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Paul Carelis: Alright, so we’ll go ahead and get started, thank you very much for joining us today for this educational and informational webinar.
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Paul Carelis: topic of today’s session will be the employee retention tax credit program updates maximizing your credit and minimizing turnaround times so.
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Paul Carelis: This is something, those of us here at MP, have been working feverishly on over the last several months as the program was expanded to help additional businesses.
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Paul Carelis: we’ve had great success assisting many businesses, including those within your industry realized sometimes thousands or 10s of thousands of dollars in employee retention tax credit so.
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Paul Carelis: just want to make sure everyone here in the Association had a proper understanding of the program and that if it’s something that they may be eligible for.
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Paul Carelis: That they are researching and determining their eligibility and, hopefully, taking advantage of these what can often be very lucrative credits.
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Paul Carelis: Just a quick hit about us here at MP, we are a full service human capital management HR and payroll provider.
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Paul Carelis: Work with clients throughout the country again to help them with their human capital management their payroll and their HR advisement needs.
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Paul Carelis: and quick hit about the the association here a nonprofit corporation dedicated to promoting quality service and management.
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Paul Carelis: And the ground transportation industry, the Member companies provide private ground transportation services throughout New England.
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Paul Carelis: They are key and leading members of the industry and adhere to the industry’s highest standards, so a very proud partner of us here at amp T we enjoy working together.
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Paul Carelis: For things such as today’s session.
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Paul Carelis: My name is Paul Cornelis I will be the presenter today I am the Vice President of HR and client services over at MP.
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Paul Carelis: been at MP for about eight years now and in the industry for for quite a bit longer working with businesses of all shapes and sizes to help them with their their HR needs.
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Paul Carelis: So the things we hope to cover and accomplish today we’ll be talking about eligibility for the employee retention tax program and specifically.
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Paul Carelis: How the programs differ between the.
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Paul Carelis: rtc.
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Paul Carelis: review some key definitions, to make sure we’re all talking the same language here.
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Paul Carelis: we’ll talk about irs guidance, which has helped to kind of clarify some of the burning questions that many businesses and, frankly, that we had.
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Paul Carelis: To that kind of had us first holding off on doing any filing of these credits, just to make sure we were doing it the right way, because the initial the initial guidelines were quite vague, but the irs in pieces has provided further clarification, which has helped quite a bit.
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Paul Carelis: we’ll review some Frequently Asked Questions some potential scenarios.
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Paul Carelis: will go over some of the key facts and figures.
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Paul Carelis: And then.
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Paul Carelis: Talk about how how you may be able to take advantage of this program if you haven’t already.
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Paul Carelis: If you do have any questions feel free to use the Q amp a feature here within zoom be happy to to try my darndest to answer any questions live if there’s something that that stumps me be happy to do the the necessary research and get back to you.
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Paul Carelis: Okay, so how did the rtc all come about.
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Paul Carelis: First things first the rotc program was born out of the very first stimulus bill.
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Paul Carelis: Back in I believe April or May of last year.
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Paul Carelis: The reason why we weren’t talking about it, then, but we’re talking about it now is because at the time that it was originally passed.
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Paul Carelis: The regulation stated that businesses could either do a paycheck protection program or a PPP loan or do these employee retention tax credits, they could not do both so the vast majority of businesses went the PPP route.
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Paul Carelis: did their pvp loans and kind of forgot about this, because they weren’t eligible.
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Paul Carelis: that’ll change with the second stimulus bill, known as the tax payer certainty and disaster, tax relief act of 2020.
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Paul Carelis: So this bill was passed at the very, very end of 2020 late December of last year.
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Paul Carelis: And, among other things, and why why it’s relevant to today’s discussion is that.
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Paul Carelis: It eliminated the disqualification of PPP borrowers from also participating in the rtc so very significant.
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Paul Carelis: What this bill did was say that you can take advantage of both programs, provided that.
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Paul Carelis: You don’t try to claim retention credits on wages that you paid for with pvp dollars, so that was that makes things a little bit tricky in the calculations, but something that we’re familiar with and know how to work around, but it is important to note that.
