The U.S. Senate is expected to begin deliberations on the version of The American Rescue Plan Act of 2021 which was passed by the U.S. House of Representatives last Saturday, February 17, 2021, as early as today, Wednesday, March 3, 2021. Up to 20 hours of debate and votes on significant amendments are expected (the dreaded vote-a-thon). Senate Majority Leader Chuck Schumer (D-NY) has expressed confidence that the bill will be passed by the Senate this week.
Senator Schumer’s comments came after a virtual meeting among Senate Democrats and President Biden on Tuesday, March 2, 2021, during which the President urged his caucus to be willing to accept some amendments they may not like, and not to hold passage of the bill hostage.
We anticipate that the Senate will pass a bill somewhat different from the House’s submission, which will then require a second vote in the House. Democrats in both chambers are working to get the bill signed by President Biden before March 14, as the proposed relief includes an extension and an increase to the Federal unemployment insurance supplement, which is set to expire on that date.
- Stimulus checks – direct payments of up to $1,400 per individual.
- Federal unemployment assistance – the Federal supplemental payment of $300 per week will be increased to $400, and extended through August 21, 2021. Currently, over 11 million Americans are set to lose these benefits on March 14, 2021.
- Enhanced Child Tax Credit – the credit is increased – for one year – from its current $2,000 for children under the age of 18 to $3,000, and to $3,600 for children under 6.
- Education – additional funding for K-12 schools, higher learning institutions, and childcare providers. Some 20% of the K-12 funds are to be directed toward mental health services for children.
- State and local governmental assistance – to state, local, tribal and territorial governments.
- COVID-19 vaccines and testing – funds are included for testing, contact tracing and mitigation, the protection of vulnerable demographics, vaccines, and the hiring of additional public health workers.
While the House bill provides for raising the minimum wage to $15 in stages, with the full amount reached in 2025, the Senate is unable to even consider that provision in their version, as the Senate Parliamentarian, Elizabeth MacDonough, has ruled it out of bounds.
This is because the Senate, in order to pass the bill swiftly, is using the process of “budget reconciliation,” which sidesteps the filibuster rules and allows a controversial bill to pass with a simple majority vote. However, there are limits as to what measures can be considered when using this process.
Republicans in both House and Senate have objected to a number of the bill’s provisions, focusing on such items as spending on high-speed rail projects, what they consider overly-generous aid to state and local governments, and projects undertaken overseas, among other items.
Polls indicate that Americans, by a large majority (including a majority of Republicans), want the bill passed.
Stay tuned – we expect some Senate fireworks in the coming days!
If you have questions on the proposed legislation or, indeed, any subject, please click here to email us directly.
Until next Wednesday –
We’ve all experienced it – the let-down, when we feel when our expectations aren’t met. When a highly-recommended film, or book, or restaurant disappoints us.
But what are our – possibly unrealistic – expectations actually doing for us? Are they perhaps closing us off to new experiences we might enjoy if we went into them without high expectations, just to find out what they actually are, what they might have to offer us? Are we perhaps suffering, some of the time, from the “I like what I know” syndrome?
That’s a comfort thing, and I’m all for comfort – up to a point. But I wonder where that point tips over into complacency and stagnation – I don’t think any of us likes the idea of stagnating in place.
If our idea of a good restaurant, deep down, is where can we get an excellent burger, and nothing beyond that, we won’t want to try fine dining, not American, French, Italian, Chinese, Thai, etc. Perhaps we line up regularly at Port of Call. But what if we do open ourselves up to the new? Jettison our expectations, and discover what unfamiliar food actually tastes like?
Maybe we won’t like it. Maybe we’ll love it. But we won’t know for certain if we don’t allow ourselves to experience it, freed of our regular habits and false expectations.
If we read a glowing review of a play, a film, a restaurant, a wine, maybe we shouldn’t take that to have universal application. Our tastes may be very different from the reviewer’s, and assuming the reviewer is “right” can lead us into high expectations which may let us in for disappointment. Taste is only taste, it’s neither “right” nor “wrong,” it just is, and we are each entitled to cater to our own.
On the other hand, some of my greatest pleasures have come from visiting a restaurant, hearing a band, reading a book which was entirely unheralded. When I had no expectations at all, having nothing to base them on, and thoroughly enjoyed myself. Happy surprises bring their own particular brand of pleasure.
Not that we should have anything against the tried and true, either. I know people who re-read favorite books regularly, and I myself have been known to revisit a film or two I’ve loved. There are certainly favorite restaurants and vacation destinations I frequent.
Still, as someone who has had many transformative experiences when I wasn’t looking for them, I do think we do well to allow ourselves to be open – to let, as the legal maxim has it, res ipsa loquitur – the thing speak for itself.
