Additional Plug-In Vehicles Qualify for Tax Credit of Up To $7,500

Plug-in electric drive motor vehicles are picking up steam.

According to the IRS: Internal Revenue Code Section 30D provides a credit for Qualified Plug-in Electric Drive Motor Vehicles including passenger vehicles and light trucks. For vehicles acquired after 12/31/2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.

Only the initial purchaser of the vehicle gets this tax credit. A few recent additions to the IRS list of plug-in motor vehicles qualifying for this valuable tax credit include:

  • 2022 BMW 745e xDrive qualifies for a $5,836 tax credit
  • 2022 MINI Cooper S E Countryman ALL4 qualifies for a $5,002 tax credit
  • 2022 MINI Cooper S E Hardtop qualifies for a $7,500 tax credit
  • 2021 Porsche Taycan EV qualifies for a $7,500 tax credit

For those of you who enjoy “the finer things in life”, Bentley Motors recently added a vehicle qualifying for the plug-in electric motor vehicle tax credit. Purchasing a new 2020 or 2021 Bentley Motors Bentayga Hybrid SUV provides you with a $7,500 tax credit on your personal tax return.

 Please note that General Motors and Tesla vehicles no longer qualify for this tax credit since they each sold more than 200,000 eligible vehicles. You can find the full list of vehicles qualifying for the Plug-in Electric Drive Motor Vehicle federal tax credit by clicking on the IRS Link below:

 https://www.irs.gov/businesses/irc-30d-new-qualified-plug-in-electric-drive-motor-vehicle-credit

New $100K Subsidy Available For Practices That Started After 2/15/20

On March 11, 2021, President Biden signed the $1.9 Trillion American Rescue Plan Act of 2021 into law. ARPA included a provision expanding the Employee Retention Tax Credit (ERTC) to include “Recovery Startup Businesses (RSB)” – those that opened after 2/15/20 with annual revenue of less than $1 Million.

The ERTC for RSB’s is only available for Q3 and Q4 of 2021 and is equal to 70% of the first $10k paid to each employee per quarter, capped at $50k per quarter. And unlike established businesses, an RSB does not need to show a decrease in revenue or being impacted by a government shutdown to qualify.

It appears that eligible startup businesses will claim this valuable tax credit just by checking a box that will be available on their Q3 and Q4 quarterly payroll tax filing Form 941. Expect the IRS to issue guidance soon.

PPP Loan Forgiveness

Business owners who received a PPP loan have 10 months following the end of the 24-week Covered Period to submit to their lender for forgiveness. Assuming you received your PPP loan in mid-April, you have until July 31st to complete the forgiveness application with the IRS.

We can help you apply for PPP Loan Forgiveness with your lender. Our fee for to complete the Form 3508S is $750, discounted to $500 if you use our firm’s payroll service, while our fee is $1,000 to complete the Form 3508EZ or $1,500 for the Form 3508.

Please email us at practicehelp@schwartzaccountants.com to request our help with our PPP Loan forgiveness application.

ERTC Update

For starters, the American Rescue Plan Act of 2021 (“ARPA”) extended the ERTC (Employee Retention Tax Credit) through the end of 2021.  Practice owners that haven’t fully recovered to 2019 revenue levels might now be eligible for a tax credit of $7k per non-family employee per quarter, which translates to $28k per employee for 2021.

As we explained in our January 4th blog post available at https://schwartzaccountants.com/2021/01/employee-retention-tax-credit-ertc-updates, to be eligible for the ERTC:

 For 2020 – Maximum annual credit of $5k per eligible employee:

  • To first qualify for the ERTC during 2020, your practice either needed to close due to a government orders or see its revenue fall by 50% for a calendar quarter as compared with the same quarter of the prior year.
  • You continue to qualify until the first day of the quarter following the quarter that collections exceed 80% of the collections for the same period of 2019.
  • For each quarter you are eligible, you can take a payroll tax credit equal to 50% of the first $10k of eligible wages paid per employee for the calendar year.

