New Employee Retention Credit Guidance

New Employee Retention Credit Guidance

In the past, we have stressed the importance of taking advantage of the Employee Retention Credit (ERC), which was created by the Coronavirus Aid, Relief and Economic Security (CARES) Act and signed into law in March 2020, to encourage businesses to keep employees on their payroll. But since being implemented, there are several updates employers need to keep on their radar. Read on to learn about new IRS guidance that could mean bigger cost savings for you and your team.

To take full advantage of this opportunity, you need to understand the new ERC guidance the IRS released on August 4, 2021. Notice 2021-49 addresses changes made by the American Rescue Plan Act (ARPA) to the ERC that are applicable to the third and fourth quarters of 2021, including:

  • Making the credit available to eligible employers that pay qualified wages after June 30, 2021, and before January 1, 2022
  • Expanding the definition of eligible employer to include “recovery startup businesses”
  • Modifying the definition of qualified wages for “severely financially distressed employers”
  • Providing that the employee retention credit does not apply to qualified wages taken into account as payroll costs in connection with a shuttered venue grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, or a restaurant revitalization grant under section 5003 of the ARPA

The new guidance also responds to frequently asked ERC questions, including:

  • The definition of a full-time employee and whether that definition includes full-time equivalents.
  • The treatment of tips as qualified wages and the interaction with the section 45B credit.
  • The timing of the qualified wages deduction disallowance and whether taxpayers that already filed an income tax return must amend that return after claiming the credit on an adjusted employment tax return.
  • Whether wages paid to majority owners and their spouses may be treated as qualified wages.

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their employment tax returns. If a reduction in the employer’s employment tax deposits is not sufficient to cover the credit, certain employers may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

On the horizon:

Earlier this month, the Senate passed its bipartisan infrastructure plan H.R. 3684, (the Infrastructure Investment and Jobs Act) by a vote of 69–30 which now goes to the House of Representatives for consideration. While this is a hugely historic piece of legislation that we suggest you follow separately, it’s crucial to note that the infrastructure bill would end the employee retention credit (ERC) early, making wages paid after Sept. 30, 2021 ineligible for the credit. The IRS and the Treasury said they’re closely monitoring the pending legislation related to the ERC and will provide additional information as needed. As a best practice, we suggest watching this legislative development closely in the coming days and weeks. Frequently asked questions and updates on the employee retention credit, tax credits for required paid leave and other items can be found on the coronavirus page of IRS.gov. Still need guidance to navigate the ERC? Contact our team of professionals today to set up a consultative conversation.

Sources: IRS, SHRM, Accounting Today

NY Manufacturers Tax Credits, Do You Qualify?

NY Manufacturers Tax Credits Do You Qualify

It’s not tax season just yet. But since it’s basically as American to search for sound ways to lower your taxes as it is to pay them, it’s never too early to have taxes on your radar and get prepared. As you know, you can claim deductions to reduce the amount you owe, but too often, manufacturers forget about the incredible opportunities that tax credits provide. In many ways, credits are an even more exciting way to save money because they can directly reduce the taxes you owe and in some cases, produce a refund. In order to simplify the process for you, we’re breaking down various manufacturing-specific incentives that are unique to New York State manufacturers.

Investment tax credit (ITC)

If you or your business placed a qualified property into service during the tax year, you may be entitled to this credit, up to 5% on your investment.

The ITC is a percentage of the investment credit base of qualified property placed into service during the tax year. Unused credits can be carried forward for 15 years (10 years for personal income taxpayers). A business that qualifies as a new business can also elect to receive a refund of unused credit instead of carrying it forward. See Investment tax credit (ITC) to learn more.

Manufacturer’s real property tax credit

You may be eligible to receive a credit equal to 20% of the real property taxes paid during the tax year on your New York State business property!

To be eligible, you must use your property principally for manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture, or commercial fishing. For more information about eligibility requirements, see Manufacturer’s real property tax credit.

Excelsior jobs program tax credit

Your company may be eligible to receive up to four fully refundable tax credit components:

  • excelsior jobs tax credit,
  • excelsior investment tax credit,
  • excelsior research and development tax credit, and
  • excelsior real property tax credit

If your business participates in the Excelsior Jobs Program and has received a certificate of tax credit from Empire State Development, you will be allowed to claim the credit. The amount of each credit component allowed is determined by Empire State Development. For more information about the Excelsior Jobs Program application and approval process, visit Empire State Development.

Alcoholic beverage production credit

If you are a registered distributor under Article 18 of the Tax Law (taxes on alcoholic beverages), you may be entitled to a tax credit.