Perhaps it’s a question of balance – like the old song goes, “make new friends, but keep the old.” I think that balance – the equilibrium between expectation and the comfort we feel when our expectations are met, and keeping our minds open to the new – is something each of us may have to work out for ourselves.
How do you achieve that balance? Please click here to email me directly – I’d love to hear your strategies and stories.
Until next Wednesday –
This week, the U.S. House of Representatives will finalize details on their version of President Biden’s proposed $1.9 trillion coronavirus relief and stimulus spending package, and could potentially send the bill to the Senate as early as next week.
Unsurprisingly, most of the President’s proposed measures – though not quite all – appear to be included, based upon the various committee approvals.
- Stimulus checks – direct payments of up to $1,400 per individual. Full credit for children as well as adult dependents (who were not eligible for previous stimulus checks). The amount of the checks will decline for those individuals earning over $75,000 and married couples with income above $150,000, phasing out completely at earnings of $100,000 per individual and $200,000 for families.
- Federal unemployment assistance – both the Pandemic Unemployment Assistance (which provides relief for freelancers, independent contractors and gig-economy workers) and the Pandemic Emergency Unemployment Compensation (for more traditional workers) programs will be extended through August 29, 2021 (both are currently set to expire in March). The Federal supplemental payment of $300 per week will be increased to $400.
- Enhanced Child Tax Credit – a one-year increase, beginning in July of 2021, of the credit from its current $2,000 for children under the age of 18 to $3,000, and to $3,600 for children under 6. For the term of this increase, the credit will be fully refundable, meaning that families with incomes too low to receive the full credit under current provisions will now be eligible for the full benefit. In addition, the credit will be provided monthly, rather than on an annual basis as is currently the case.
- Education – $130 billion for K-2 schools to upgrade ventilation, reduce the number of students per class for social distancing purposes, purchase personal protective equipment, and hire additional staff, as well as to prevent teachers being laid off. A minimum of 20% of these funds are to be used to mitigate the loss of learning students are currently suffering, through extended school days, summer school, or other provisions. For higher learning institutions, $40 billion is provided, and $39 billion is earmarked for providers of child care.
- State and local governmental assistance – $350 billion to state, local, tribal and territorial governments.
- COVID-19 vaccines and testing – $46 billion for testing, contact tracing and mitigation, $25 billion to address health disparities and protect vulnerable segments of the population, $14 billion toward vaccines, and $7.6 billion for hiring an additional 100,000 public health workers (this will almost triple the current number of such workers).
- $15 per hour Federal minimum wage – to be phased in by 2025. This hourly wage will extend to those currently not covered by the Federal minimum wage provisions, such as those who are tipped, underage, or with certain disabilities.
The last provision listed is the most controversial at present, with two Senate Democrats, Krysten Sinema of Arizona and Joe Manchin of West Virginia already vocal in opposition. This is, of course, significant, as Democrats cannot afford to lose a single Senate vote, given the 50/50 split between the Democrat and Republican senators.
Notably absent is any further provision to help mitigate small businesses’ losses.
The coming debate should be interesting – stay tuned!
If you have questions on the proposed legislation or, indeed, any subject, please click here to email us directly.
Until next Wednesday –
As I’ve noted, my career path to helping people has entailed a significant amount of self-discovery, which, in turn, has made me sensitive and understanding to people’s individuality – to what drives them, what they need and want out of life.
In short, through writing my own story (metaphorically speaking), I learned the importance of each person’s own story. And that is what I need.
To understand your story. It’s not anyone else’s story – you own it, you’ve lived it, it’s yours. And it is what drives you.
One of the first things I like to ask new and prospective clients is, “Why is money important to you?” Quite often, the first thing out of their mouths is a generic tribute to the fact that money is important, period.
Of course it is! But that’s not what I want to know. What I want – and need – to know, in order to help you to the very best of my ability, is why it’s important to you. What does it represent, in your most secret heart?
Does it mean security or adventure? Do your retirement dreams whisper quiet comfort, or the freedom to take on new challenges? Neither one is better than the other – they are both worthy of address – as are all the goals, dreams, and fears my clients share with me.
Did you grow up in hard or easy circumstances? A good number of my clients have encountered hardships at some point in their lives, and this can impact the way you approach life – and money.
Everything you’ve lived through is your story. It is the movie that you star in and direct. Everything you’ve made, from your family to your business to your retirement wealth, is part of your story. I can’t help you plan for the future you long for unless I have a deep understanding of what makes you you, and not someone else.
What I want is to help you plan for the future based upon where you have been, where you are now and where you want to go.
And to do that, I have to know that it all matters.
In my office, you are listened to, you are heard – and you are cared about.
Because you are telling me your story, and your story is worth listening to.
Please click here to email me directly – I’d love to talk with you and hear your own, unique story.
Until next Wednesday –
Last week, lenders nationwide were permitted to begin accepting applications for second-round Paycheck Protection Program Loans (PPP 2 Loans), as authorized by the Consolidated Appropriations Act (CAA).
