One more ERC update as we prepare to contact our practice owner clients with an approximation of the amount of the Employee Retention Tax Credit their practice should be eligible to receive. Earlier this month, the IRS announced that the wages of owners of more than 50% of the value of the practice won’t qualify for this credit unless the shareholder has NO living relatives.
This crazy rule was detailed in IRS Notice 21-49 available at: https://www.irs.gov/pub/irs-drop/n-21-49.pdf.
We have considered waiting for Congress to provide clarity on this most recent IRS ruling. Not allowing the wages paid to practice owners to be included in the ERC calculation reduces this valuable payroll tax credit by $5k.
Everything we have read since the IRS issued Notice 21-49 has indicated that clarifying this issue is not currently a priority to Congress. For that reason, we plan to move forward with processing the amended payroll tax forms to file for the ERC once we get approval from each of our clients. Expect to hear from us by the end of September. If the rules change, we can re-file later to request the additional $5k ERC.
Our friends at the IRS continue to be way behind with processing their mail. Believe it or not, that includes many checks that the IRS has received in the mail since COVID hit last March.
For that reason, if you pay quarterly estimates, consider making those payments online at https://www.irs.gov/payments. I started paying my quarterlies online using direct debit last year during COVID and found the whole experience preferable to writing and mailing them a check along with a payment voucher 1040-ES.
The IRS has issued more info on What Taxpayers Need to Know About Making 2021 Estimated Tax Payments.
And remember, third quarter estimated tax payments are due 9/15/21.
Great news if you feel your PPP lender is making the loan forgiveness process too complicated. The SBA recently announced that they set up their own Direct Forgiveness Portal “to streamline forgiveness processing for PPP Borrowers. After registration, you may use this streamline process to automatically submit your forgiveness request to your lender.”
The SBA also offers live customer service to borrowers at 877-552-2692. More info is available at: https://directforgiveness.sba.gov./requests/borrower/login/?next=/
According to the SBA in their Press Release:
WASHINGTON – The U.S. Small Business Administration (SBA) is launching a streamlined application portal to allow borrowers with Paycheck Protection Program (PPP) loans $150,000 or less through participating lenders to apply for forgiveness directly through the SBA.
“The SBA’s new streamlined application portal will simplify forgiveness for millions of our smallest businesses — including many sole proprietors — who used funds from our Paycheck Protection Program loans to survive the pandemic,” said Administrator Isabel Casillas Guzman. “The vast majority of businesses waiting for forgiveness have loans under $150,000. These entrepreneurs are busy running their businesses and are challenged by an overly complicated forgiveness process. We need to deliver forgiveness more efficiently so they can get back to enlivening our Main Streets, sustaining our neighborhoods and fueling our nation’s economy.”
This new change will help rush relief to over 6.5 million smallest of small businesses which has been the Administrator’s priority since day one. The new forgiveness platform will begin accepting applications from borrowers on August 4th, 2021. Lenders are required to opt-in to this program through https://directforgiveness.sba.gov. In addition to the technology platform, the SBA is standing up a PPP customer service team to answer questions and directly assist borrowers with their forgiveness applications. Borrowers that need assistance or have questions should call (877) 552-2692, Monday – Friday, 8 a.m. – 8 p.m. EST.
You can find out if your lender is participating in this process at: https://www.sba.gov/document/support-ppp-lenders-participating-direct-forgiveness