New Jersey and Pennsylvania-area employers hit with IRS penalties over failure to pay income taxes related to the Employee Retention Credit (ERC) may have some relief on the way.

The economic effects of the COVID-19 pandemic on businesses have primarily passed. The last parcel of federal relief, the American Rescue Plan Act, provided one final economic boost for individuals and businesses, and since then, popular federal relief programs, including the Paycheck Protection Program, Shuttered Venue Operators Grant, and the Employee Retention Credit (ERC), has expired.

As Christmas approaches, Klatzkin is putting a twist on a holiday classic. But rather than filling your head with drummers drumming and golden rings, we’re focused on providing tips through “The Twelve Days of Taxmas” blog series that could help minimize your tax liability. On the ninth day of Taxmas, my accountant gave to me […]

When the Infrastructure Investment and Jobs Act was signed into law on November 15, 2021, it opened the door for necessary repair and upgrades to the nation’s crumbling infrastructure. The massive spending bill calls for a $1.2T investment in roads and bridges, power grids, rail services, broadband access, water infrastructure, airport development, and environmental remediation. When Congress was negotiating the legislation, there was significant concern about how it would be funded without inflating the national debt. This need for funding resulted in the early termination of the Employee Retention Credit (ERC). It has been estimated that the move will save the federal government $8B, redirected to offset expenses.

As we previously blogged about, the IRS issued Notice 2021-49 on August 4, 2021, which included guidance on claiming the credit after July 1, 2021. The Notice contains a provision concerning related individuals, of which many companies may not be aware. Essentially, if any of the company employees are family members of the majority owner, their wages do not qualify for the ERC like the wages of other non-related company employees.

On November 5, 2021, the House passed the Infrastructure Investment and Jobs Act (the Act), comprehensive legislation that calls for a $1.2T investment in the nation’s aging infrastructure. Initially, there will be $550B allocated over five years to upgrade bridges, roads, transit, rail, water systems, electrical grids, and broadband.

As the financial and operational challenges created by the COVID-19 pandemic begin to subside, many New Jersey and Pennsylvania-area businesses are starting to turn the corner. It was recently reported by the U.S. Bureau of Labor and Statistics (BLS) that New Jersey added another 21,500 jobs in September, which means the state has reclaimed 68% of the jobs lost during the pandemic. In Pennsylvania, the unemployment rate has fallen to 6.7%, with parts of the state reporting a better 6.3%. A key reason so many businesses were able to survive during recovery is federal COVID-19 relief programs such as the Employee Retention Credit (ERC). 

The Employee Retention Credit (ERC) is one of a handful of federal programs aimed at helping organizations and businesses maintain healthy operations through the ongoing COVID-19 pandemic. For nonprofits, programs like the ERC and the Paycheck Protection Program (PPP) can be the difference between providing services and having to shutter their doors.

The arrival of the COVID-19 Delta variant has many New Jersey and Pennsylvania-area employers concerned about the potential for future economic challenges. The number of new cases in both states has increased at an alarming rate, and the anxiety is compounded by the expiration of several Small Business Administration (SBA) COVID-19 relief programs, including the Paycheck Protection Program (PPP). Of the few remaining programs, the Employee Retention Credit (ERC) offers a compelling savings opportunity and is still underutilized by businesses and nonprofit organizations.

The Paycheck Protection Program (PPP) was one of the Small Business Administration’s (SBA) most popular COVID-19 relief programs and officially came to a close at the end of June. These loans were in such high demand primarily because of the possibility of loan forgiveness, assuming certain conditions were met. Now that the ten-month covered period is quickly winding down, the attention amongst borrowers has shifted to the loan forgiveness process.  Many PPP first draw loans have an August, September, or October 2021 deadline to apply for forgiveness, so now is the time to start evaluating how to maximize PPP forgiveness and the Employee Retention Credit.