VANNOY:

Hello everyone, and thanks for joining today. My name is Mike Vannoy. I’m the Vice President of Product and Marketing at Asure. And joining me today for a, a special conversation on E R T C myths. Debunked is our very own Terri Kirby. If you’re a regular watcher or listener of the show, you know, Terry is an expert in tax filing in compliance. So welcome to today’s show, Terri.

KIRBY:

Thank you very much.

VANNOY:

All right. So we are halfway through the year, right? So lots, lots of changes in the last six and call it six and a half months with the employee retention tax credit. I don’t think we need to go through a deep dive educating everyone what it is. If you’re not aware, it is the single largest tax credit business, small business stimulus opportunity on the planet right now. And, and if you haven’t learned about it, hop on our website and, and please learn. I think what we wanted to accomplish today is really some of, I think, the misconceptions. So I think Terri the number last month we just topped over 100 million in stimulus that we had filed in quarterly returns, 9 41 Xs on behalf of our clients. And so obviously there’s a lot of people getting help and, and, and we love to be in the path of, of helping them get that, that stimulus.

 But it’s interesting, we, we talk to hundreds of clients every single day in, in, in, in, I’d say non-clients as well, that there’s still so much confusion on, on you know, do I qualify? Don’t I qualify? And I’d say unfortunately the hardening of some of these big myths. So, so I, I think today what I want to do is really just, you know, we kind of picked what we thought were the top five things that we are hearing from clients and in, in questions and, and just let, let’s, let’s unpack these things. Does that make sense?

KIRBY:

Sounds great.

VANNOY:

Okay. So let’s have that, let’s take, let’s take the first one. And, and, and this is kind of a layup for you cause spoiler alert for everybody, you’re still eligible, but we hear from, from the small business owners all the time that they think that they’re not eligible for E R T C because they’re eligible for and or applied for and got the second draw P p P funds. What, what, what can you tell us about the relationship of P P P second draw in E R T C Terri?

KIRBY:

Well, granted, the, the actual cost of payroll that you’re using as a basis for your second draw is, you know, those become non qualifiable for wages for E R T C. But the whole thing is, is that you are basically using a period of time for that P P P loan. So it’s like the 24 week period that they were looking at for qualifying. And if you look at how your payrolls lay out, in some cases you’re gonna have gaps. There’s certain weeks that aren’t covered. And those weeks that you didn’t have for that P P P loan are open and free for you to be able to take a look at for whether or not, you know, you’re gonna have dollars sitting there. And they’re perfectly available for E R T C. The item is, is that you only need to use or have 60% of the information for your cost based on payroll.

So the other 40% is your mortgages and stuff like that for your loan. But that means that you probably have a available weeks that would not necessarily be used to qualify for like that forgiveness that goes with that P P P loan. And you could use those wages as part of your basis for E R T C. In many cases. A lot of CPAs and stuff have recommended that their customers take a look at that because in some cases they have periods from, you know, January to the end of June that they’re looking at. And for the most part, they really don’t start accounting for the cost of payroll until February. All those January wages were there available and you could have applied or can apply them for the E R T C and get that credit too. So you don’t wanna close the book just because I have P P P loans, but you need to look at what periods I’m using to qualify for those payroll costs for my forgiveness. Cuz if it’s outside of that, you’re free.

VANNOY:

Yeah, I, I, I think, I think this is a huge missed opportunity I’ve seen over and over as, as clients think that they gotta, they gotta work in these sequential buckets, right? Of okay, first came P P P, so we learned about it, you know, they became law part of the Consolidated Appropriations Act, the c a A in December 27th. And so you know, education around that came early January. Everybody was applying for loans in January and February and people getting funded, you know most people getting funded in February, March, some, some I think in January. But if, if, if you wait for the end of your P p P forgiveness to begin any E R c, you’re, you’re missing, you know, the whole beginning of the year right there. So there’s nothing that the, the law says you can’t double dip which, which makes perfect sense. You know, we’re not gonna use the taxpayer funded dollars to, to, to, to double dip on, on stimulus. It’s either P P P or E R C funding a payroll. You can’t get both. But there’s nothing that’s, that says the E r c credits have to come from a single sequential block of time. It just says it can’t double dip. Am I saying that right, Terri?