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Paul Carelis: While you are seemingly eligible for both programs if you meet the other requirements, and you can take advantage of both just have to make sure you don’t double dip, so to speak.
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Paul Carelis: But among the other things that the stimulus bill provided was it created a program for the first two quarters of this year, the previous bill only did he rtc for 2020 also expanded the eligibility in a couple of key ways.
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Paul Carelis: And then it also made advanced payments available, which is kind of a moot point at this stage but we’ll get into that in a little bit.
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Paul Carelis: So this program open it up for pvp borrowers and also open up the program with some different rules and more lenient rules for 2021 first and second quarter.
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Paul Carelis: Fast forward to middle of this year, President Biden past the American rescue plan act or arpa believe in April of this year.
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Paul Carelis: And that also had some significance when it came to how the rtc program would work, so, in addition to having the program for quarter one quarter to have this year, our but also extended the program into q3 and Q4 now it is very important to note.
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Paul Carelis: All the slides that that you’ll see today.
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Paul Carelis: I left them untouched.
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Paul Carelis: Based on what’s what’s factual as of today, that being September 29.
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Paul Carelis: The infrastructure bill that you’ve probably heard about that’s being debated in Congress, as we speak, does currently having a provision in it that would cancel er TC for Q4 so.
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Paul Carelis: This doesn’t affect being able to retroactively claim the credits for 2020 or the first three quarters of this year, should you be eligible.
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Paul Carelis: But it would prevent any claims of he rtc credits for any wages paid in Q4 of this year so as of right now it’s looking somewhat likely that’ll that that will be on the chopping chopping block.
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Paul Carelis: But there is still a lot of negotiating going on within the infrastructure bill and so several other pieces of legislative action that that could tip the scales, one way or the other, so again, as of today, the waning days of q3 Q4 etc, is still in place but.
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Paul Carelis: There is a fairly good likelihood that it will be canceled.
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Paul Carelis: That said, the American rescue plan act did also create what’s called the severely distressed category, so this allows businesses who are in q3 and Q4 of this year.
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Paul Carelis: Suffering still suffering from a 90% or greater drop in revenues, as compared to 2019.
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Paul Carelis: Some additional credit opportunities to to obtain more credit, even if they’re considered a large employer.
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Paul Carelis: Not too many of those, but there are several that fall into this category of recovery startup businesses so a recovery startup businesses defined as a business, who started February 15 of last year, or later.
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Paul Carelis: and has less than a million dollars in annualized revenues.
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Paul Carelis: Those businesses without otherwise being eligible are able to claim and the rtc credit in q3 and Q4 of this year.
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Paul Carelis: As of the way the infrastructure bill is currently written, even if they get rid of Q4 rtc for most businesses the recovery startup businesses will still have that available to them again that is subject to change that’s latest and greatest as of right now.
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Paul Carelis: opera did also give the irs a five year statute of limitations to review audit what have you any rtc submissions so you do want to make sure that if you file for employee retention tax credits that you keep all of your substantiation and other documents on file for at least five years.
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Paul Carelis: The bill also did clarify that some other popular federal grant programs.
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Paul Carelis: least one use for purposes of funding payroll would be wages that would be excluded from the rtc most commonly restaurant revitalization grant and the shattered venue grant.
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Paul Carelis: For those of you who have used coven sick pay, whether it be FF CRA leave or arpa covert sick leave.
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Paul Carelis: Those wages would be excluded from the rtc as well.
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Paul Carelis: Okay, in terms of irs guidance it’s common in bits and pieces.
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Paul Carelis: bits may not be the right word, because a lot of times it’s an 800 page or 200 page document.
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Paul Carelis: But for all intents and purposes, as it hasn’t always been as timely as we had hoped, like many things with the irs in this program.
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Paul Carelis: They have provided some some solid information and some good examples to give us fairly good clarity about when something may be eligible or not.
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Paul Carelis: So the irs has has provided quite a bit of clear guidance on what qualifies as a suspension of operations so go into the eligibility.
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Paul Carelis: In a moment, but one of the pathways to eligibility is if your business suffered a suspension of operations, and what that really is is when a governmental order, whether it be federal state or local.