There is some $284 billion available in funds for these loans, but remember, the initial $349 billion authorized in 2020 ran out within about two weeks – so don’t hesitate to determine whether you are eligible and, if you are, get your calculations and documentation in order without delay.
PPP Round 2 Loans are capped at $2 million.
Eligibility for a PPP Round 2 Loan requires that:
- You took a PPP Round 1 Loan, the proceeds of which have already been, or soon will be, exhausted,
- You have 300 or fewer employees, and
- You experienced a 25% or greater decline in revenue in 2020 versus 2019, either for any given calendar quarter (you cannot use any three-consecutive-month period you choose) or for the year as a whole.
Note that, if you are simply running a total of your 2020 bank deposits to determine revenue (some cash-basis businesses may be tempted to do this), you must be vigilant in excluding any PPP Round 1 Loan proceeds – it is neither appropriate nor in your interest to include them.
We recommend that you go ahead and run your profit and loss statements, having ensured that PPP Round 1 Loan proceeds are entered into a different account than your ordinary revenue, and use those figures to determine your eligibility for a PPP Round 2 Loan.
Documentation & Calculations
If you are seeking a PPP Round 2 Loan of $150,000 or less, and applying to the same lender you used for your PPP Round 1 Loan, your lender may not require documentation supporting your 2019 or 2020 quarterly revenue figures, but you need to keep them on hand in case they are asked for.
Likewise, for such a loan ($150,000 or less and with the same lender from whom you received the PPP Round 1 Loan), 2019 payroll documentation may not be required to apply for a PPP Round 2 Loan.
But for those seeking larger loans, or applying through a new lender, you may be required to provide:
- Quarterly revenue for 2020 versus 2019 (profit and loss statements) showing a decline of 25% or greater for at least one quarter of 2020 compared with 2019.
- Documentation of payroll expenses. The CAA allows you to use either 2019 or 2020 payroll data to determine the amount of the loan you can apply for, so use the year with the higher payroll costs, which gives you a higher loan figure.
Other Potentially Required Documents
Other documentation you may need to provide:
- Photo ID for owners who own 20% or more of the business.
- Profit and loss statements for 2020 and 2019.
- 2019 business tax returns (2020 if available). For partnerships, this means both IRS Form 1065 and Schedule K-1s, for sole proprietors IRS Form 1040 Schedule C.
- Your Articles of Incorporation.
- Payroll reports listing gross wages, paid time off, and taxes for all employees for all months of 2020.
- Form 941 (Employer’s Quarterly Federal Tax Return).
- Form 944 (Employer’s Annual Federal Tax Return).
- Form 940 (Employer’s Annual Federal Unemployment Return).
- Form W-3 (Transmittal of Wage and Tax Statements).
- Documentation supporting employer-paid benefits such as health insurance and retirement plan contributions.
While we consider it unlikely that the rules governing PPP Round 2 Loans will change as significantly or as frequently as those governing PPP Round 1 Loans did, we feel some changes are more than likely. You never know.
We will monitor the program, and, of course, report back to you.
If you have questions on whether a PPP Round 2 Loan is both available to and beneficial for your business, please click here to email me directly.
Until next Wednesday –
It’s tempting to be busy. “Busy” signals that we’re working. But are those “busy” signals reality? And, even if they are, is merely busying ourselves actually meeting our clients’ needs to the very best of our ability?
I think that, often, we need to step back and ask ourselves whether our “busy” work is producing the solutions our clients want and need, or are we merely doing what’s easiest to do? One of the best ways to determine this is to ask ourselves the hard questions. But it’s also a very good idea to check in frequently with our clients, to ensure we are actually being productive for them, and not merely busy.
If our workplace is a factory line, measuring productivity is an easy matter, and, up to a point, keeping busy will raise our productivity while in the factory. For knowledge-brokers, though, the metrics are much more complicated. We measure productivity via our clients’ satisfaction, our own valuation of the services and solutions we provide, as well as our bottom line.
But we all, factory workers and knowledge-brokers alike, require rest. We all know muscle fatigue, what it feels like, and how, sometimes, without rest our bodies just won’t do what we want of them. The same is true for the brain. A factory worker’s hands need rest, and a knowledge-worker’s brain needs rest, or they won’t be able to reach that deep level of focus which produces their best work.
And right now, I think many of us are experiencing a kind of mental fatigue, after a year of COVID-19 and the crushing Saints’ loss on Sunday, sadly ending their season.
I’ve written extensively on the need for recreative time, vacations, holidays, getaways. But it’s been a while since I’ve written on the perils of fatigue – and they are real. Fatigue impairs memory, concentration, and decision making (bad for knowledge workers!), as well as coordination, reaction time, and muscle strength (bad for physical workers!).