KIRBY:

That’s correct. That’s, yeah, that’s the biggest part right there.

VANNOY:

So if I was to apply, so if I applied for my P p p second draw, say late January, I got funded middle of February. And just for, to make the math easy, let, let’s say let, let’s say I used up my P p P funds on qualifying expenses, you know, 60% payroll, rent, mortgage interest P p p p personal e protective equipment, p p e, excuse me, too many acronyms. And that ran me through, let’s say end of April. I could qualify for e r c credits for January 1st through February 5th, 14th in q1 and anything after the end of April. So May 1st through June 30th in q2. That’s correct. Am I, am I doing my, yeah, right? Yep. Alright. Right. So the, the punch line is here just cuz you got P P P look at your dates and what, what flexibility do people, so I know that we, this is an E R T C conversation but, but remind people what flexibility they have when applying for forgiveness around P P P in choosing the effective dates. You’re, you’re, you’re fairly restricted based on funding date, but you, there’s still a little flexibility you have there.

KIRBY:

Exactly. Cuz you’re only looking at like a 14 week period or so within that area to grab and say, from here to here, this is the, the, the loan that I used up. Here’s my qualified wages for this period, here’s my mortgages for this period. And it’s usually an eight to 14 week period that you’re grabbing onto. And it’s one of those that it’s like you grab where you have it in many cases, it’s like for the loan example we have, they’re gonna grab it at the end of February through that April period. Well, that freed up that whole first month of January and anything afterwards so that you can use those weeks that you’ve got there as your basis for your payroll costs, as well as your other costs that go into that forgiveness request to that P P P loan.

VANNOY:

Yeah. I, I think maybe one more point of encouragement for small business owners here is they evaluate the, the, the, the pay periods that qualify for P P P forgiveness. Knowing that the, the shorter window you can use for your P P P forgiveness, the bigger the window you are creating for yourself for E R T C. So I, I know there’s a lot of business owners in 2020, cuz as, as we, as we remember back then, you had a choice. You could participate either in P P P or E R T C, but not both. So a lot of people, you know, mid late 2020, they were applying for forgiveness of their P P P loans. And just to make it easy on themselves, they had more than enough qualifying payroll dollars mm-hmm. <Affirmative> to get forgiveness to, to, to meet the was then a 70% threshold, not 60 but instead they didn’t even go through the bother of putting together the calculations for interest on mortgage and utilities and stuff cuz they easily qualified just with payroll dollars. Well, in retrospect, they, they left money on the table because <laugh>, that, that, that was money that they, they could have retroactively applied for E R C. So as we think about 2020 I think our guidance would be maximize all of the non-payroll expenses you can for your P P P forgiveness, your utilities, your interest on mortgage, your personal protective equipment rent. That way you’re freeing up and creating as big a window as you possibly can for E R T C. Am I Exactly. Am I saying that right?

KIRBY:

Exactly. That’s exactly it.

VANNOY:

Okay, let’s move on to myth number two, Terri. So some sometime we hear a lot now I know. And we’re gonna, we’re probably gonna touch on this topic a little more in the, in the, in, in the coming myths if you will. There’s the, the big obvious one for qualification is declining gross receipts. So let’s just talk a little bit about what that means. But there’s a second test that is not gross receipts that has to do with government orders. But, but first let’s tackle the gross receipts. So talk to us about what is the test? How much do you must there be a decline? What is the compare period? Cause I think people need to understand what the, what the math actually is.

KIRBY:

Well, basically the gross receipts is how you’re looking at the receipts of your business and the entity, of course. And the, and the logic here is, is that you’re comparing this back to 2019 records. So if you had a decrease, now remember this decrease can be because you had shutdown or whatever, but that decrease in your grocery seats would need to be at about 20% of where you were at from 2019. That’s what they’ve calculated. So if I have, you know, if I’m less than that, I’m usually, you know, you have to have the 50% or whatever they’re saying, decline. But you show a marked decrease of that grocery receipt, you have an impact. Now realize that initially they’re saying, you know, 50%, 40% that they’re looking at, you just had to have a significant decrease knowing that, that you had a reduction in business.