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Paul Carelis: causes you to suspend your operations or her have more than a nominal effect on your operations.
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Paul Carelis: So you’ll see the bullet here the 10% rule and.
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Paul Carelis: What what that’s in there for is because the irs has defined more than nominal when when we’re determining whether.
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Paul Carelis: Whether it’s a special operations is more than nominal is if it has more than 10% impact on revenues or staffing so to give you a better idea.
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Paul Carelis: And certainly we can talk offline if there any specific to your industry or your organization, but to use some more kind of black and white examples.
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Paul Carelis: We work with a lot of breweries here at MP, so we have some who do both take out sales they sell six packs or growlers what have you and then also have a tap room where people could come to the bar and sample beer have have some other breweries beverages.
00:14:05.340 –> 00:14:17.430
Paul Carelis: And, in some cases, the takeout business more than made up for the loss of the tap room, so they don’t qualify based on loss of gross receipts which we’ll talk about later, but.
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Paul Carelis: Because the suspension of operations being that government regulations prevented for a time.
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Paul Carelis: For this breweries customers to be able to sit at the bar and they couldn’t serve customers drinks within the establishment and that accounted for more than 10% of their business.
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Paul Carelis: Even though that the takeout sales more than made up for it, that counts as his suspension of operations similarly in the restaurant industry when restaurants were forced to limit the amount of dining customers or the percentage of dining customers, they could have.
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Paul Carelis: That also counted.
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Paul Carelis: For an example of something that the irs has said doesn’t count, when we look at a retail let’s say a grocery store that was considered an essential business and allowed to remain open.
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Paul Carelis: They did have limits on the amount of people that can be in the store at a time, but the irs has gone on record and stating that, if this that if the.
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Paul Carelis: The effect on the business is that people had to wait for a short time outside of the store until the safe number of customers was reached than that does not count with the suspension of operations.
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Paul Carelis: So, again, there is still quite a bit of Gray area within the guidance, but we do at least have a framework and several scenarios to work off of.
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Paul Carelis: The irs did also clarify how to go about claiming the credits So those are most commonly done on a form 941.
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Paul Carelis: When claiming it for prior quarters, it has to be applied to when the wages were paid so essentially we’re filing a 941 X or an amended 941.
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Paul Carelis: Because the rtc is a credit on employee or social security tax, it is a refundable credit so oftentimes the amount of the credit will exceed what was actually paid and social security tax, but where it is refundable the business will get a check for that true amount of the credit.
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Paul Carelis: There have also been a lot of questions about eligibility for owners, so the current rule and the irs guidance on the rule is that.
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Paul Carelis: owners who are more than their own 51% or more of a business are excluded and their family members are also excluded from eligibility.
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Paul Carelis: But if you have two friends who each own 50% or three friends who each own a third those owner wages can be included.
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Paul Carelis: If it’s a husband and wife or relatives that own half and half and those generally have to be excluded because those ownership stakes are.
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Paul Carelis: have to be combined, but for folks who own less than 51% of a business those wages can be counted if you’re a 51% owner or greater or relative of such.
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Paul Carelis: you’re excluded.
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Paul Carelis: There are also aggregation rules, so when there is a controlled ownership group so let’s say you know you own a few different companies and for irs purposes is considered a control group for versus of kind of your employees and all that.
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Paul Carelis: You do have to count those all together or aggregated the nice thing about the aggregation rules is when it comes to the suspension of operations, so if you are a control group, while you have to aggregate your employee counts and your revenues and all that fun stuff.
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Paul Carelis: If one of your locations, or one of your businesses is subject to a sufficient governmental order that qualifies as suspension of operations, you can apply that across the entire organization and qualify.
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Paul Carelis: The entire business based on that.
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Paul Carelis: They did also clarify that, in order for something we consider governmental orders when it comes to that suspension of operations that it does have to be something formal.
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Paul Carelis: a mandate from a governor a law that was passed a clear directive from a government agency, it can be something that a recommendation let’s say that was mentioned during a press conference or something like that.
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Paul Carelis: So.