Therefore, in order to continuously produce our best work, we have to avoid the trap of being busy instead of being productive. We have to rest our minds, so they can rejuvenate and refresh themselves. This is not accomplished by reading thick technical tomes, but a well-written yet undemanding novel can fill the bill, for readers. We can take a nap, exercise. Anything which allows our brains to take some time off and kick back.
This isn’t a matter of stress-relief, as important as that is. Resting our minds, daily, is stress-prevention, in addition to promoting our best and deepest work. Sounds like a good combination to me.
How do you like best to rest your brain? What activities (or non-activities) bring you the greatest focus and calmness during the workday?
Please click here to email me directly – I’d love to hear your stories and strategies.
Until next Wednesday –
When I started my accounting career, I had a serious desire to help others. I went to work for one of the then Big 6 accounting firms in New Orleans. I footed general ledgers, prepared tax returns, and performed other seemingly menial tasks for somewhere between 14 and 16 hours a day.
I would see companies whose books showed serious financial issues, and I’d ask managers if we couldn’t figure out a way to help these companies. One example was the audit of a tugboat company, which occurred in the middle of an oil field crisis. I asked the supervisor on the job if we couldn’t we help them refinance their boats, get them a little working capital? I was told, “Just go back to your cubicle, finish the accounts receivable portion of the audit.” I was not happy.
After two years, I was asked whether I’d considered taking a job with one of the firm’s clients. “No,” I replied, “I want to be a partner here. Did you see the client I brought in? And the retainer check? They want us to do an inventory study for them.”
“Well, who asked you to do that?” “No-one, I just wanted to help them.” “Go back to your cubicle and foot some general ledgers.”
They weren’t much happier with me than I was with them, and eventually I left, with the intention of setting up shop on my own.
Serendipitously, a friend from college called me; he was with another of the Big 6, and was beyond swamped. I said I’d help him out, maybe three days a week, and found myself with a job I could live on (complete with health insurance and 401(k)) and time to build my own business.
I hustled – I had to. My evenings were spent at Charity Hospital, now sadly gone, recruiting clients among residents who moonlighted. You see, residents could earn extra dollars – $100 was about the usual hourly wage, and back then, that was money – spending their weekends manning emergency rooms in Port Sulphur and other areas outside New Orleans. Taxes weren’t withheld, as these doctors were treated as independent contractors, and often we were talking about extra income amounting to $50,000 to $60,000 a year, for residents making something like $30,000 per year at LSU or Tulane.
I started putting up signs all over the downtown New Orleans medical corridor hospitals, and snagged one doctor. One became two, two became four, four became 16. Some of those doctors are clients to this day, and I cherish them all, thankful they trusted a hustling sole practitioner who was entirely unknown to them.
Finally, it got through to me. I was not only helping entrepreneurs, I was an entrepreneur myself. By nature, by inclination, by temperament. And being an entrepreneur gave – and still gives – me insight and empathy in helping my clients solve their unique problems.
Embracing entrepreneurship meant embracing who I am. While it’s sometimes been scary, I would never trade what I’ve learned, the experiences I’ve had, the clients I’ve been able to help, the people I’ve worked with, for a past, present and future of nothing but grinding out tax returns and general ledgers at a big firm.
What – or who – has helped you find who you are? Was it a lightbulb moment, or a gradual dawning?
Please click here to email me directly – I’d love to hear your stories.
Until next Wednesday –
Last week, we discussed some of the changes to COVID-19 relief under the newly enacted ~$900 billion legislation. This week, we take a deeper dive into the specifics of the changes to the Employee Retention Credit (ERC) as modified via Internal Revenue Code Sections 206 and 207 of the new law.
As initially instituted in the CARES Act in March of 2020, the ERC was a mutually exclusive alternative to a Paycheck Protection Program (PPP) loan – if a business applied for a PPP loan, it could not also apply for an ERC, and vice versa.
Section 206 of the new law specifically rescinds that mutual exclusivity, enabling a business to take out a PPP loan and remain eligible for an ERC, so long as the same eligible payroll-related costs are not used to calculate eligibility for both the PPP loan and the ERC. This is true retroactively for 2020, as well as for the first two quarters of 2021.
However, the rules governing the ERC vary significantly from 2020 to 2021 – for 2020, the major change under the new law is the eligibility of PPP borrowers to apply for an ERC under Section 206.
2020: A business was/is eligible for an ERC for 2020 if, for any quarter, 1) that business was shut down or partially suspended by governmental regulation or edict, or 2) the business experienced a drop in revenue of 50% or more versus the same quarter in 2019. Once eligible, the business remained ERC-eligible until the end of any 2020 quarter in which revenues returned to 80% or more of the revenues from the same quarter in 2019.