Now that grocery seats says, okay, by comparison to 2019, my grocery receipts are down 50%. Okay, you’re, or 30%, you’re still down there. It’s, it still had a market impact. That means that basically you are not doing the, all the business that you would’ve been doing. And so then if it’s under the 80% tile mark, you’ve hit it, you’re under grocery receipts. And so you would qualify the item with grocery receipts calculation. Also helps you to know, when do I no longer qualify? If I have a 50% reduction today I’ve qualified for sure, that means I’m also qualified for the first of the next quarter. Right now, next quarter when I go calculate my grocery receipts, if I’m all of a sudden business is open up and I’m successful and it says I’m at 83%, I now am closer to where I need to be.

Cause that that 20 percentile, 80%, if I’m over 80%, it’s usually like the cutoff. If I’m over that 80% from what I was doing in 2019, that means the beginning of the next quarter, the first day of that next quarter, I would no longer qualify. So I’m gonna know pretty much a quarter in advance of where I’m at when I’m doing my grocery receipts computations. So I could, today it’s July I qualify still, but I calculate you know, August and I’m, I’m all of a sudden I hit my 80%. That means as of October 1st I won’t qualify. If in August I’ve still got that, you know, 70 percentile, I’m gonna qualify for October. And that means I’m gonna take it through fourth quarter. Now, we’re not gonna extend it into the next year because we know that we’ve pretty much, they’ve put the, the, the labels on this one as ending at the end of this year at this point.

Cuz they believe that we’ll all be back to work shortly and everything will be back up. And our grocery receipts will be skyrocketing and everybody will be in business and doing well again. But so far we know that the end of this year is so far the end and the deadline. Keep in mind too, though, that that second part that we were gonna lead into, if it’s not gross receipts, it’s a big or it’s gross receipts or my government shutdown orders and that government order, the letters O ror <laugh>. That’s right. And, and that’s based on federal, state, or even local. So if you’ve got a local order that says you’re shut down, boom. I’m under an order, I, that means that I have been reduced and I qualify.

VANNOY:

Yeah, I, so, so let, let, let’s, let’s move to the next one. Cause I wanna take a little deeper dive on on this. I, I think the punchline we want people to understand here is it that even though you might have, let’s say you had a business, you got a a business that does, you know, 1.2 million a year, a hundred thousand dollars a month in revenue, maybe, maybe you went down to $75,000 a month for you know, for a quarter. And you got a business with variable costs and you were able to, you know, dial your cost back down with your revenue. So I actually, from a profit standpoint, maybe you were doing okay and, and cash flow is still okay. And so the, the, I think the myth that we’re hearing is people think that you know, that they, they weren’t crushed. Like, boy, the, the, the restaurant and bar business was crushed. Movie theaters were crushed. Some industries were crushed and I wasn’t crushed, but it, but it, we, we tightened the belt and, and, and we made it. You, if you hit a decline, it’s, it’s probably a lot easier to qualify than you, than you think it is in, in

KIRBY:

Exactly

VANNOY:

To really do the math because this is, this is, you know it’s taxpayer money. The purpose of this show is to help people get informed and take advantage of every opportunity they can. It’s not to, to, to take advantage of taxpayers, but this is a tax credit available to you. So you should be kicking, scratching, calling for every penny of year. All right. So let, let’s move to the other half of this, Terri and, and get in. I wanna get into more detail ar around the, the government shutdown. So this is maybe the biggest, most common one that I’m hearing mm-hmm. <Affirmative> is people think that especially brick and mortar businesses, right? So if I’m a software development company and all my people are virtual, this whole thing is kind of a non-issue for me. But if I’m, I’m a a retailer, I’m a a, a gym, I’m a salon, I’m a tattoo parlor. I’m, I’m any business that serves customers if they weren’t shut down, they were able to stay open. They think that they don’t qualify, but that’s just not true. They’re, the, the, the, this is a much easier to qualify for this term, partial shutdown. Can, can you put some color around that? Correct?