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Paul Carelis: To further solidify the eligibility requirements again the formal definition of the suspension is operations that were fully or partially suspended during any calendar quarter.
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Paul Carelis: To two orders from an appropriate governmental authority limiting commerce travel or group meetings to to coven 19.
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Paul Carelis: or so it’s either or you don’t have to me both.
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Paul Carelis: Experience a significant decline and grocery seized during the calendar quarter.
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Paul Carelis: So when we talk about sufficient declining gross receipts.
00:19:00.150 –> 00:19:04.980
Paul Carelis: As well as some other things again the programs really differ from 2020 to 2021.
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Paul Carelis: So first let’s talk about the receipts decline.
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Paul Carelis: So regardless of which year you’re trying to claim credits and you’re always comparing against 2019 that’s always the measure measure that you want to use.
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Paul Carelis: So, to be eligible for employee retention tax credits in 2020 when comparing same quarters against 2019 you have if you don’t meet the suspension of operation, then you’re looking to be eligible by receives the client that the client has to be at least 50%.
00:19:39.750 –> 00:19:46.350
Paul Carelis: When you’re looking to qualify and 2021 the client receives against 2019 only has to be 20%.
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Paul Carelis: And 20 the 2021 program also has what’s known as the proceeding quarter rule so let’s say you’re trying to qualify for this quarter, and right now quarter three based on receipts decline.
00:20:00.390 –> 00:20:11.220
Paul Carelis: You basically have two quarters that you’re allowed to look at you can either look at quarter three gross receipts and compare those to quarter three of 2019 or you can use a receding quarter rule.
00:20:12.270 –> 00:20:28.140
Paul Carelis: And look at quarter to have this year against quarter two of 2019 so essentially in 2021 if you qualify because of gross receipts in a given quarter you automatically qualify for the following quarter as well, even if your revenues shoot up dramatically.
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Paul Carelis: The amount of the credit also differs depending on which year’s program you’re looking at, so the.
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Paul Carelis: Wage based limit is always $10,000 so you’re always you can never claim the credit on more than $10,000 in any employees wages, but the amount of the credit in 2020 is 50% or up to $5,000 per employee.
00:20:55.710 –> 00:21:05.340
Paul Carelis: versus in 2021 the maximum credit is 70% so you can theoretically get up to $70,000 seven gives me $7,000 per employee.
00:21:06.210 –> 00:21:14.130
Paul Carelis: The other important differentiator is that the 2020 program is kind of all chorus combined the 2021 program is really.
00:21:14.790 –> 00:21:28.560
Paul Carelis: Three programs or four programs, depending on the fate of fourth quarter in one so in 2020 you’re looking at all the quarters together and claiming no more than $5,000 per employee for the entire year.
00:21:29.850 –> 00:21:35.220
Paul Carelis: In 2021 that script gets flipped flipped and you can look at each quarter individually so.
00:21:36.570 –> 00:21:43.830
Paul Carelis: If an employee has $10,000 in wages within a quarter let’s say quarter one you can get a $7,000 retention credit in that quarter.
00:21:44.220 –> 00:21:57.120
Paul Carelis: If they then have $10,000 in wages in quarter to another seven so should fourth quarter stay on the books, you could be looking at up to $28,000 and employee retention credits for a $40,000 or more year employee.
00:22:00.900 –> 00:22:21.330
Paul Carelis: In terms of the time periods when you can be looking at wages and claiming the credit for 2020 the first date is march 13 through the end of the year and for 2021 is January 1 through either tomorrow September September 30 or December 31 depending on what happens in Congress.
00:22:29.490 –> 00:22:32.070
Paul Carelis: Alright, so for some key definitions again.
00:22:34.290 –> 00:22:38.790
Paul Carelis: The wage period is march 13 through the end of this quarter or the end of this year.
00:22:40.560 –> 00:22:51.750
Paul Carelis: Qualified wages are considered salaries commission’s tips or any other similar compensation that would be subject to fica tax or wages that are separated social security medicare taxes.
00:22:54.510 –> 00:22:58.830
Paul Carelis: And then, when you’re calculating gross receipts, to see if you had a sufficient declined to be eligible.