2021: Under Section 207(a)(1) of the new law, the ERC is extended through June 30, 2021, from its original end date of December 31, 2020. A business is eligible for a 2021 ERC if, for either the first or second quarter, gross revenues are less than 80% compared with the same quarter in 2019, rather than the same quarter of 2020.
If the business had not begun operations at the start of the comparable 2019 quarter, the corresponding 2020 quarter revenues may be substituted. To determine eligibility for an ERC for the first quarter of 2021, 4th quarter revenues for 2020 versus 2019 may be used.
2020: A business which qualified for an ERC could claim a tax credit equal to 50% of the first $10,000 in eligible compensation (expanded retroactively in the new law to include health-insurance costs paid by an employer) paid to any employee during the year, providing the business had 100 or fewer full-time equivalent (FTE) employees. For such companies, every fully-eligible employee with over $10,000 in annual wages would enable the business to claim a tax credit up to $5,000.
If, however, a business had over 100 FTE employees, only those employees who were paid but not actually working were eligible to be claimed in an ERC.
For example, a business owned a chain of restaurants offering sit-down dining and had over 100 FTE employees in 2019. Due to COVID-19, the company was barred from providing dining on-site and could only provide take-out. The wages of wait staff who were not working but were paid are eligible to claim an ERC against, but the salaries of the working kitchen staff are not.
2021: Under Section 207(b) of the new law, an eligible business can claim a 2021 ERC equal to 70% (up from 50% in 2020) of the first $10,000 of qualified wages paid to any employee per quarter, rather than on an annual basis. This means that for a business showing gross revenue drops of 20% or more for both the first and second quarters of 2021 as compared with 2019, an employee whose wages generated an ERC eligibility of $5,000 in total for 2020 could potentially generate eligibility for $14,000 in ERC for 2021.
Section 207(e) increases the number of employees a business may have before the change in eligible FTE employees (i.e., only those paid not to provide services) kicks in from 100 to 500, meaning that the hypothetical restaurant chain postulated above would, providing it has fewer than 500 employees in total, be able to claim an ERC for their working kitchen staff as well as paid but non-working wait staff.
2020: Eligible wages per qualified employee were capped by Section 2301(c)(3)(b) at what the employee’s wages would have been during the 30-day period prior to the eligible quarter. Simply put, this was instituted to preclude an employer from paying higher wages temporarily, or bonuses, to gain a greater ERC.
2021: Section 207(e)(2) strikes Section 2301(c)(3)(b) entirely, meaning that employers can pay bonuses or increase wages and remain eligible for ERC based on those increased figures.
Further, Section 207(g) provides, for 2021, that a business eligible for an ERC for a given quarter can receive the ERC in advance, rather than claiming the credit by reducing payroll tax deposits. The credit claimed can be up to 70% of the average wages paid for the same quarter in 2019.
We will monitor the guidance which will be forthcoming from the IRS, and, of course, report back.
If you have questions on the new rules governing the ERC and how it might impact your business, please click here to email me directly.
Until next Wednesday –
On Sunday, December 27, 2020, President Trump signed into law the COVID-19 relief package of ~$900 billion, as well as the accompanying ~$1.4 trillion omnibus appropriations bill for fiscal 2021 (October 1, 2020, through September 30, 2021).
On Monday, December 28, 2020, the U.S. House of Representatives approved by a vote of 274 to 134 a separate measure increasing direct stimulus payments ($600 per taxpayer and dependent child under the newly signed legislation) to $2,000 for both taxpayers and dependent children.
On Tuesday, December 29, 2020, the House bill for increased stimulus payments reached the Senate, but was blocked from a vote by Senate Majority Leader Mitch McConnell. Late Tuesday, Senator McConnell surprisingly introduced his own bill increasing stimulus payments to $2,000, but also providing for full repeal of Section 230 of the Communications Decency Act, which makes changes to online-speech rules, and the creation of a new commission to study election fraud.
The direct stimulus payments would start phasing out when individual adjusted gross income exceeds $75,000, when head-of-household income exceeds $112,500, and when income for married couples filing jointly exceeds $150,000. For individuals without children, the payments go to zero when income reaches $87,000; that is $174,000 for married couples. The numbers are generally based on 2019 income.
As for the enacted COVID-19 relief bills, we have discussed many of the more significant provisions heretofore. However, we thought it might be of interest to note that under the newly enacted COVID-19 relief law there are changes regarding the interaction of Paycheck Protection Program (PPP) loans with the Employee Retention Credit (ERC), and to the latter program particularly:
- For PPP Round II loans, $284 billion has been allocated. Loan amounts will be limited to $2 million, and to businesses with 300 or fewer employees (down from 500 in the first round of loans) who demonstrate a drop in income of 25% or greater for any quarter of 2020 as compared with the same quarter in 2019. The loan amount which can be applied for is based on 2.5x average monthly payroll, calculated based on either the 2019 average or the average for the 12 months prior to applying for the loan.
