Page 26 - GS220302

CoverStory

Club Restaurant & Bar, in Columbus, Ohio. with tax consultants who handle the heavy lifting of filing
for refunds.
"Without this help we were forecasting tough times to
come this summer, with the possibility of closing our Just about any business with W-2 workers can qualify for
doors," Tony Mollica, the restaurant owner, said in a press ERTC, even if they were only marginally affected by the
release. Without the expertise of a company like Clarus, pandemic. Qualifying conditions include:
he added, "we would not have been able to manage or • Partial or full shutdowns due to government edicts
leverage this process on our own."
• 20 percent decline in revenue between 2019 and 2020
"For both large and small companies, the rules for • Supply chain interruptions
pandemic-related tax incentive programs can be daunting
and complicated," Maxwell said. "However, for most • Inability to access equipment
businesses the potential tax incentives are well worth • Reduced operating hours
investigating." • Investments in sanitation processes and equipment

This has not been lost on tax consultants, and a small It's worth noting that ERTCs are not just a way for ISOs
army of consultants has emerged to help small businesses and agents to make money by helping clients secure
benefit from this and related tax incentives created or refunds. ISOs and others in the acquiring business may
bolstered by Congress in response to the pandemic. Many also qualify for ERTCs, noted Scott Talbott, senior vice
of these consultants are enlisting ISOs and merchant level president for government relations at the Electronic
salespeople (MLSs) to help with outreach. The payback: Transactions Association and an accountant by training.
an ISO/MLS receives a percentage of the refunds the
consultants collect for businesses. Businesses have until three years following the calendar
year when the credits were earned to file for refunds.
"This is nothing like the PPP, where agents were getting That means, businesses have until 2024 to apply for ERTC
$50 and $100 referral fees," said James Shepherd, president refunds on 2020 payroll taxes and until 2025 to apply for
of CCSalesPro. "It's potentially a lot of money." 2021 refunds.

It's not unusual for a business that paid payroll taxes on Credit for R&D investments
four employees in 2020 and 2021 to receive a refund in
excess of $100,000, according to several experts. Typically, In addition to ERTC, businesses that have had to pivot,
the consultancy securing that refund for the business or reinvent themselves or their products because of the
takes a 30 percent cut, or $30,000 on a $100,000 refund. pandemic may qualify for research and development tax
Kem said Strike pays referral partners 10 percent of the credits.
money collected.
Favorable tax treatment for R&D investments has been
Who qualifies for ERTC? available to U.S. businesses since the early 1980s. It's a step
many countries take to encourage innovation and keep
The ERTC was established by the CARES Act to help more high-paying jobs inside their borders, experts have
companies with 500 or fewer W-2 employees. It essentially noted. "If a company is developing or improving products,
refunds payroll taxes these businesses paid during the processes, technologies, inventions, patents—just about
height of COVID. Eligible businesses can claim refundable anything—they can qualify for an R&D tax credit," Kem
tax credits equal to 70 percent of qualified wages paid said.
to employees, up to $7,000 per employee per quarter.
Qualified wages include salaries, tips, commissions and Examples include:
any other compensation subject to FICA tax.
• Restaurants, retailers and others that have had to
Wages reported as being paid from forgiven PPP loans build out ecommerce channels;
must be deducted from totals used to calculate ERTCs, • Medical offices that invested in telemedicine appli-
and wages paid to the owner of a business and family cations for remote consultations;
members don't qualify. • ISOs and financial technology firms that improve
As originally written the CARES Act offered small
businesses the option of taking out PPP loans or using user interfaces or implement new customer relation-
ship management systems;
ERTC credits, but not both. Subsequent legislation,
however, broadened the ERTC qualification criteria • Manufacturers of personal protection equipment or
significantly and made the tax credits available to some high-demand household consumables;
PPP loan recipients as well. • Software solutions needed to support a remote
workforce; and
"This means that businesses can go back and refile for 2020
and 2021 to claim the credit. But, it's very complicated," • Manufacturers that redesign products and/or pack-
said Shepherd, who is helping to connect ISOs and MLSs aging in response to supply chain or consumer safe-
ty issues.
26