For 2021 – Maximum annual credit of $28k per eligible employee:

  • This payroll tax credit for 2021 has been extended through 12/31/21.
  • You are now eligible for any quarter in 2021 that your collections fall by more than 20% as compared to the same quarter of 2019 (or you can base eligibility on the preceding quarter as compared with that same period from 2019).
  • For each quarter in 2021 that you are eligible, you can take a payroll tax credit equal to 70% of the first $10k paid per eligible employee per quarter.
  • The credit for the first two quarters of 2021 is taken against your staff’s Social Security taxes, while the credit for the last quarters of 2021 is taken against Medicare taxes. Claim Advance ERTC payments on a Form 7200 (https://www.irs.gov/forms-pubs/about-form-7200)

 We also explained in another January 4th blog post available at: https://schwartzaccountants.com/2021/01/ppp-update/ how to prepare a report on your QuickBooks Online to see if you meet the required reduction in quarterly collections.

 Our plan is to help our clients file for the ERTC starting right after the 5/17/21 extended personal tax filing date. Our fee is $500 per eligible employee per quarter. Additional fees apply if we need to amend your 2020 practice and/or personal tax returns.  If you would like our assistance filing for the ERTC, please email us at practicehelp@schwartzaccountants.com.

Other ERTC Rules – IRS Issues Notice 2021-20: Guidance on the Employee Retention Credit:

In short, the current rules require that employers looking to claim the ERTC must amend the applicable 2020 quarterly payroll tax filings (Form 941) and must also reduce the deduction claimed for their staff salaries on their 2020 practice tax return by the amount of the credit. You can read all 102 pages of this IRS Notice at: https://www.irs.gov/pub/irs-drop/n-21-20.pdf.  Here are some highlights:

  • No deduction allowed for wages included in ERTC Calculationa similar deduction disallowance applies under section 2301(e) of the CARES Act with regard to the employee retention credit, such that an employer’s deduction for qualified wages, including qualified health plan expenses, is reduced by the amount of the employee retention credit.
  • Family members don’t count: wages paid to related individuals may not be taken into account for determining qualified wages for the employee retention credit.
  • No Credit for Schedule C Income: Self-employed individuals are not eligible for the employee retention credit with respect to their own self-employment earnings. However, a self-employed 21 individual who employs other individuals in the self-employed individual’s trade or business and who otherwise meets the requirements to be an eligible employer may be eligible for the employee retention credit with respect to qualified wages the self-employed individual pays to the employees.

Lastly, the IRS Notice (on page 87) details how to file for the ERTC for wages paid in 2020 as follows:

An eligible employer that received a PPP loan and did not claim the employee retention credit may file a Form 941-X for the relevant calendar quarters in which the employer paid qualified wages…[employers] should not use a subsequent Form 941 to claim an employee retention credit for qualified wages paid in the second quarter of 2020.

Please note that calculating the ERTC goes hand in hand with filing for the PPP Loan forgiveness. The rules seem to imply that you can re-figure the allowable payroll costs for the ERTC calculation even if you offset 100% of the PPP Loan with payroll costs for the forgiveness calculation.  See examples starting on page 73 of the IRS notice at: https://www.irs.gov/pub/irs-drop/n-21-20.pdf.

Lastly, unlike other subsidies offered during the past 12 months including the PPP Loans and HHS Provider Relief Funds that provided relatively short windows to apply for those subsidies, practice owners eligible for the ERTC have 3 years to file an amended payroll tax form – 941-X.

Our plan is to help our clients file for the ERTC starting right after the 5/17/21 extended personal tax filing date. Our fee is $500 per eligible employee per quarter. Additional fees apply if we need to amend your 2020 practice and/or personal tax returns.  If you would like our assistance filing for the ERTC, please email us at practicehelp@schwartzaccountants.com.