If you produce 60,000,000 or fewer gallons of beer or cider, 20,000,000 or fewer gallons of wine, or 800,000 or fewer gallons of liquor within a tax year, you could receive a credit equal to 14 cents per gallon for the first 500,000 gallons that you produce in New York State.

You may also qualify to receive 4.5 cents per gallon for each additional gallon over 500,000 produced in New York State (up to 15,000,000 additional gallons for beer, cider or wine or up to 300,000 additional gallons for liquor). To learn more, see Alcoholic beverage production credit.

Don’t qualify for any of the credits we’ve mentioned?

Not to worry. Oftentimes, having an in-depth conversation with a tax professional about your unique business financials can save you a lot of time, frustration, and yes, money. For a complete list of credits and their requirements, see General business corporation (Article 9-A) tax credits and Business tax credits (Article 22). Or, to set up a brief consultative call with one of our RBT professionals who specialize in assisting manufacturing clients, don’t hesitate to contact our team, here.

Act Now: Don’t Miss this Local Grant Funding Opportunity!

Act Now Don't Miss this Local Grant Funding Opportunity

As we quickly approach the upcoming academic school year, teachers across Hudson Valley are busy preparing for the fall. In mere weeks, students will begin spilling into the hallways, navigating their new classes, and breaking out their fresh supplies to jot down the lesson plans that will shape their school year studies. Before September arrives and educators are swept away in the endless to-do list that accompanies a fresh batch of students, we’d like to highlight the Fund for Excellence in Education Teacher Grants which is now open to applicants. The purpose of these grants is to recognize the important contributions that teachers make in our community, offering Dutchess, Putnam, and Ulster County classroom teachers funding opportunities to support special classroom projects or professional development for teachers. Grants awarded will have a direct benefit to classroom learning and support the achievement of educational outcomes, so don’t miss out on these unique local funding opportunities. Read on to learn more about the available grants and the rules to apply.

Who is this grant program open to?

Teachers in grades Pre-K – 12 in public, private/independent, or parochial schools in Dutchess, Putnam, and Ulster Counties may apply for support from the program with the exception of specific grants open to public schools only. Proposals from Teaching Assistants will be considered only if they are submitted jointly with the classroom teacher.

Is this grant money off-limits for any specific uses?

Yes. Grant funding is not to be used for field trips or after-school activities.

What can grant recipients expect to receive?

Grants made through this program will not exceed $2,500 with the average awards ranging from $1,000 – $1,500. In previous years, grant money from this program has resulted in exciting enhancements to various school districts. One Putman County school used their grant funding to purchase a Little Tikes Picture Communication Symbol (PCS) panel for the school playground to help students with severe communication difficulties express their wants and needs. An Ulster County school applied its funds to materials and training to support the Diversity, Cultural Competency, and Social Justice Education program, bringing diverse stories to life within the library, classrooms, and school.

When is the deadline?

The fall online application opened up on July 1, 2021 and the application deadline closes on October 15, 2021.

Can I apply for all of the grants?

While there is no rule prohibiting you from applying for multiple grants, not all grants will be a good fit for your school. Below, please review the variety of available grants to make the best selection possible:

General Grants: Teachers may apply for grants that fulfill one or both of these criteria:

  • Support for classroom projects/initiatives which will improve learning opportunities for students
  • Support for the personal and professional enhancement of teachers (not to fulfill Master’s Program or certification requirements)

Writing Grant(s): A grant will be awarded to K-12 teachers for either professional development in the field of teaching writing or for a specific program designed to enhance the writing abilities of students.

Grants Available to Public Schools Only:

Marionette/Puppet Grant(s): Grants will be awarded to public school teachers for projects which incorporate student and/or teacher-made marionettes and puppets in the curricula. Preference will be given to multi-cultural or multi-disciplinary projects.

Dutchess County – Community Service Grant(s): Dutchess County United Teachers’ Community Service Grants will be awarded to Dutchess County public school teachers for projects involving their students in community service. These community service awards are made from the Dennis Markle Memorial Community Fund. Examples of the type of projects which would be considered for these grants are projects involving senior citizens, Veterans, hospice, daycare, disadvantaged populations, community beautification projects, etc.

So, how can I apply?

To access the grant portal, click here. All applications will be reviewed by the Fund for Excellence in Education Committee of the Community Foundations. All recommendations are reviewed, approved, or declined by the Board of Trustees of the Community Foundations. Recipients will be notified of their award status during the fall of 2021. Our team wishes you the best of luck and a successful academic year. Please do not hesitate to contact us with any questions you might have, or to schedule a brief appointment with one of our dedicated professionals.