- For restaurants, hotels (and other businesses with NAICS codes starting with 72), you may apply for a loan in the amount of 3.5x average monthly payroll, other provisions as above.
- Eligible payroll costs (wages, employer taxes, employer-paid health insurance and retirement contributions, etc.) must still represent 60% of costs eligible for forgiveness, with 40% allowable for non-payroll-related eligible costs (e.g., rent, mortgage interest, utilities including internet, and other newly eligible expenses under the just-passed relief bill, such as essential supplier costs).
- Additionally, a new, streamlined PPP Loan Forgiveness application and process will be implemented for loans of $150,000 or less.
- If you took an Employee Retention Credit (ERC) and not a PPP loan during Round I in 2020, and feel this was possibly a mistake, then you can pay back the ERC you received and take out a PPP Round I loan, as soon as the application process for Round II PPP loans opens.
- However, under the new rules, you may be eligible to recapture an ERC for wages paid as far back as March 12, 2020, if you did not use them as a qualifying cost basis for a PPP loan.
- An example of how this might work: you received a PPP loan in the amount of $100,000. You had a 24-week period in which to incur eligible forgivable expenses, 60% of which must be payroll-related costs. You paid $200,000 in eligible payroll-related costs during the 24-week period, and had non-payroll-related eligible forgivable expenses of $40,000.
- You need, therefore, only use $60,000 of those $200,000 in payroll-related costs to obtain forgiveness of your $100,000 PPP loan. You are now potentially eligible for an ERC based upon the $140,000 in remaining payroll-related costs.
- Under 2020 ERC rules, to be eligible for the credit you must meet one of two criteria – either 1) your business was shut down by governmental mandate, or 2) your business experienced a 50% or greater decline in revenue quarter-over-quarter, by comparing the 2020 quarter with the same quarter in 2019. If you meet either test, you can receive an IRS tax credit of 50% of the wages paid to an individual employee, up to the first $10,000 in wages paid during the year ($5,000 maximum credit per employee – i.e., if you have a team of 10 people and all fully qualify, you may be eligible for an ERC of $50,000 on your 2020 federal income taxes).
- It is noteworthy that, once you are eligible for an ERC, you remain eligible until the quarter in which your revenues return to at least 80% of revenue compared with the same quarter of 2019.
- Now, for 2021, the ERC gets even more interesting. For the coming year, businesses will only need to demonstrate a 20% drop in revenue compared with the same quarter in the prior year. And, if your revenues for the fourth quarter of 2020 were at least 20% down from the fourth quarter of 2019, you are automatically eligible for an ERC for the first quarter of 2021.
- In addition, the 2021 ERC provides a significant increase in the credit maximum – your credit will be 70% of the first $10,000 (up from 50%) paid in wages per employee per quarter rather than per year, through the ending of the credit, which has been extended in the new legislation from December 31, 2020 to June 30, 2021.
- This means that you could potentially receive an ERC of $14,000 per eligible employee for the year 2021, up from $5,000 per employee for 2020.
- Both the SBA and the IRS will need to weigh in with guidance on how this will work going forward; however, this will be of potentially significant benefit to business owners (and their employees).
We are glad President Trump signed the COVID-19 relief bill on December 27, 2020, and we are sure many, many individuals and families will have a happier New Year for it. It will be interesting to see how the issue of the increased (or not) stimulus checks is resolved.
We will monitor the progress of the competing increased direct payment measures, as well as SBA and IRS guidance. The SBA has 10 days from the date the bill was signed into law to provide guidance as to the process and procedures pertaining to the PPP Round II loans.
If you have questions on the latest stimulus package and how it might impact you and/or your business, please click here to email me directly.
Until next Wednesday – Happy New Year!