KIRBY:

Yeah. With the partial shutdown, we have to keep in mind that you may have been on a curfew. We’ve got, you know, restaurants and bars that may have been open until two or three o’clock in the morning, which now they had to close at 10. You’ve had a significant reduction in hours that you’re available, which now means that you have a partial shutdown. I mean, you didn’t volunteer do this. Now, if you choose to volunteer shut down, you’re not necessarily gonna be able to qualify, but you need to really look at the orders that you’re under. There’s usually a timeframe that’s been assigned by those as well as, again, you have hours of reduction, so you don’t have as many hours in operation that you normally would have. So how does that fit in with the way you’re calculating, because that is a partial shutdown.

 The other part of that also is are you impacted by others because of a partial shutdown you may have been an essential service, but if you have a supplier that is unable to provide to you the materials you need, you don’t have the materials to do the work. And if you don’t have the materials to do the work, you don’t have the work. Hey, that was not a choice, but that was a shutdown that’s occurring to your business because the supply chain is being cut. So, again, that too can also be looked at about the government orders that are out there and how those are controlling what you have available so that you can continue to do your business. These are different things that we kind of forget. You know, I’m still open, I’m still doing business, everything’s great. But your reduction in hours means the reduction of what your normal business would be. And again, your supply and demand. If you don’t get the supplies that you need to be able to do your business, that means you have less business. And if you have less business, you may have reduction of hours, which means that government order has impacted you. And that can’t qualify those wages that you’re paying as E R T C.

VANNOY:

Yeah. So, so th there, there’s some, there’s some, this is, this is a, how do I say it? This is probably the single biggest opportunity that small businesses have. And so we really wanna encourage people to, to, to, to make the most of this and really look for a reason. I, I would say, look for a reason why you don’t qualify rather than just assuming you, you, you, you don’t but this is also probably the area most ripe for fraud, right? So, yes. To be crystal clear, we are advocating for small businesses to get, to maximize every single penny of the stimulus available legally. So we’re, we’re not pushing fringe cases here to, to try to, to fi find excuses for you. If, if, if the I R Rs, what, what, what are we looking at a five year window for an audit, if they come knocking four years from now, you’re gonna have to be able to prove and defend why you did this.

But let, let’s just talk about some more of these cases. So like you, I, I can think of a scenario, Terri, where let’s say I’m a business like a retailer or maybe maybe a nail salon, right? And I am under a government so I can stay open, but maybe because of a local health order, I had to change the configuration of my business to allow for social distancing. Mm-Hmm. <affirmative>, that’s an impact. That’s a business definitely from, from an order. So ironically, you could have had an increase in grocery receipts, your business could have actually been doing quite well. But if, if the local health order says, Hey, you have to, you can’t operate at more than 25% capacity. Well, if you’re building capacity was for a hundred people in the most people you ever have in your, in, in your facility at a time is 20, well, you’re operating under 25% capacity. So you’re following your order, but you’re still under the, under the rule of that order. Is that, is that right?

KIRBY:

Correct. That’s correct. And like you said too, I would make sure that you have that order, have a copy of it or information with you, keep it on file, because those are the things that are demonstrating those requirements that you have to perform as your business. So there’s your government order, and that is gonna substantiate why you only have, you know, 20 customers instead of the a hundred that potentially could have been there. So you’re doing well cuz you got the 20, but you have been reduced or partially shut down in what you’re capable or able to provide services for. And so that potentially means that you’ve got those wages that you’re paying to those individuals, satisfying those 20 customers as e r tc,

VANNOY:

What could you tell us? So you, you, so we hit on capacity, we sit on head on curfew. I think that’s a, a commonly missed one. So you might have still been open for business with no other restriction other than you had to close early, well, closing not been your choices in

KIRBY:

Order production of hours. Yep. Partial shutdown.

VANNOY:

Yep. We talk supply chain. So if you, if you business is impacted all for suppliers and their shutdowns or their restrictions impacting what can you tell us? And I know I’m not trying to lead the witness here, <laugh>, I, I know this gets to a, here a hairy area where people really need to consult with their CPAs, but this whole concept of multi-location businesses and maybe even multi e i n businesses cuz on one hand, if one is impacted they’re all impacted, but there’s also a need to provide materiality of impact can, so it’s, it’s, it’s, it’s probably a topic for whole we webinar in and of itself. But what guidance might you give around multi-location businesses?