00:22:59.520 –> 00:23:06.210
Paul Carelis: You include all total sales and all amounts received for services, including interest dividends friends royalties and annuities.
00:23:07.050 –> 00:23:15.870
Paul Carelis: So it’s really the kind of a top line number you don’t factor in you know the expense of doing business or supplies or anything like that it’s truly gross receipts.
00:23:20.760 –> 00:23:22.740
Paul Carelis: So, to talk about that a little bit further.
00:23:25.980 –> 00:23:37.890
Paul Carelis: The way that this works is if you’re looking to qualify in 2020 based on gross receipts you look for the first quarter in 2020 where your gross receipts dipped by more than 50% when compared to that same quarter in 2019.
00:23:38.940 –> 00:23:40.620
Paul Carelis: You continue to be eligible.
00:23:41.970 –> 00:23:46.230
Paul Carelis: Until you have a quarter, where the decline was less than 20%.
00:23:48.330 –> 00:23:59.250
Paul Carelis: You still would qualify in that quarter, where the revenues rose to above a 20% drop it would just be the calendar quarter following that you would then lose eligibility.
00:24:01.650 –> 00:24:03.180
Paul Carelis: So in this scenario here.
00:24:05.460 –> 00:24:06.180
Paul Carelis: we’re a.
00:24:08.220 –> 00:24:18.900
Paul Carelis: let’s say a company dropped 52% in quarter to they were to qualify there in quarter three their revenues pick right back up and they were only down 17%.
00:24:20.010 –> 00:24:25.890
Paul Carelis: They were still qualify, be able to claim in that quarter, but in the following quarter, because their revenues rose.
00:24:27.750 –> 00:24:30.420
Paul Carelis: And we’re less than 20% excuse me drop.
00:24:31.770 –> 00:24:37.980
Paul Carelis: They know they would not qualify in Q4 of 2020.
00:24:42.780 –> 00:24:48.420
Paul Carelis: Alright, so let’s talk about some frequently asked questions again we’ve been working with with many, many businesses on this program.
00:24:49.530 –> 00:24:57.030
Paul Carelis: And there are a lot of a lot of questions that businesses understandably have this is a brand new program and oftentimes even accountants aren’t aren’t quite familiar with it.
00:24:57.720 –> 00:25:10.080
Paul Carelis: The timing of it was very tough on them this all past again at the very end of December last year, so they were up to their eyeballs and urine taxes and all that stuff so this cut them off guard it caught the irs off guard.
00:25:12.120 –> 00:25:14.700
Paul Carelis: There have been certainly been some some messy.
00:25:16.140 –> 00:25:19.380
Paul Carelis: Excuse me some some messy aspects to this no doubt.
00:25:23.250 –> 00:25:37.830
Paul Carelis: So I you know I think the burning question is that we get from client that we work with is how long is it going to take me to get this money, and unfortunately it’s generally a long way, especially if you are.
00:25:38.940 –> 00:25:41.850
Paul Carelis: Claiming for 2020 or the first two quarters of this year.
00:25:43.140 –> 00:25:43.830
Paul Carelis: Because.
00:25:46.440 –> 00:25:49.740
Paul Carelis: The claim that you’re making is going to be an amended return.
00:25:51.210 –> 00:26:06.840
Paul Carelis: And the irs does not currently allow amended returns to be filed for at least 940 amendment 940 ones to be filed electronically, they have to be done on paper, so, as you can imagine, this program has been pretty popular.
00:26:08.370 –> 00:26:09.060
Paul Carelis: and
00:26:10.230 –> 00:26:21.420
Paul Carelis: The irs is just absolutely inundated with returns and trying to get through those they originally only had one office dedicated to processing these they have made some improvements.
00:26:22.560 –> 00:26:28.350
Paul Carelis: But once the employee retention tax credit is realized and filed.
00:26:29.280 –> 00:26:41.250
Paul Carelis: A business can reasonably expect to wait anywhere from four to seven months before they have a check in hand from the irs, unfortunately, they are working to improve that we have seen more on the side lately of four months, rather than seven but.
00:26:43.260 –> 00:26:44.760
Paul Carelis: They are still backed up quite a bit.
