ERC Talking Points Flashcards
Compliance First Tax Technology
- Our compliance team consists of tax litigation atty and former prosecutor, CPA and a former IRS revenue agent
- We utilize our outside counsel consisting of former IRS trial attorneys at tax litigation law firms to assist us as well.
o Our Tax Technology is software designed for compliance which allows us to determine your ERC based on object code not what someone feels you should get, and the numbers therefore are more defensible.
Relevant Statutes & Authorities
- The ERC was established by the CARES Act March 2020
- Further amended and extended under 2 presidents and 2 different Congresses.
o Consolidated Appropriations Act
o American Rescue Plan Act (Put the Recovery Start Up in place)
o Infrastructure Investment & Jobs Act
These 4 acts legitimize the ERC - The IRS Notices 2021-20; 2021-49; 2021-65 & 2021-33 are the Internal Revenue’s interpretation of the signed acts.
Eligible employers are those that carried on a trade or business in 2020 and 2021.
o Two avenues to file
GRT – Gross Receipts Test – 50% reduction in revenue from 2019 to 2020 and 20% reduction in revenue from 2019 to 2021
GOT – Government Orders Test – Most businesses file under this – CHANGE IN OPERATIONS – How did your business change to stay open?
* Shut down lobby,
* Carry out / Delivery service
* Travel – what was the purpose of the travel, meetings, regular gatherings, trainings, to gain new clients/employees etc.
* Supplies – cost increase, limited supply, delay in getting products
o How did this impact your clients? Were projects delayed? Did you absorb the additional costs?
Aggregation Rules – Clarify how many owners and how many businesses.
o Percentage of ownership – 51% ownership
o Find out if they have other businesses and how many employees
o There are long-standing Internal Revenue codes around Aggregation. This impacts how you count the number of employees, gross receipts and calculate qualified wages. This is a complex part of the rules by which we use certified tax professionals to assist with calculations.
Small Eligible Employers
o 2019 provides the baseline and determines the average number of FTEs/month.
o For 2020 100 or fewer employees on average
o For 2021 500 or fewer employees on average
Documents
o The 941s speak to the number of w2 employees.
o The 1094-C shows the actual number of FTEs, by month.
o This document is required by the CARES Act.
o We look specifically at Colum B for employees that work 30 hours a week or more.
o KEEP In Mind – Part-time employees DO NOT COUNT, but we do look at their hourly/weekly wages and see if we can include them in the calculations.
o This is where our Proprietary software comes into play. Your ERC is calculated using 800k lines of object code, this makes your numbers defensible, this is what makes us better than the others and we can get the numbers to you in a matter of days vs. weeks.
Wages
o 50% of wages or maximum amount of $5,000 per employee
o 2020 is based on the full year.
o 70% of wages or maximum amount of $21,000 per employee
o 2021 based on calendar quarters.
o Do NOT mention the number of companies that we have worked with.
o Our average is $14,100 per employee.
o This takes the PPP into consideration, but everyone has a different situation
o 2019 is a baseline for employee count
o 1099s are NOT eligible
Why StenTam?
o We started by creating software to assist banks with calculating the PPP loans and then created our proprietary software that focuses on compliance because we saw a need for businesses to file for the ERC.
o Initially could have filed for ERC and skipped PPP, at that time it was $33k max per employee, the government decided to eliminate Q4 of 21 and Q1 of 22 with no notice, so it behooves you to file, in the event they want to make another change.
o Our software was created with compliance to keep you the client in a good position with the IRS.
o The technology is used to reduce Risk and human behavior – ERC is calculated using object code, this makes the numbers more defensible. (You can’t say this enough)
o At StenTam, we reiterate that your safety is important to us and we emphasize the importance of compliance.
o These are the number of filings the IRS had. The backlog was created because of the pre-assessment reviews. Now that the ‘official tax season’ is over, there is a lot more progress with getting the filings completed.
o The final piece I will leave you with is that you will need to amend your taxes. If you have flow-through, you will need to amend both personal and business taxes.