KIRBY:

Well, again, you need to keep in mind what the portions of the business are and how they’re being impacted. I may have a small business on, you know, one section of town that’s under one order and the other section of a town has already opened up. I need to realize and identify how the one that’s been reduced has been impacted and it’s potential that the one that’s been reduced provides materials for the one that’s open. Which means that, again, I have that material supply chain. If I can’t keep up the supply, my other, my other office may be impacted even though they’re at full capacity. Or I have the situation of one group is fully working where the other one is being required to be closed. That’s a partial shutdown.

VANNOY:

Yes.

KIRBY:

Yeah. And so you have to look at the piece that is being impacted and how it may be impacting others. If its one that you have one office that’s dependent upon the other one’s under a shutdown order, the other one is not. But I can’t get the supply and demand. I now have a partial shutdown potentially for both locations because of the inability of getting what I need to do to do business. So, well,

VANNOY:

Even in a multi e i n business, so like you, you, you might have you, you know, you, you cookie cutter out your, your locations, your retail operation, you got three locations. And you know, let’s say I’ll take my hometown of, of St. Louis, maybe I’ve got two locations in St. Louis, I’ve got that is under one A YA n I’ve got another location across the Mississippi River. But just outside downtown on the, on the Illinois side. And so that’s another e i n if I have that, as long as that is business is part of my core business and it, and the, and the decline is or the, whether the revenue decline or the government order has a material impact, then if it impacts one, it impacts. All right. So a a a a shutdown is a shut, a partial shutdown is a partial shutdown is a, is a partial shutdown. And any other final guidance on this topic, Terri? The, before we move on to the next one,

KIRBY:

This one is just really big that people need to probably look at how it impacts them. Cuz I agree that this is probably the one that’s most misunderstood and probably overlooked because, you know, oh, okay, so I go home at 10 instead of two. That’s a big difference. And so it may significantly impact your business. You may need to take a look. You might qualify.

VANNOY:

Yeah, that’s right. I I, i, I, I agree. This is the single biggest opportunity. And I think a lot of businesses that are more, they’re especially the larger end of small businesses, they maybe have multiple locations. They have multiple revenue streams. They’re more, they’re simply more complex. They have frontline customer serving employees face-to-face with brick and mortar component and back office components of their business. They, they probably qualify. That’s, that’s probably too broad of a statement. Many will qualify when they think that they don’t. And, and you need to, you need to be on the hunt for, to find ways in which you do. Okay, let’s move to our next topic here. This is something I’ve heard. You know what, I’ve heard this one from some really smart informed people that you know, fear.

Cause, cause you know, we’ve talked a lot about IRS backlog. We’ve done a few webinars on this topic. You know, the, the IRS and their staffing, they were, they’ve been impacted by covid just like everybody else has. And so they’re really, really, really far behind. And then all the complexity that, you know, has been inter introduced from all the stimulus and tax updates. I mean, they’re, they’re, they’re drowning, right? And so a lot of people think, Hey, I gotta file for my file for my nine, my 9 41 x my amended tax return to get my credit. They’re so backlogged by the time they even get to mine. I, I, I’m kind of too late and they’re probably gonna be outta money before they even get to me. Let, let, let’s squash this myth. Hard <laugh>, yes. Tell, tell everybody the truth here.

KIRBY:

<Laugh>, unlike like P P P loans where the government actually set aside funding for those loans, this credit is based on the withholding tax that you take out of employees checks with your payroll. This is basically looking at how does that impact those wages that you’re paying and the impact to your company. How can you keep those from, like going out of your pocket to the I r s and then basically they stay in your pocket when you qualify for E R T C that basically saying, I’m gonna take this credit, and that credit gets calculated against that withholding amount that you would deposit every time you have a payroll. And so it’s putting that money back in your pocket. It’s not a matter of running out unless you’re not paying anybody anymore. But the whole thought process is that by stimulating that payroll, that withholding amount, which is the federal withholding, the employee employer shares of social security and the employee employee shares of Medicare are being looked at, so that you get your withholding back so that it can stimulate the business.