00:26:46.620 –> 00:26:52.170
Paul Carelis: The best piece of advice I could give is, if you do in indeed determine that you’re eligible and third quarter.
00:26:53.550 –> 00:26:57.420
Paul Carelis: You want to work with your payroll provider, whether that be us or anyone else.
00:27:00.810 –> 00:27:15.630
Paul Carelis: To make sure that if you can you get your credit amount on your quarter three 941 so the regular 941 that your payroll company would be filing anyway, because that will greatly speed up the process on the time of you getting your check.
00:27:16.740 –> 00:27:26.190
Paul Carelis: So again, an amended return could take anywhere from four to seven months for you to get paid on if you can get it on your 941 within the next week or two.
00:27:28.200 –> 00:27:40.560
Paul Carelis: You probably be more likely looking at six to eight weeks before you have a check in hand so obviously a much faster process, because those are he filed they don’t have to go through the amendments department, the irs it’s just a much faster process.
00:27:50.070 –> 00:27:56.310
Paul Carelis: here’s another question that comes up those an employer need to prove that a significant decline and gross receipts is related to coven 19.
00:27:56.850 –> 00:28:10.080
Paul Carelis: So a lot of businesses, going to various disruptors are various reasons why they would have a dramatic decline in in sales So the answer to this is no with no legislation there’s no requirement that.
00:28:11.700 –> 00:28:17.970
Paul Carelis: or any need to explain why there was a declining crush receipts, so it does not necessarily have to be related to coven 19.
00:28:26.190 –> 00:28:39.300
Paul Carelis: Okay, so something I didn’t touch on too heavily in the chart that I referenced earlier was large employer versus small employer so maybe i’ll quickly go back to that.
00:28:42.240 –> 00:28:47.880
Paul Carelis: So you’ll see here the definition of large employer varies from 2020 to 2021.
00:28:49.200 –> 00:28:53.190
Paul Carelis: And this is significant because if you are determined to be a large employer.
00:28:54.600 –> 00:29:14.790
Paul Carelis: Health limits which wages, you can count for your TC purposes, so if you do fall under the large employer category you’d be limited to claiming etc credits on wages and expenses paid to employees who weren’t performing work, so what that most commonly is is when employees who are furloughed.
00:29:15.900 –> 00:29:18.870
Paul Carelis: If they receive any type of payment during their for a low or.
00:29:19.920 –> 00:29:23.040
Paul Carelis: The cost of their health insurance would would be able to be counted.
00:29:24.090 –> 00:29:26.370
Paul Carelis: In terms of how that.
00:29:28.170 –> 00:29:39.420
Paul Carelis: Employee count is determined and defined again you’re looking at at 2019 and you’re you’re only counting employees who work 30 or more hours per week in 2019.
00:29:40.590 –> 00:30:03.060
Paul Carelis: You don’t have to it’s not like the affordable care act, we have to count to 15 hours a week employees as one full time equivalent you don’t have to worry about equivalent you just looking at actual full time employees and what that number was in 2019 so.
00:30:10.410 –> 00:30:23.310
Paul Carelis: Another question, what if my credit that’s calculated exceeds my tax liabilities, this is a refundable in advance of all tax credit, so you will receive the full amount of the credit, even if it’s more than what you actually paid in social security tax.
00:30:27.930 –> 00:30:29.790
Paul Carelis: We touched on this a bit earlier but.
00:30:32.190 –> 00:30:35.280
Paul Carelis: You can never hit it home enough, this is really one of the key.
00:30:36.300 –> 00:30:42.900
Paul Carelis: key aspects of the program if more than a nominal portion of a businesses operations or suspend a very governmental order.
00:30:43.440 –> 00:30:52.590
Paul Carelis: Meaning more than 10% of businesses function so again, if there is any question about that feel free to reach out to us, we can talk through it together and hopefully help determine.
00:30:54.780 –> 00:30:58.830
Paul Carelis: Probably doesn’t apply too much within this industry, but for others it has.