- Progress on COVID-19 Relief3 March 2021
- Expectation Versus the Open Mind24 February 2021
- Unpacking the Proposed House COVID Pandemic Relief Bill17 February 2021
- What’s Your Story?10 February 2021
- PPP Round II Loans – What’s New?27 January 2021
- Busy Does Not Mean Productive20 January 2021
- It Took Me a While to Realize . . .13 January 2021
- The ERC – 2020 v 20216 January 2021
- COVID-19 Relief – Year-End Legislative Roundup31 December 2020
- Happy Holidays24 December 2020
- COVID-19 Relief? Not Yet!23 December 2020
- COVID-19 Relief? Negotiations Continue18 December 2020
- Congressional Compromise? $908 Billion for COVID Relief in Two Bills16 December 2020
- What a Biden Presidency Might Mean for Estate Taxes, Wealth Transfers, and Inherited Assets9 December 2020
- What a Biden Presidency Might Mean for Business Taxes2 December 2020
- New IRS Guidance – Expenses Paid with PPP Loan Proceeds Are Not Deductible25 November 2020
- What a Biden Presidency Might Mean for Individual Taxes18 November 2020
- 2021 – Tax Policy and the All-Important Senate11 November 2020
- SBA Issues New Requirements for PPP Loan Justification5 November 2020
- Can Our Smartphones Make Us Less Smart?28 October 2020
- How to Save Money in a Difficult 2020 With Tax Planning21 October 2020
- PPP Loans – New Guidance for Loans Under $50K, Clarification on Deadlines14 October 2020
- The Overscheduled Life – and How to Avoid it7 October 2020
- PPP Loans – Updated Guidance30 September 2020
- Unplug and Breathe23 September 2020
- Travel and Human Connection16 September 2020
- Humble and Kind9 September 2020
- How Do You Make a Beautiful Day?2 September 2020
- Independence or Interdependence? It’s a False Choice!26 August 2020
- What is fellowship19 August 2020
- Guidance on Executive Order Regarding Social Security Taxes12 August 2020
- Serendipity5 August 2020
- Education in the Time of Coronavirus30 July 2020
- Wait! Why it Doesn’t Make Sense to Apply for PPP Loan Forgiveness Yet22 July 2020
- Reap the Benefits of Deliberate Practice15 July 2020
- SBA Begins Accepting New PPP Loan Applications; Good Faith Certifications8 July 2020
- House Joins Senate, Passes Extension to Apply for PPP Loans2 July 2020
- PPP Loans – Early Forgiveness Available, SBA Issues New Forgiveness Applications24 June 2020
- PPP Loan Forgiveness – SBA Issues New Interim Final Rule17 June 2020
- New Guidance – Partial PPP Loan Forgiveness Intact10 June 2020
- Senate Passes Bill to Relax PPP Loan Forgiveness5 June 2020
- House Passes Bill to Relax PPP Loan Forgiveness3 June 2020
- Senate Unanimously Passes Extension to Apply for PPP Loans1 June 2020
- PPP Loan Forgiveness – SBA Issues 2 New Interim Final Rules28 May 2020
- SBA Issues PPP Loan Forgiveness Application20 May 2020
- PPP Maximum Allowable Forgiveness Amount13 May 2020
- IRS Now Says No Tax Deduction For PPP Covered Expenses6 May 2020
- UPDATE – House Passes Additional Funding for Small Business Relief29 April 2020
- The Virtual CFO Minute Episode V29 April 2020
- Senate Passes Additional Funding for Small Business Relief22 April 2020
- The SBA Changes its Mind Again – New Guidance on PPP Loan Applications For Partnerships15 April 2020
- The Paycheck Protection Program Could Help Your Business Now7 April 2020
- Senate Reaches Agreement on Third Coronavirus Stimulus Bill25 March 2020
- Fact versus Fiction – Tax Filing and Payment Deadlines19 March 2020
- Be Safe, Be Alive!18 March 2020
- Talent – or Skill?11 March 2020
- The Virtual CFO Minute – Episode IV4 March 2020
- To Be Or Not To Be Overwhelmed – It’s Your Choice26 February 2020
- Know What to Expect19 February 2020
- The Virtual CFO Minute – Episode III12 February 2020
- The Virtual CFO Minute – Episode II5 February 2020
- The SECURE Act of 201929 January 2020
- The Virtual CFO Minute22 January 2020
- Overcoming Obstacles15 January 2020
- January 2020 Challenge7 January 2020
- Happy Holidays!18 December 2019
- Success11 December 2019
- How to Spark Joy in Your Life3 December 2019
- An Umbrella is Not a Satsuma27 November 2019
- Margins – When is it Better to Color Inside the Lines?20 November 2019
- In Crisis? Text 741741 to be Seen and Heard13 November 2019
- Employing Family Members6 November 2019
- The Future is Female31 October 2019
- Dashboards – How Can They Help You Run Your Business?23 October 2019
- The Third Biggest Reason to Hire a Virtual CFO16 October 2019
- The Second Biggest Issue We See With Not Having a Virtual CFO – And How To Overcome It!9 October 2019
- The Biggest Issue With Not Having a Virtual CFO2 October 2019
- The Power of Having a Virtual CFO24 September 2019
- 9 TO 517 September 2019
- Keeping Up With the Joneses11 September 2019
- Use Your Best Judgement28 August 2019
- Post For 201913 August 2019