Additional EIDL Advance Funds May Be Available

As we wrote in February at https://schwartzaccountants.com/2021/02/additional-eidl-advance-funds-may-be-available/, the SBA has started reaching out to inform practice owners who didn’t receive the full $10k EIDL Advance last April that they might be eligible for an additional grant now.  To qualify for the Targeted EIDL Advance, your practice must be located in a low-income community per the map available at: https://sbaeidl.policymap.com/app and you need to demonstrate a 30% reduction in revenue for an 8-week period beginning 3/2/20 or later. Plus, you need to wait to be contacted by the SBA to apply.

If you have been contacted by the SBA by email regarding additional EIDL funds available, please read through our blog post or check out what the SBA posted about the new Targeted EIDL Advance at: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/covid-19-economic-injury-disaster-loans.

Businesses Can Temporarily Deduct 100% of Meals As Of 1/1/21

IR-2021-79, April 8, 2021

WASHINGTON — The Treasury Department and the Internal Revenue Service today issued Notice 2021-25 providing guidance under the Taxpayer Certainty and Disaster Relief Act of 2020. The Act added a temporary exception to the 50% limit on the amount that businesses may deduct for food or beverages. The temporary exception allows a 100% deduction for food or beverages from restaurants.

Beginning January 1, 2021, through December 31, 2022, businesses can claim 100% of their food or beverage expenses paid to restaurants as long as the business owner (or an employee of the business) is present when food or beverages are provided and the expense is not lavish or extravagant under the circumstances.

Where can businesses get food and beverages and claim 100%?

 Under the temporary provision, restaurants include businesses that prepare and sell food or beverages to retail customers for immediate on-premises and/or off-premises consumption. However, restaurants do not include businesses that primarily sell pre-packaged goods not for immediate consumption, such as grocery stores and convenience stores.

Additionally, an employer may not treat certain employer-operated eating facilities as restaurants, even if these facilities are operated by a third party under contract with the employer.

Still No Update By HHS On The PRF Self-Reporting Requirement

We checked the Provider Relief Fund (PRF) Reporting Portal Frequently Asked Questions (FAQs) available at:

https://hrsac19.my.salesforce.com/sfc/p/#t00000004XgP/a/t0000001FId8/wN.4dTa.NRiNhwh_0CBblH6gvvedhqOt7_.5OS7rP6U

We found no updates on when you need to comply with the PRF self-reporting requirement.

Reporting Questions 

  1. How can I report on the use of funds? 

Providers will be notified when they should complete the second step of the process and report on the use of funds. This functionality is not currently available. You will be able to log into the PRF Reporting Portal at https://PRFReporting.hrsa.gov  hen the system is ready for providers to start reporting on the use of funds. 

  1. When will I be able to begin reporting on the use of funds? 

The operability of the PRF Reporting Portal for reporting on use of funds has been delayed. HRSA will announce the timeline for submission of these reports when it is available. 

  1. How will HRSA communicate to providers when the PRF Reporting Portal is open for the submission of reports on the use of funds? 

HRSA will communicate via broadcast email to the email address that was provided during registration. Providers can also check the Reporting Requirements and Auditing webpage for the latest updates about the PRF Reporting Portal available at: https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/reporting-auditing/index.html

MASS Finally Conforms With Federal Rules For PPP Loans and EIDL Advances

During March, Massachusetts passed legislation to make PPP Loan Forgiveness and EIDL Grants not taxable to Massachusetts business owners. Other grants, including the those issued by the MGCC or the HHS, continue to be taxable for federal and Mass taxes.

According to the Mass Department of Revenue at:  Tax Filing Season Frequently Asked Questions | Mass.gov:

PPP Loans:

Loan forgiveness income is excluded from gross income for personal income taxpayers for 2020 under An Act Financing a Program for Improvements to the Unemployment Insurance Trust Fund and Providing Relief to Employers and Workers in the CommonwealthSubsequently, the Consolidated Appropriations Act of 2021 (CAA 2021), provided that PPP loan recipients may deduct expenses paid for using PPP loan amounts, even if the PPP loans are ultimately forgiven.

