Employee retention credit updates and a delegation taboo

Written by promotiondept

April 24, 2021

Employee retention cRedit updates and a delegation taboo What you’ll learn from this episode: Play the episode below or read the edited tRAnscript: To comment on this episode or to suggest an idea for another episode, contact Neil Amato, a JofA senior editor, at Neil.Amato@aicpa-cima.com. TRAnscript: Neil Amato: Welcome back to the Journal of Accountancy […]

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Employee retenton credt up and a delegaton taboo

What you’ll learn from ths epsode:

Play the epsode below or read the edted transcrpt:


To comment on ths epsode or to suggest an dea for another epsode, contact Nel Amato, a
JofA senor edtor, at Neil.Amato@aicpa-cima.com.

Transcrpt:

Nel Amato: Welcome back to the Journal of Accountancy podcast. ’m Nel Amato. use the term “welcome back” be ’m welcomng back a repeat guest, the lead manager for the A’s Tax Practce and Ethcs team, Aprl Walker.

Aprl, t’s been almost two months snce we last spoke about the employee retenton credt. As we close n on May, what’s new snce then, snce that discussion in early March?

Aprl Walker: Yes, thanks, Nel, for havng me back. n ths tme, the RS has ssued another notce, on Aprl 2, and that s Notce 2021-23. And what that does s provdes nformaton on clamng credt for the frst and second quarter n 2021. You’ll recall when we talked last tme that the legslaton passed at the end of 2020 both extended the employee retenton credt and also modfed t n several ways, most notably by ncreasng the credt amount from 50% to % of qualfed wages, as well as ncreasng the maxmum amount of the credt. t went from $5,000 n total for an employee to $7,000 per quarter for an employee. Also, there was a reducton n the declne n gross recepts test that was necessary from 50% to 20%.

So, that’s just a quck summary of the changes that happened wth the employee retenton credt for 2021. Ths notce provdes nformaton and clarfcaton on some of those thngs. Another change of note for the credt s the ablty to choose ether the current quarter or the mmedately precedng quarter when testng for that declne n gross recepts. To gve you a quck example, to calculate the 2021 frst quarter, you could qualfy ether by comparng recepts for 2021 frst quarter to 2019 frst quarter, you could qualfy that way wth the 20% reducton. Or you can qualfy by comparng the fourth quarter of 2020 to the fourth quarter of 2019, so the prevously precedng quarter. Just another way that Congress was hopng to expand ths relef to busnesses.

Amato: That’s a good summaton. What are some yet-to-be-resolved topcs that elgble organzatons are most nterested n regardng the ERC?

Walker: We’ve gotten two man, really bg questons that we’re watng on gudance for. The frst one s whether wages that are pad to more than 50% owners and also ther spouses, whether those employees’ wages are elgble for the credt. The statute s slent on the ssue, and there s no clear consensus on ths. There have been a lot of people who have dscussed ths and looked nto ths, but no consensus. So we really need gudance from the RS to be able to know the defntve answer.

Another hot topc s whether PPP proceeds, when they’re receved or when they’re forgven, should be ncluded when you’re dong that gross recepts calculaton. So, for some busnesses that mght be really mportant n determnng whether or not they qualfy. Agan, these have not been addressed, and we are hopeful they wll be addressed soon.

Amato: Earler, you mentoned Notce 2021-23. Now a queston about Notce 2021-24. How does the penalty relef announced n that RS notce affect employers who are clamng the ERC?

Walker: Ths notce provides penalty relief for busnesses that are antcpatng but mght not have calculated ther employee retenton credt yet, be as we dscussed, t s qute a complcated determnaton to determne whether a busness qualfes or not. So t’s provdng those busnesses who — be quarterly reports are due Aprl 30, so that’s comng up really soon. For busnesses who are tryng to decde whether they qualfy or not, they mght not be to make ther depost for these payroll . So, t’s gvng them penalty relef, a lttle bt of tme to be able to determne whether they qualfy. And t’s actually not just the ERC. t s for some of the other credts that are ntended to provde relef for the pandemc.

Amato: So, ’ve read about flng optons. Are there dfferent ways elgble busnesses can clam the credt?

Walker: Yes, that’s rght. For the normal way, the most common way a busness s gong to apply for ths credt s through the quarterly fled returns, Form 941. So, those are fled every quarter, and you reduce the amount of payroll tax you depost by the amount of the credt. That’s how most busnesses wll receve the beneft of the credt. For certan busnesses n 2021, they are allowed to apply for an advance payment of the credt. So maybe the amount of the credt that you’re calculatng s greater than the amount of payroll tax that you are gettng to depost, so that’s when you would have a possble opportunty to apply for an advance credt, and you would apply for that on Form 7200.

Amato: Aprl, these are some good up. Obvously, there’s stll gudance people are watng on for the thrd and fourth quarters of 2021. Thank you so much for the update.

Senor edtor Courtney Ven has an ntervew wth frm leader Brannon Poe publshng soon on the podcast. They dscuss a range of topcs, ncludng one skll that some of us are good at and some of us need to work on. That skll s delegaton. Here’s Brannon Poe on one of the ways managers get delegaton wrong.

Brannon Poe: When you delegate somethng, the person that’s gettng the work, they need to own that project, and f you keep takng that ownershp back, then they’re never gong to take ownershp of anythng. t’s too hgh-rsk for them. And they’re not gong to put [n] ther effort f you’re gong to do t for them.

Amato: Agan that was Brannon Poe, a featured n an upcomng Journal of Accountancy podcast epsode. Look for that epsode to publsh n early May on the Journal of Accountancy webste and popular podcast platfor.

n other news, the U.S. Small Busness Admnstraton sad n a news release on Aprl 19 that t ntended to reopen the portal for Shuttered Venue Operators Grant Program applcatons by the end of the week. The SBA sad ts technology team and vendors are focused on testng the portal, whch was shut down be of techncal ssues only hours after t opened on Aprl 8. Up on the status of the portal can be followed on the SBA’s account at twitter.com/sbagov.

Also, the SBA provided details of ts Restaurant Revtalzaton Fund, ncludng fundng calculatons. Elgble busnesses can begn preparng applcatons, but the SBA s not yet to accept them. A date for when the applcaton wndow offcally opens s stll to come.

The House of Representatves passed a bll that would prohbt federal prosecuton for provdng bankng servces to a legtmate cannabs busness. The Safe Bankng Act, whch now heads to the Senate for a vote, also ncludes protectons for ancllary servces. Those ancllary servces are expected to be nterpreted to nclude CPA services.

And the RS announced t would extend, for a large number of for, the authorization to electronically sign untl Dec. 31 of ths year. The RS also added new for that can be e-sgned. For more on these topcs and other news, vst journalofaccountancy.com. Thank you for lstenng to the Journal of Accountancy podcast.


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