00:30:59.880 –> 00:31:14.460
Paul Carelis: Where a business wasn’t necessarily themselves fully or partially suspended because of government order, but if one of their raw supply channels was subject to shut down or suspension of operations, because of governmental order.
00:31:16.140 –> 00:31:17.100
Paul Carelis: That can count as well.
00:31:23.610 –> 00:31:26.430
Paul Carelis: So again, these figures are subject to change.
00:31:29.910 –> 00:31:34.290
Paul Carelis: But again, up to $5,000 per employee in 2020.
00:31:35.580 –> 00:31:45.720
Paul Carelis: Up to $28,000 should fourth quarter program stay alive and up to $33,000 in combined E rtc available per employee.
00:31:51.240 –> 00:32:01.380
Paul Carelis: So, as I said, we’ve held businesses and all of our various industries on this, I think we’re up to about $20 million collectively in credits we’ve been able to help clients.
00:32:02.460 –> 00:32:12.090
Paul Carelis: REACH, but in terms of how to do this again at least how we do it, or how you want to go about doing it, or whoever you decide to work with for the issue, do you determine that you’re eligible.
00:32:13.290 –> 00:32:19.860
Paul Carelis: You want to gather up all of your payroll data your gross receipts any proof, you may have of suspension of operations.
00:32:21.240 –> 00:32:33.150
Paul Carelis: it’s also really important that you, you gather up and have a good handle on your pvp data if you did receive up loans, because, again, you do have to exclude those time periods, where you use PPP for.
00:32:34.470 –> 00:32:45.390
Paul Carelis: payroll purposes, important to note under the pvp program you’re required to spend at least 60% of alone on payroll costs should you have.
00:32:46.680 –> 00:32:48.210
Paul Carelis: Other eligible expenses.
00:32:49.740 –> 00:33:04.860
Paul Carelis: Those can account for up to 40% and the more that you can do that, the more advantageous it’ll be in terms of growing your employee retention tax credit because, even if you say use the 24 week covered period for your pvp loan.
00:33:06.030 –> 00:33:18.750
Paul Carelis: If you use the payroll costs portion or or spend it on payroll and less than 24 weeks, you don’t have to exclude those entire 24 weeks from the rtc only the actual wages that you paid with PPP funds so.
00:33:19.590 –> 00:33:29.820
Paul Carelis: A lot of times for many businesses that will be shorter than the 24 weeks it might be eight weeks or 12 weeks or even 20 weeks, but it does allow more time for retention credits to be realized.
00:33:34.020 –> 00:33:39.240
Paul Carelis: But once you’ve excluded that PPP you want to do your calculations and then again.
00:33:40.470 –> 00:33:44.520
Paul Carelis: These are realized by by following a 941 or an amended 941.
00:33:50.970 –> 00:34:05.520
Paul Carelis: So we do have decision trees available, we can make these available to the association that just kind of help you walk through your situation to determine whether or not your business or anyone you work with may be eligible for retention credits.
00:34:09.120 –> 00:34:20.100
Paul Carelis: So, in terms of top 10 things to take away and to know to feel like you have a good handle on this fresh you want to understand those key differences between the 2020 and 2021 programs.
00:34:21.000 –> 00:34:27.300
Paul Carelis: You want to calculate your employer size and know what it means you want to have a good understanding of your gross receipts for.
00:34:29.070 –> 00:34:34.440
Paul Carelis: q2 q3 Q4 of last year, and all the quarters of this year, as well as all quarters of 2019.
00:34:36.090 –> 00:34:45.780
Paul Carelis: You want to understand whether or not the impact that government regulations had on your business during the height of covert would qualify as a suspension of operations.
00:34:47.580 –> 00:34:53.490
Paul Carelis: You want to understand whether or not you need to exclude any owners or family of owners from your calculations.
00:34:54.630 –> 00:35:00.390
Paul Carelis: You want to have a good understanding that you do need to aggregate multiple entities within a control group.
00:35:02.670 –> 00:35:08.310
Paul Carelis: You really want to understand how to maximize around your pvp long so again, if you have not yet filed for forgiveness.
