Pub. 3 2021 Issue 5

21 nebraska society of cpas W W W . N E S C P A . O R G Need health insurance? I know health insurance and can help you evaluate your options. Give me a call today to discuss your health insurance needs! Melissa Wheeler 249 Cherry Hill Blvd, Ste 2 Lincoln, NE 402.484.0303 agentmelissawheeler.com/ Securities & services offered through FBL Marketing Services, LLC, 5400 University Ave, West Des Moines, IA 50266, 877/860-2904, Member SIPC, Affiliate Farm Bureau Financial Services. PR-H-F (4-21) RickMeyer, CPA, MBA, MST is a long-time member of the Illinois CPA Society and has served on various tax committees over the past 40-plus years. He is a director for alliantgroup, a national firm that works with businesses and their CPAs to identify powerful government-sponsored tax credits and incentives. You may contact him at rick.meyer@alliantgroup.com. its activities in a comparable manner, and did that result in a more than nominal impact on their business operations? Remember, the partial or full suspension is an alternative way to qualify for the ERC, separate from the reduction in gross receipts test. 4. My client’s company was deemed an essential business, so they do not qualify because of business suspension. Even if your client’s business is deemed essential, an impact or change in their business may still qualify them. For example, even if they were open but their vendors were closed down or they couldn’t go to their client’s job site, they may still qualify. Or alternatively, if part of their business was considered nonessential andwas impacted by a government-ordered suspension, they may also qualify. The scenarios discussed above inMistake No. 3 could apply here as well. 5. Myclient’scompanyhasgrownduringquarantine; this isn’t something they should take. Great news! If your client’s company has grown during quarantine but experienced a full or partial suspension, there are expenses that may qualify. 6. Sales have rebounded for my client in Q1 of 2021; they can’t qualify for this credit. With the introduction of the CAA, you have the option to look at one quarter prior to determine qualification. This means we can determine eligibility based on lost revenue in 2020. Also, if your client was subject to a full or partial suspension, they may qualify regardless. 7. My client was in losses, or they do not have any tax liability. This is a refundable credit. In practice, this means that any credit overage above tax liability is sent to the taxpayer/business owner as a refund. 8. My client’s company has grown tomore than 500 employees, so they are not eligible for the ERC. The employee count restriction is based on full-time equivalent (FTE) employees, which is a more involved calculation than just counting everyone in the office. We helped a business with 640 employees and the FTE calculation put them at less than 500. Furthermore, if your client paid any employees to NOT work, or to work less than the hours for which they were paid, then the employee count restriction would not apply for those employees. 9. My client is a charity and the ERC is only for businesses. The ERC also may provide significant benefit to charities, e.g., churches, nonprofit hospitals, museums, etc. Charities can be particularly good candidates for the ERC. 10. Failure to document. Many tax advisors still think they can just create their own simple form. They check a few boxes, give a few-sentence explanation, and expect the IRS to hand over thousands and thousands of dollars on a silver platter and then play audit lottery. We’ve talked with former senior IRS officials. It is clear that the best practice is for businesses to provide contemporaneous documentation now, when first determining whether they qualify. To avoid headaches and heartaches down the road, they need to have counsel to properly and fully document how their business qualifies for the ERC. Let’s face it. Many companies are still struggling to stay open. There is so much business uncertainty due to COVID-19 and the variants. What affect will this have on your client’s business? Do they have enough cash to make it another month, quarter, or year? The only shot CPAs are qualified to give is to educate and help their clients get a cash infusion. The ERC is a fantastic tax incentive that could make this happen. Let’s do our best to be that value-added, trusted professional that can give them a chance to survive! t