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 |  Bizink  |  American Rescue Plan Act,  ARPA,  C.A.R.E.S. Act,  covid-19,  Employee Retention Tax Credit,  ERC,  STIMULUS FUNDS,  tax advice for 2020,  tax advice for 2021,  tax minimization,  tax planning

Weekly Update – August 19th 2021

Those COVID-19 relief programs which certainly helped keep millions of Americans and businesses afloat during the pandemic,  have unfortunately also been a spectacular bonanza for an array of international scam artists, including Russian mobsters, Chinese hackers, and Nigerian scammers. An estimated $87 million to $400 billion in unemployment benefits may have been lost to fraud; at least half of that is thought to have been stolen by foreign criminals. Many took advantage of weak systems of unemployment verification in many states, which were further loosened to get financial support out quickly. Besides looting millions – or billions – of federal funds, identity thieves prevent innocent people from receiving the support they are entitled to. While the vast majority of the stolen cash is gone for good, so far the FBI has recovered $100 million, while the Secret Service has recovered $1.3 billion.

We were so grateful to successfully assist our clients obtain those stimulus funds they were entitled to, while working with clients caught-up in the identity theft scams.  You might be interested in reviewing and following recommendations in this resource I created for accountants which can be accessed through the Intuit help center here: click through this link

Of course all work and no play does not make for a happy or well balanced CPA.  Sunday mid-morning I was thrilled to welcome my daughter Jessie and her dog Samson (pit-boxer mix)  who arrived for a week long visit.  What a great excuse to get out on the beach for a daily run/walk with Samson as the rest of the family was fast asleep.  I had already made arrangements with several of the doggie play group “parents” to allow us to join them for a test visit.  Best of all I had a running buddy as I am starting back after my skiing accident…

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Of course he is totally sandy when we return, but he puts up with the rinse-off knowing it is a small price to pay for a romp on the beach

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Now who will I miss more when they head back to Atlanta at the end of the week?  Why my daughter Jessie of course, we stayed up late talking into the night, it’s so great to have Jessie and Samson as our guests this week.

THE AMERICAN RECOVERY PLAN ACT (ARPA)

Shuttered Venue Operator Grant (SVOG)

The SBA has announced that the SVOG program will be closing to new applications on Friday, August 20, 2021. This program provides grants for live venue operators, promoters, arts organizations, and other businesses that were closed due to the COVID-19 pandemic. Grants equal 45% of gross earned revenue, up to a maximum of $10 million and, good news; funds are still available. This program has  already awarded $8.4 billion in grants, and has received applications requesting a total of $12.3 billion, nearly $4 billion less than the total of $16.25 billion allocated by Congress. Later this month, the SBA will open their supplemental awards program which is 50% the original award amount. Certain applicants, who were initially rejected, are also being invited to apply for a reconsideration of their awards.

Advance Child Tax Credit Payments

As a reminder, once you evaluate your situation, you might find that it is in your best interest to opt out of future payments.  In order to do so, you must use the IRS portal for the advance Child Tax Credit by the deadline for the next month’s payment. Check out the IRS FAQs where you’ll find everything you need to know about opting out in Section J.

At present, the portal only allows taxpayers to verify enrollment status, update banking information and to unenroll from payments. For more information, again, taxpayers should consult the IRS webpage for this credit.

Paycheck Protection Program vs Employee Retention Credit

We love the initials and the balancing act:  PPP vs ERC.  Our firm members and I spent hours learning the finer points of the laws and then creating individual excel spread sheets to determine PPP loan forgiveness eligibility and ERC eligibility.  As we interview our clients and then comparing salaries, eligible expenses, eligible time periods, government regulations, we are seeing that all the time was well worth it.

We accounting professionals have been asking for more guidance regarding the ERC and finally last Wednesday evening we received some guidance:  (Notice 2021-49 and IR-21-165). This guidance seems to go against the intention of the last few tax bills.

I am so glad that congressman Jack Bergman of Michigan sent a letter to the IRS “opposing recent guidance discriminating against business owners with families and demanding immediate action to change this misguided rule”.

FRAUD

Being tech savvy isn’t enough to protect against fraud: a recent study shows that the number of individuals under the age of 20 who report being victims of cyber fraud has risen by 156% over the last three years. In contrast, fraud among the less tech-savvy generation over 60 has risen by only 112% over the same time frame. In 2020, 23,200 reports from under-21 age group were made to the FBI’s Internet Complaint Center were made, with losses of $71 million. Common scams include job scams (applicants are told to purchase training), and online influencer scams (contest winners are told to pay a fee or provide banking information to receive their prize). The best way to avoid any kind of scam is to thoroughly investigate the person or company before sending them any financial information and to be wary of offers that seem too good to be true.

REOPENING THE OFFICE

Tech companies may be delaying a return to the office in the face of the Delta variant, but according to recent surveys of American employees, more than half of respondents are already back in the office. According a recent survey, only 8 percent of employers had adopted a permanent work from home policy, and 19 percent were still planning to bring everyone back in September. However, policies vary by education level: as education level increases, fewer report working in person. But even among the most highly educated, most employees project returning to in-person work in August or September.

Workplaces that offer employees the option to work from home or in person may be setting themselves up for two tiers of workers: those who are remote and those who work on site. Managing two different groups of workers on a go-forward basis could be challenging; those return to the office are more visible and as such may receive more attention, better opportunities, and more promotions. Awareness of this tendency and updates to processes may help to ensure all workers are treated in an equitable manner.

Developing a successful hybrid model will also require accommodating the differing needs of differing demographics. For example, because women tend to take on more of the childcare and household responsibilities, working from home may be more appealing to women. Younger workers may need more help setting up a home office and connecting with mentors.

Workplaces are being forced to be creative in the bonuses and perks they offer to entice new employees. More restaurants are offering 401(k)s to their workers than before the pandemic, while even big companies such as Walmart, Target, and Facebook are offering tuition reimbursement or child-care benefits. Wages and signing bonuses are also common, especially in food services and retail.

ECONOMY

Inflation appears to be moderating, as the consumer price index rose less in July than in June, but it does not appear that we will return to the low inflation of the pre-pandemic days. Used car prices, which were a big driver of inflation recently, are beginning to moderate, but prices of other services such as lodging are increasing as people begin traveling again.

Meanwhile, job openings in June shot to a record high of 10.1 million as hiring also increased to near-record levels. However, the level of people voluntarily leaving their jobs (the quits rate) also increased in June to 3.9 million people, well above pre-pandemic levels. The quits rate is seen as a barometer of job market confidence. However, worries remain that a resurgence in infections could discourage the unemployed from returning to work.

Only a fraction – $3 billion – of the total $46.6 billion allocated for rental assistance has been distributed by the end of June. Although the program is overseen by the Treasury, implementation has been the responsibility of an uneven patchwork of state, county, and municipal governments plus charitable organizations. Local organizations have had to build programs from scratch and have had to hire additional staff to process applications. Some regions have adopted recent guidance which makes it easier for tenants to demonstrate financial need, while others require voluminous documentation.

GENERAL RESOURCES

We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!

Complementary Discovery Session

If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started.

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