three different acts. The first being the Consolidated Appropriations Act, 2021 (CAA), enacted in December 2020, the second is the American Rescue Plan Act (ARPA), enacted in March 2021, and the third is the Infrastructure Investment and Jobs Act (IIJA), enacted in November 2021. The last act accelerated the end of the program from the initial date of December 31, 2021, to September 30, 2021, for most businesses. However, for wages paid by a Recovery Startup Business, the expiration date remains December 31, 2021.

Read More

No Good Deed Goes Unpunished – The Harsh Realities of Pandemic Fraud

Written by Anam Lotia. Updated Jul 20, 2022.

Even in crisis, there is wrongdoing. This is an unfortunate truth in the world, and the COVID-19 pandemic is no exception. Since the beginning of the health crisis in 2020, the world has faced numerous negative impacts related to health, education, and the economy. Here in the United States, to minimize the impact to the economy, the Federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Specifically, this new law sought to provide emergency financial assistance to help millions of impacted small businesses and American families get back on their feet, as well as stimulate the economy. Although created with good intentions, these relief packages and economic aid tools brought about individuals and businesses who took advantage, initiating pandemic fraud activity.

Read More

The CARES Act Cares about Non-Profits – Have you considered the ERC?

Written by Annette Fago. Updated Mar 30, 2022.

March 27th, 2022, marks the second anniversary of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), the $2.2 trillion economic stimulus bill that authorized the Employee Retention Credit (“ERC”). The ERC is a refundable payroll tax credit based on wages paid to employees at organizations that either (1) have been fully or partially shut down due to a government order OR (2) had gross receipts decline a certain percentage relative to gross receipts in the same calendar quarter of 2019.

Read More

COVID-19 Relief Bill Provides Favorable Changes to the Employee Retention Credit

Written by Ian Merwin. Updated Jan 12, 2021.

Signed into law on December 27, 2020, the Covid-19 relief bill contains a favorable update to the Employee Retention Credit (“ERC”). The Employee Retention Credit was one of the more successful components of the CARES Act, but there are several significant updates to the credit that are even more favorable for qualified businesses. Several updates can be seen below, along with a comparison to the credit terms under the CARES Act. Unless stated otherwise, the effective date of the provisions covered by the new law will be January 1, 2021.

Read More

PPP Loan Forgiveness and the R&D Tax Credit

Written by John Bohannon. Updated Dec 28, 2020.

Updated Dec 28, 2020

Officially signed into law on December 27th, the recent omnibus Covid-19 relief bill H.R. 133 reversed the Service’s previous stance regarding the deductibility of PPP-related expenditures. Among the bill’s voluminous provisions, section 276 (beginning on page 2004) makes clear that no deduction shall be denied as a result of a PPP loan’s forgiveness. Consequently, a taxpayer’s potential federal research credit will be unaffected as a result of the taxpayer’s utilization of a PPP loan and subsequent loan forgiveness. This protection is extended both to loans under the original Paycheck Protection Program as well as future loans to be granted under the bill’s expanded program.

Read More

A Tale of Two Tax Agencies During the COVID-19 Crisis: Federal giveth and California taketh away

Written by Ian Merwin. Updated Jul 16, 2020.

On June 29, 2020, the Governor of California, Gavin Newsom, signed into law the fiscal year 2020-2021 state budget, which included provision AB 85, limiting the ability of certain taxpayers to use net operating losses (“NOLs”) and specific business credits for the 2020, 2021, and 2022 tax years. Specifically, for tax years beginning on or after January 1,2020 and before January 1, 2023, taxpayers with a net business income or modified adjusted income of greater than or equal to $1 million will have their NOLs suspended during the period, and businesses will be capped at claiming $5 million in business credits per tax year.

Read More

The IRS and the Pandemic Highlights

Written by Charlotte Ochs. Updated Jul 7, 2020.

Since the beginning of the pandemic it has been a whirlwind of unprecedented economic impacts. With that came the Coronavirus Aid, Relief, and Economic Security (CARES) Act and a curtailment of enforcement actions by the Internal Revenue Service (IRS), including audits. Per the People First Initiative the IRS generally avoided launching new audits from April 1st through July 15th. This did not prevent the IRS from opening audits to protect the government’s interest in preserving statute of limitations. (See IRS, IR-2020-59) In a report released June 29th, National Taxpayer Advocate Erin Collins said that the IRS launched substantially fewer audits from April 1st to June 1st compared to the same period in 2019. The IRS launched 71% fewer Corporate audits, 79% fewer Partnership audits, and 65% fewer individual audits. In total across all types of examinations there was a 65% decrease during this time period. With July 15th approaching the assumption is that there will be an increase in audits launched. However, with the pandemic still in a critical state as numbers of COVID-19 cases rise it remains to be seen what will happen as things are more fluid and the rules of the game are constantly changing.

Read More

Paycheck Protection Program Flexibility Act

Written by Charlotte Ochs. Updated Jun 18, 2020.

During this time of unprecedented economic challenges faced by small businesses during COVID-19, rare glimpses of bipartisanship are encountered to assist small business with economic relief. Due to the economic challenges faced by small businesses the economic relief provided is in a constant state of fluidity. This has been the status quo for the Paycheck Protection Program (PPP). The President signed into law the Paycheck Protection Program Flexibility Act (PPPFA) to address the concerns voiced by the small businesses utilizing the program. The Congressional intent of the new law is to allow greater flexibility for business to use the PPP loans that was not provided by the initial short-term fix of the PPP set up under the CARES Act. This new law provides the following expansions and flexibility to address the issues created by the CARES Act – PPP, that was a band aid and not a comprehensive bandage when it was enacted.

Read More

Key Changes to COVID-19 Incentives Paycheck Protection Loan and Employee Retention Credit

Written by Charlotte Ochs. Updated May 11, 2020.

Life is in a constant state of flux right now with the COVID-19 virus. It has affected daily life and the economy. Congress has worked to provide economic stimulus programs such as loans and credits. The intent of Congress was to stimulate the economy and help employers maintain business and retain employees to alleviate the economic hardship caused by COVID-19. However, as is typical when trying to quickly stop the negative impact of a disaster, details get omitted from the legislation and key areas need clarification as we have seen recently with the Paycheck Protection Program (PPP) and the Employee Retention Credit. More specifically, with the PPP concerning the deductibility of expenses when payments were made with debt forgiven funds and with the Employee Retention Credit in determining whether employers could claim the Employee Retention Credit when the only payments made to furloughed employees was for their health care benefits.

Read More

WOTC 28-Day Application Processing Time - EXTENDED

Written by Stephanie Cornejo. Updated Apr 28, 2020.

The Department of Treasury and the Internal Revenue Service (IRS) released new guidelines and provisions under NOTICE 2020-23 in response to the COVID-19 pandemic.  These measures were intended to provide relief to taxpayers in the form of extensions to time-sensitive acts. Most notably under these provisions was the extension of the tax filing deadline to July 15, 2020.

Read More