EIDL Advance:

EIDL grant amounts are not taxable for personal income taxpayers, including unincorporated businesses reporting income and expenses on Schedule C, partners in a partnership, and individual shareholders of an S corporation. Recently passed Massachusetts legislation excludes EIDL grant amounts awarded pursuant to Section 1110 of the CARES Act or Section 331 of the Economic Aid Act for 2020 for taxpayers subject to the Massachusetts personal income tax. Therefore, personal income taxpayers do not need to report these amounts. Whether you are subject to the personal income tax or the corporate excise, if your expenses are deductible on your federal return, they are also deductible on your Massachusetts return.

Other Grants:

Federal law requires that grants to businesses be included in gross income.  The IRS has specifically stated that if governments use CARES Act Coronavirus Relief Fund payments to establish grant programs to support business, businesses receiving such grants must include the grant amount in their federal gross income.  Because these grants are taxable under federal law, they are also taxable under Massachusetts law. 

Anyone who filed their 2020 Massachusetts tax returns reflecting the PPP loan or the EIDL Advance as taxable income can amend their tax returns to have those taxes refunded.  Please reach out to your tax preparer if you think your 2020 Mass returns might have picked up PPP loans or EIDL Advances as taxable income.

Need Help With Locum Tenens Providers?

During the pandemic, we’ve often been asked for advice on finding qualified providers. We highly recommend using Barton Associates.

Barton Associates, founded in 2001 and headquartered in Massachusetts, connects hundreds of practices each month with qualified healthcare providers. Their vast database of providers includes physicians, dentists, nurse practitioners, physician assistants, CRNAs, and psychologists/iatrists. Having such a large pool of providers allows Barton Associates to supply a qualified candidate with any state license needed.

Barton’s 1:1 approach means that throughout the entire process you will have a single point of contact. This strategy positions them to build the strongest possible relationship with you.

Most facilities, like yours, typically use expert locum tenens providers to manage a wide variety of healthcare staffing challenges, such as:

• Covering urgent needs because of vacancies, vacations, illnesses, or planned leaves of absence (e.g., maternity or sabbatical leave) among permanent staff.
• Supplementing existing staff during unanticipated or seasonal spikes in patient volume.
• Providing stopgap coverage while recruiting a permanent provider.

Barton is equipped to help you fill your short- and long-term assignments, no matter the situation. Partnering with Barton Associates means you’ll never be left to figure things out alone. They give you a dedicated account manager that’s with you every step of the way helping to:

• Quickly and efficiently find qualified candidates. Barton recruiters are trained to proactively recruit for new providers, meaning our database grows daily.
• Obtaining additional credentialing or state licensing when necessary.
• Obtaining comprehensive medical malpractice insurance coverage.

It’s your account manager’s core responsibility to find the best candidate that matches your organization’s staffing needs. They review CVs, conduct initial interviews, and check references, so you don’t have to.  All you have to do is review the candidates and choose the best fit for your practice. Barton also handles travel and housing, helping to get your new provider to work as quickly as possible.

To learn more about locum tenens staffing through Barton Associates, visit bartonassociates.com/clients. Simply fill out the form or give them a call to be connected with The Locum Tenens Experts®.

PPP Updates for Small Practices and Sole Proprietors

More changes were made to the PPP program. First, the deadline to apply is extended to May 31st. If you are self-employed or own a small practice, consider applying for a PPP loan. Remember, the PPP loan is FREE MONEY, and should NOT need to be repaid and should NOT be subject to federal income taxes.

A second change deals with how much PPP money self-employed individuals can receive. Under the revised PPP rules, you will base the maximum PPP loan on your Gross Collections as reported on your Schedule C. Previously, the calculation was a function of your net Schedule C income. Either way, the max you can receive remains at $20,833, with the calculation now based on gross revenue capped at $100k.

More info is available at: https://mdtaxes.com/2021/03/ppp-formula-enhanced-for-sole-proprietors-earning-less-than-100k/

Please visit the SBA website for more details at: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources