Amended CARES Act helps struggling SMBs

Amendments to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) may help small and midsize businesses (SMBs) survive post-pandemic challenges, government sources noted. The sweeping revisions include an Employee Retention Credit (ERC), designed for SMBs that kept employees on the payroll despite their own economic hardships.

Heidi Chan, CFO at Access One Solutions, stated the ERC is meant to help offset some of the costs that her company and other employers incurred when keeping staff employed during the pandemic. "For some employers that were not able to qualify or obtain a PPP loan, the ERC credit could be a big help," she said. "Our industry caters to other businesses; when they were forced to close or their business decreased, it directly affected our income."

Chan emphasized that the credit, originally created on March 27, 2020, and subsequently revised, may offer relief to eligible business owners. She also encouraged ISOs and merchant level salespeople to let small business owners know about this program, which could enable eligible merchants to stay in business in 2022.

Multiple ways to qualify

Qualifying businesses can receive benefits from the following sources, which are outlined on The Internal Revenue Service's Taxpayer Advocate Service website:

• CARES Act – 2020 Tax Year: Qualifying employers, including PPP borrowers, can claim half of annual employee wages of up to $10,000 per employee, for the period between March 13 and Dec. 31, 2020, the IRS stated.

• Consolidated Appropriations Act – 2021 Tax Year: Qualifying employers, including PPP recipients, can claim a credit against 70 percent of qualified wages paid. Qualifying wages are now up to $10,000 per employee per quarter for the first two quarters of 2021, the IRS noted.

• American Rescue Plan Act (ARPA)– 2021 tax year: This amendment specifies a 70 percent credit for qualified wages of up to a $10,000 limit per quarter for a maximum of $7,000 per employee per quarter for all of 2021. Eligible employers can claim $7,000 per quarter per employee or up to $28,000 for 2021.

Further details and eligibility requirements can be found at: www.taxpayeradvocate.irs.gov/covid-19-home/covid-19-business-tax-relief/

Joining forces for SMBs

Tyler Kem, co-founder and president of Strike Tax Advisory, mentioned that his company partnered with The Green Sheet to help SMBs understand and leverage available tax credits with no upfront costs.

"One of the biggest misconceptions our clients have is that they think they don't qualify," he said. "Qualified merchants can get back $26,000 per employee from the IRS. In fact, yesterday a new client got back $1.7 million right to their bottom line."

Additional information on the Strike Tax offer is available at: www.striketax.com/partners?utm_source=email-blast&utm_medium=digital&utm_campaign=greensheet-partner&utm_content=merchant_processor_ERTC011122

Cash flow concerns

A 2021 survey of 294 business owners by Skynova Inc. found a majority of respondents are struggling with cash flow and late invoice challenges in the wake of COVID-19. Researchers also found that supply chain issues and hiring shortages are impacting businesses. Despite an overall increase in credit card transaction volumes, 45 percent of respondent SMBs suffer from open past-due invoices, and 49 percent have reportedly faced clients who refuse to pay for goods and services. In addition, 52 percent of businesses surveyed have cut ties with clients due to past-due or unpaid invoices, according to the report.

"Companies from virtually every region – at some point or another – have had to deal with clients who either do not submit payments on time or fail to submit them at all," Skynova researchers wrote. "And while a majority of businesses want to give their clients the benefit of the doubt, the reality is cutting off services until a client pays their invoice has proven a most effective method in obtaining payment and may be the key to ensuring that a company, its bottom line, and the employees who work there are not negatively impacted in the process."

Survey details are available at www.skynova.com/blog/collection-confessions

Lessons learned

Erin M. Collins, a national taxpayer advocate, acknowledged the tremendous challenges facing taxpayers during the 2021 filing season. In a prepared statement delivered May 19, 2021, before the U.S. Senate Subcommittee on Financial Services and General Government Committee on Appropriations, she vowed to improve relations between the IRS and citizens, stating adversity creates opportunities by exposing areas in need of improvement.

"Over the long run, the lessons learned from the pandemic are valuable in helping to identify needs for improved tax administration," Collins wrote. "The pandemic exposed weaknesses and vulnerabilities that can be strengthened, it prompted the IRS to experiment with new approaches to old problems, it led to a renewed awareness of the impact of cuts to the IRS's budget over the past decade and its need for additional funding, and it is causing the IRS and congressional overseers to collaborate on steps to improve the IRS's performance going forward."

A transcript of the hearing is available at www.taxpayeradvocate.irs.gov/wp-content/uploads/2021/05/National-Taxpayer-Advocate-Testimony-Senate-Approps-FSGG-Hearing-5-19-2021.pdf

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