And that’s how the agency’s looking at it. So that this credit goes against those taxes that you’ve withheld from the individual. You’re still gonna report that information. It’s still gonna get credited to their social security accounts and their withholding accounts. But the credit, the way it works is, is that it gets it back the, it’s the government turnaround saying, hi, no thanks. You don’t have to give me that money. You just keep it so that you can keep your business going. It’s almost that readily available. When you’re processing it the way you set up your payroll, it’s possible that it’ll calculate within that payroll so that it reduces any tax liability that you’re funding. If you have in excess, and it’s for the current quarter, you can file a Form 7,200 with the agency and get that excess back. That is all withholding funds that you are paying into the government that you’re basically getting back. So it’s not an amount or a limited loan amount that the government said, okay, I can only give out this much money and then I shut it off. This is something that’s like living and breathing along with your payroll. Every time you do withholdings for tax payments, that money that you’re paying into the government is the money that they’re handing you back.

VANNOY:

Yeah. The way, the way I think about

KIRBY:

It

VANNOY:

With p p p, you, it was a loan and it became forgiven potentially forgiven, but that loan, the dollars, somebody was sending you a check in the form of a loan, and so that money had to come from somewhere. Therefore, there was a fund in and, and that fund had, you know, had had a limited dollar amount. The IRS doesn’t have any money. They, o they only collect our money <laugh> in the form of taxes. Right, exactly. And so the I think that that’s just kind of how I think about this is there’s, there’s not a need to have a fund because all this is, is the reduction in how much they’re collecting from us. Correct. But because these dollar amounts can be so big, and this is just taken against the, the federal employer portion sometimes the credit. So you can, you can offset your liabilities and then decrease the, the tax expense you have forward looking, but retroactive.

It’s just basically, they’re almost like acknowledging. It’s like, Hey, yeah, you overpaid so we’re gonna give you a refund. But it’s not their money. It’s your money. Mm-Hmm. <affirmative>. So it doesn’t require funds. So maybe, maybe say, so two parts to this myth. I think number one, not true. There is no fund, so therefore there’s no fund to, to run out. This is your money if you qualify, you get it, get it in the form of, of, of a credit. And maybe that’s a forward looking credit. We can talk about that in on our next myth or in the, in the form of a refund. But let, let’s, let’s do talk maybe just, you know, a minute, Terri, if you could, on the, on the sobering reality of, of this IRS backlog, what, what expectation would you set to a small business owner of, you know, if they applied for the, you know, filed their 9 41 x their amended quarterly tax return for these credits? How long are, are, are they probably looking at before getting money?

KIRBY:

Right now? I would say from, from experience and seeing what we’ve had submitted, the IRS is working hard at trying to get this backlog down. They are opening the mail and they’re getting current with that, but the turnaround on the actual refunds are taking somewhere between like four to six months. So that, that could be hard to handle waiting six months for that refund. I mean, granted, it’s better than not getting a refund at all. But I have to say, they, you know, they are getting better. They are getting back to work. They are trying to push through. We’ve seen some responses on some notifications and stuff that are very, very positive, but we haven’t gotten to the refund stage yet. But yeah, they’re, they’re working hard at trying to get it up there so that they can get those funds out there.

 Be aware too that, I know that there’s been some questions coming up about, well, how about if I expedite it by submitting a, a form 7,200, and it’s like, no, that’s 7,200 form is specifically for credits for the current period prior to any filing of the 9 41 for that quarter. So at this point in time, since we’re into July already, I’d pretty much say don’t even try to submit a 7,200 for second quarter, because second quarter filing’s happening. I mean, granted, they say that it has to be received and processed before your nine 40 ones received for second quarter, which is starting to happen now. But I’m in July, and if I had credits and then they were available, I could be, I, you don’t wanna submit a 7,200 for every payroll, but I could feasibly start submitting it at any point in time this quarter.