- The Amazing Internet7 August 2019
- Are You Really Listening?31 July 2019
- Wimbledon 2019 – Never, Never, Never Give Up!24 July 2019
- The Mountain and I17 July 2019
- Tax Planning for 2019 – It’s Time!10 July 2019
- Be More Effective – Put Some Slack in Your Schedule19 June 2019
- Invictus12 June 2019
- Chainsaw or Scalpel?5 June 2019
- This Will NOT “Only Take A Minute”29 May 2019
- The Meditative Mind in the Digital Age22 May 2019
- Got Worries?15 May 2019
- I Think I Have the Post Jazz Fest Blues8 May 2019
- Qualified Opportunity Zones – New Proposed Regulations1 May 2019
- Make Things Better – A Controversial Statement?29 April 2019
- 5 Steps To Make Your Presentation More Persuasive10 April 2019
- To Outsource, or Not to Outsource? It Turns Out That is a Question3 April 2019
- Proper Prior Planning Prevents Poor Performance27 March 2019
- The Avocado Principles17 March 2019
- Practice Makes . . .13 March 2019
- Four Rules for Deep Work · Rigby Financial Group27 February 2019
- Do-Overs20 February 2019
- Can We Make Ourselves More Intelligent?20 February 2019
- The Power of Authenticity13 February 2019
- This is Marketing6 February 2019
- Opportunity Zones – Deferral of Gains Offers Flexibility for Investors30 January 2019
- Saints Rammed by the Zebras23 January 2019
- Slow Down and Appreciate Life16 January 2019
- After the Holidays . . .9 January 2019
- Happy Holidays!19 December 2018
- 2018 Year-End Top Tax Planning Tips12 December 2018
- Christmas Reflections – What Are You Grateful for This Year?5 December 2018
- Put a Shine on Your Shoes and in Your Heart28 November 2018
- What Will You Be Drinking This Thanksgiving?21 November 2018
- Be Great, Be Remarkable!14 November 2018
- Free Days and Why They Matter7 November 2018
- Should You Play Trick or Treat with This Stock Market?31 October 2018
- How to Save on Your Taxes Through Investment in Qualified Opportunity Zones24 October 2018
- A Thing of Beauty is a Joy Forever10 October 2018
- The Hidden Brain26 September 2018
- Thoughts on Hurricane Florence19 September 2018
- Thoughts on a Legend’s Retirement13 September 2018
- Autumn Transitions and Opportunities29 August 2018
- Qualified Opportunity Zones Offer Potential Tax Savings22 August 2018
- Qualified Business Deduction of 20%15 August 2018
- Post For 201813 August 2018
- Don’t Limit Your Own Happiness – 5 Traps to Avoid8 August 2018
- How to Implement Your Goals1 August 2018
- 7 Characteristics Shared by the Most Productive People25 July 2018
- Make Your Vacation Last Longer11 July 2018
- Focus and Create: 10 Thoughts for Entrepreneurs27 June 2018
- 5 Tactics to Help You Get Through Hard Days20 June 2018
- How to Avoid the Top 5 Mistakes Entrepreneurs Make13 June 2018
- 7 Steps to Take While in Transition6 June 2018
- Stop Being Your Harshest Critic!23 May 2018
- Being Worthy of Trust16 May 2018
- Can Slowing Down Make You Happier? More Productive?9 May 2018
- There’s Only One Happiness in This Life – to Love and be Loved2 May 2018
- Free Days – Rest and Rejuvenation Matter!25 April 2018
- Self-Talk – How the Tough Get Going18 April 2018
- Avoiding Financial Envy11 April 2018
- Practicing Creative Gratitude4 April 2018
- Everybody’s Got Somebody to Thank28 March 2018
- How to be Better Informed While Reading Less21 March 2018
- Does Vulnerability Lead to Confidence?14 March 2018
- Finding Better Solutions7 March 2018
- Hope Springs Eternal28 February 2018
- 4:00 A.M. – The Most Productive Time of Day21 February 2018
- Be Present and Avoid FOMO14 February 2018
- Explore New Places and Expand Your Mind7 February 2018
- How to Take More Time Off and Be More Productive31 January 2018
- One Key to Success – Doing Less!24 January 2018
- Tax Reform 2017 – What Does It Mean For Your Business?17 January 2018
- Tax Reform 2017 – What Will it Mean For You and Your Family?3 January 2018
- Success With Humility – The Manning Way27 December 2017
- The Search For Happiness19 December 2017
- Proper Prior Planning Prevents Poor Performance13 December 2017
- Risk Management and Snow Skiing29 November 2017
- Who Says You Can’t Buy Happiness?22 November 2017
- Investing – a Marathon, not a Sprint15 November 2017
- Why Does Money Matter to You?9 November 2017
- Breaking News – White House and Congressional GOP Leaders Announce Tax Reform Blueprint28 September 2017
- Senate Agreement Opens a Road to Tax Reform27 September 2017
- Succession Planning: What Business Owners Need to Know6 September 2017
- The Outlook for 2017 Tax Reform8 August 2017
- U.S. Economic Performance: January 1 through June 30, 201720 July 2017
- Tax Reform: 1031 Exchanges22 June 2017
- Tax Reform Status25 May 2017
- What We Think Tax Reform Should Look Like27 April 2017
- Deep Work – How to Get More Done in Less Time15 February 2017