00:35:09.810 –> 00:35:25.800
Paul Carelis: using up to 40% and other non payroll expenses, as part of your forgiveness application and then making sure you’re capturing time before and after your pvp lot to really maximize your credits you do want to make sure you keep all your documents on file for at least five years.
00:35:27.420 –> 00:35:35.880
Paul Carelis: Understand that this isn’t too good to be true it’s real and companies are are receiving some real money in the mail, as a result of this.
00:35:36.450 –> 00:35:52.350
Paul Carelis: And then, lastly, just just some patients when it comes to the irs stage they are working on it, but um it is taking a incredibly long time for them to process these, but what we do is we run irs transcripts that hopefully track the status of a refund it’s just taking a while.
00:35:55.830 –> 00:35:58.830
Paul Carelis: It looks like we did have a question come in, let me see here.
00:36:02.670 –> 00:36:04.530
Paul Carelis: If I qualify and quarter two.
00:36:05.580 –> 00:36:14.970
Paul Carelis: But in quarter three revenue is higher than the 2019 numbers, can I still qualify, yes, so if your qualification and your eligibility.
00:36:16.170 –> 00:36:27.960
Paul Carelis: was based on the gross receipts declined for quarter to you are allowed to use what’s known as the proceeding quarter rule, so if if your quarter to revenues were down by 20% more than 20% when compared to quarter to of.
00:36:29.220 –> 00:36:35.070
Paul Carelis: You do automatically qualify for quarter three as well, even if your revenues were up for question.
00:36:43.290 –> 00:36:46.320
Paul Carelis: In terms of other questions that have come up.
00:36:48.930 –> 00:37:05.250
Paul Carelis: It is important to make sure that, especially if during code you changed your business address or you moved or you close your offices in favor of a Home Office you do want to make sure that everything is filed the irs has your most current legal address.
00:37:07.530 –> 00:37:14.850
Paul Carelis: The reason for that is that there is not an option for a direct deposit of the rtc it does have to come in the form of a paper check.
00:37:15.660 –> 00:37:26.250
Paul Carelis: And that is me out to the address that they have on file, it seems like there are limits restrictions on forwarding of these checks, so we had we did have a an unfortunate incident or two where.
00:37:27.180 –> 00:37:36.300
Paul Carelis: A business didn’t move during the pandemic and the irs does not have that address change on file and so when the check was mailed to them and they get kicked back to the irs so.
00:37:37.590 –> 00:37:46.470
Paul Carelis: The last thing you want to do is delay these payments any further so do make sure if you have moved at the irs does have your current address on file it’s important because these will be coming as a paper check.
00:37:47.430 –> 00:38:00.540
Paul Carelis: Generally, what we’re seeing is that a letter is, at least for the amended ones and a letter is coming in the mail advising them that they that they qualified and that will be getting a credit and then a couple days after that the check then follows.
00:38:07.980 –> 00:38:07.980
Paul Carelis: Okay.
00:38:09.960 –> 00:38:14.370
Paul Carelis: I think everybody very much for their time should you have any questions.
00:38:15.660 –> 00:38:32.700
Paul Carelis: For us, you can always reach us at HR MP dash hr.com happy to answer your questions on on this or anything else again i’ll make sure will send out the decision tree to everyone, or send everyone who’s part of the association here another link to our hr.
00:38:35.340 –> 00:38:43.650
Paul Carelis: Electronic HR hotline where folks can submit questions via the web and get a response on any type of HR issues, you may be experiencing.
00:38:44.340 –> 00:38:58.620
Paul Carelis: great resource for the association here to help out with any sticky or compliance related questions you might have but again I thank you so much for your time and your partnership, and I hope you all, are able to receive some some big credits here Thank you so much.
VP of HR Services, MP
Organizations across all industries are qualifying for ERCs of thousands of dollars (and some over $1 million). In July, the ERC expanded eligibility for this refundable, advanceable tax credit. Join MP’s HR and payroll experts to get updated on the ERC and learn more about this program that provides significant pandemic aid.
Register for the webinar to:
- Find out new ERC eligibility categories
- Learn which restrictions are lifting and how they’ll impact eligibility
- Get proven strategies for maximizing credits
- Discover how to reduce turnaround times and receive funds faster