And those are usually being reviewed within a 24 hour period. And then they’re forwarded on. So if they’re approved, you might see cash within four weeks for that current period. Keep in mind though, that again, the i r s is going through those and they will send you a notification whether you are rejected or if you’ve been approved. You gotta use the right form. It’s gotta be the current date. Stuff like that. But they’re doing what they can in so many ways to try to be able to get cash back into the hands of the small business person and their group so that they can continue to do business.

VANNOY:

Yeah, and I’d I’d say, you know, as a, you know, we, we got 80,000 small businesses that we help with, with payroll in almost all those. We also provide the tax filing for, so as a, as a very large bulk filer who has daily contact with IRS officials, we kind of a front row seat to this thing. And you know, I, I think we are past the stage where, you know, we, we didn’t even know if bail was being opened. We know mail was being opened and responded to, but it’s kinda, it’s kind of the pig in the Python. It’s gonna take a while for this to kind of pass through the entire system. But there’s no question. I’d say two things. One, or we’re seeing acceleration. The, the, the backlog is just so gigantic. It’s gonna take time. But we are seeing acceleration and, and I think just in general, we’re seeing a pretty responsive willing to work with folks the best they can. IRS would, would you, would you agree? Definitely. Yeah. Yeah,

KIRBY:

Definitely.

VANNOY:

All right. Let’s, let’s, let’s take myth number five. Our, our, our last one here. And, and you touched on it with, you know, talking about, you know, a 9 41 versus a 7,200. So I, I think the average entrepreneur is expert in their field. They aren’t expert necessarily at payroll taxes. Can you just, you know, give a 62nd edu education on what the heck, a 9 41 and a 9 41 x and a 7,200, what, what those things even are, I think for the most people, part, people get it, but it’s important to understand the relationship. And then let’s talk about, you know, how you can get your money retroactively and how you can get your money forward looking and, and what, what, what the difference in those are.

KIRBY:

Well, we’ll start with the easy part cuz we’re, we’re withholding our payroll tax liabilities with each payroll process. And that’s our periodic process. And if we keep that in mind, and if you had a credit it becomes, you know, cumulative, you might say over a while you’ve had excess for a couple of weeks and I really would like to see that. Then you’ve, then you may have use of the form 7,200 form 7,200 has been revised a couple of times. So you always have to use a current form and you’re not gonna wanna file 7,200 with every week. That, that’s kind of redundant and kind of ridiculous. It’s the IRS is gonna start wondering what the heck you’re doing. But the 7,200 form was designed so that if you had a, a significant amount in the past couple of weeks that you really needed, you could submit that form, fax it into the i r s and it is for a periodic reimbursement of the excess, not the, not the withholding.

Cuz you’ve gotta take your look at how does it impact my current deposits If I withhold all of my liability, keep it in my pocket if I have access. That’s where the 7,200 comes into play. Be aware that when you set up with the E R C through the payroll systems, that calculation use, you know, if you’ve identified what wages are qualified, it processes it through most payroll systems will say, okay, well let’s calculate it out the credit. So here’s my total tax liability, but here’s the amount I’m not depositing to the agency because it’s gonna stay with the employer. So it can be realized even with the payrolls that you’re processing. That was the initial goal when the E R C was started. So it allowed the money to never flow through. Similar to, you know, some states have job credits where you gather withholding, but then you don’t remit it back to the state because of the job credit.

You reinvest it back into the job site. That’s kind of what the I Iris tried to do on the periodic level. Now keep in mind, sometimes, you know, we didn’t know until after the fact and we needed to re, we have to report all of this stuff that’s taking place on our quarterly 9 41. If I did not make use of a form 7,200, everything would go in. I would have E R c, let’s say if it went through my periodic reports, I have my withholding, it’s gonna impact my 9 41 and I may or may not see much of a refund, but because you’ve already gathered and kept that money in your pocket without having to release it to the agency, if you did not do E R c, okay, we had the 7200 7200 form. If you use that during that current quarter, I have to report that on the 9 41 because you’re not gonna get that double dipped paid back again.

