COVID-19

The Employee Retention Tax Credit (ERTC) is one of the remaining federal tax incentives left over from the pandemic era. Although the program is no longer in effect, taxpayers can continue to file retroactive claims. This is certainly good news for eligible businesses that previously did not claim the savings. At the same time, it has also opened the door to unscrupulous ERTC mills and others falsely promising huge tax savings to unsuspecting business owners. The result has been a sharp increase in the number of fraudulent ERTC claims. In fact, the IRS has already identified over 11,000 fraudulent returns

The COVID-19 pandemic was a challenging time for individuals, families, and businesses. Concern about the widespread transmission of a relatively unknown virus resulted in stay-at-home orders and forced business closures. While a practical step, it did create significant complications for many including restaurants, bars, and entertainment businesses. Additional challenges were created with the introduction of social distancing rules which only served to further complicate matters. The result was that revenue vanished while expenses compounded leaving employers with little choice other than to lay off staff.  

Originally established by the American Rescue Plan Act of 2021, the Restaurant Revitalization Fund (RRF) was designed to provide needed capital to help restaurants and other hospitality businesses keep their doors open. As one of the hardest-hit industries by the combination of stay-at-home orders and forced business closures, the capital infusion was desperately needed. The RRF provided up to $10M per business was available and repayment was not required assuming monies were used to pay eligible expenses.

The Paycheck Protection Program (PPP) was an invaluable tool that helped many Atlanta companies manage through the COVID-19 pandemic. The loan program, which was initiated through the CARES Act, offered funding designed to keep operations going through government orders and restrictions. It even included a forgiveness option assuming funds were used on certain expenses including payroll, rent, mortgage interest payments, and more. The PPP was so successful there was a second draw option available for the hardest hit. In fact, Georgia companies alone received over $11B in PPP loans.  

Now that the pandemic has passed almost all these programs are no longer available. In fact, the recently enacted Infrastructure Investment and Jobs Act called for an early end to the Employee Retention Credit. The only remaining program is the Economic Injury Disaster Loan (EIDL) which is set to expire at year-end. Earlier today, the SBA announced new guidance to help small businesses that are considering applying for a new loan, targeted advance, or supplemental advance.

As the pandemic continues to abate, the way many Atlanta businesses operate has significantly changed over the last 18 months. The unexpected restrictions preventing customers, employees, and vendors from directly interacting created unexpected operational challenges. New social distancing requirements forced organizations to make significant changes to achieve compliance. This meant some businesses (restaurants) had to move to a take-out-only format, and others had to limit production runs, while several companies transitioned to a virtual office environment. The ability to move to a virtual format allowed employees the opportunity to stay productive while working from home. This new operating format met regulations while serving customers in a whole new way.

COVID-19 may not have been unexpected in 2021, but it continued to shape the year for almost everyone. To incentivize employers to offer paid time off for affected employees, legislation in March 2020 provided tax credits for paid sick and family leave. In the first six to eight months, it’s estimated that six to eight million U.S. workers took advantage of the expanded leave if they were unable to work or telework. Now, the IRS has issued detailed reporting guidance for employers that offered paid sick, and family leave this year. Since the period for offering paid leave is coming to an end on September 30, 2021, Atlanta businesses have time to calculate accurate reporting data and begin preparing W-2s to be issued in January of next year.

Many Atlanta area businesses are continuing to recover from the financial challenges created by the pandemic. Despite the obvious increase in demand for many products and services, many businesses continue to struggle financially. While there are many concerns, a primary issue is the inability to satisfy the deferred and short-term debt obligations taken to survive the early days of the pandemic. When combined with the dwindling number of federal COVID-19 relief programs, it is easy to understand the depth of the issue.

Unfortunately, COVID-19 continues to present complications for Atlanta organizations. While it appears, the restrictive regulations will not return, the arrival of virus variants (delta and MU) have become a cause for concern. It was reported by the Georgia Department of Public Health that for the two weeks ending on August 30th, both Fulton and Gwinnett Counties had experienced a sharp increase in new infections. Although far less than what was reported during the height of the pandemic, it does mean that businesses will have to plan for this new risk factor. It is also a prompt to review internal policies on COVID-19 including safeguards, exposure notification, and other policies.

During the pandemic, many Atlanta businesses became familiar with the COVID-19 relief options offered through the Small Business Administration (SBA). This included the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL), and the Employee Retention Tax Credit (ERC). As the recovery continues and these programs end, many are looking for new ways to jump-start growth through new business opportunities. While the dynamics have changed, the SBA offers other programs such as the SBA 8(a) Business Development Program which can help qualifying businesses compete for federal contracts.