 If you do, you could get into a lot of trouble. So that’s why you have to keep an eye on that. For those employers that opted not to do the 7,200 and they didn’t get the chance to set up their payroll so they could take it with the withholding, that’s when we’ve got the 9 41 x and we’re actually filing the 9 41 and then going back and amending that return to realize that e r c credit. Now that’s kind of what happened for all of 2020 because a lot of employers initially were not qualified. And then with the C A A and with the ARPA pieces coming into play at the end of the year and the beginning of this year, all of a sudden more employers were eligible to be able to make use of that. And so that’s when, okay, let’s do what we call a nine forty one x, which is an amendment to the 9 41 to get those dollars back.

And so granted it takes a little bit longer to realize those monies back into your pocket, but it’s out there, you’ve already paid it in. And if you’re eligible, you can get that money back so that you can reinvest it into that payroll and into your business so that you can continue on. So it’s, they’re just timeframes that we’re looking at. It’s like, can I take care of the current immediate payroll period? Do I have qualified situations? If I don’t have it for the current period, then I’m looking at, you know, well, is it over a period of time for the current or am I looking retroactively? And anything that’s a look back is an amendment at this point.

VANNOY:

And I think the 7,200, just looking at the calendar, is probably gonna become less and less of an issue as the year progresses. Right. I think it’s definitely you know, on face value, the number of government orders that restrict business and the, the decline in grocery receipts, you know, as the world reopens and business starts to grow, you know, we’re, we’re obviously, you know, said a million times in this program. We’re in the same storm, but not we’re all out all in the same boat. So I think the number of in businesses that are this season even makes sense for will continue to shrink. And it’s a good thing. Cause that mean, that means people are, people are growing their businesses and getting back to life. But I I, I’d say know that the 7,200 is still an option. If you wanna get proactive and not have to pay the money out in the first place, you’re better off not paying it in the first place than having to wait months to get a refund. But at the end of the day, a refund is better than nothing. <Laugh>. Right,

KIRBY:

Exactly.

VANNOY:

So, knowing this is our last myth that we’ll talk about today, I’m sure we’re gonna have more topics in in in the coming months because this thing is not going away. As we, as we look and talk to our customers, I think the small business administration says estimates there’s something like 25% of all small businesses that’s any company over 500 employees has been impacted mm-hmm. <Affirmative>. And you know, it, it is, it is hundreds and hundreds and hundreds of customers that we have already filed returns for that that is now in excess of a hundred million dollars in stimulus, but that’s hundreds and hundreds and hundreds out of like 80,000. So it, it is still how do I say it? I I almost think frustrating how much money is left on the table for small businesses our customers and non-customers.

 This is, this is a once in a lifetime opportunity. Yeah. I mean, covid is a terrible, terrible thing. Horribly impacted all kinds of lives in a million ways, but this is almost criminal. As a small business owner, if you’re not hunting and searching for ways to get this tax credit, this business stimulus that is legally available to you in a, you know, if you don’t qualify, that’s a good thing because your business simply wasn’t impacted. It, it would seem reasonable to not take taxpayer funds to, to, to, to, to boost your business up. But man, this is a legal thing provision provided to you to stimulate your business and get grown. So if you haven’t explore, ask your cpa, ask a tax attorney. And by all means, we’d love to help ask, ask anybody at Asure and, and help you through that process. Gary, anything else you want to, you wanna hit a final message you wanna deliver to everybody today?

KIRBY:

I think we have pretty much covered most of these myths, but I’m hoping that most employers would take a look at how, you know, how these, this last year and a half or so has impacted them. And yeah, I would say check into it. You may have e r c eligibility that could help stimulate your business that you never thought about. Yeah.

VANNOY:

Yeah. All right, Terri, thanks so much. And thanks for everybody else for joining us today. Th this is what we do. Our, our mission is to help small businesses grow in for the last year and a half I think it was a lot more about helping people survive and navigate some very, very difficult waters. Even for companies who were doing well. The, the compliance landscape of hr was, was, was unchartered waters for all of us. So if, if you need some help navigating the complex waters of tax and HR legislation if you need some help managing cash flow, need some help finding the talent you need to grow your business and getting the stimulus you need, this is exactly what we do. So if you need help in payroll, hr, time, attendance, or HR services don’t hesitate to call. And we look forward to our next meeting. Thanks again, Terri. And thanks for everybody to, for joining today.