Category Archives: General Business News

Small Business Recovery Grant Program

The New York State COVID-19 Pandemic Small Business Recovery Grant Program was created to provide flexible grant assistance to currently viable small businesses, micro-businesses and for-profit independent arts and cultural organizations in the State of New York who have experienced economic hardship due to the COVID-19 pandemic. Applications open last Thursday for $800 million in state grants to help the smallest businesses recover from the pandemic – and the money may not be taxed by Albany.
The State Legislature is expected to approve a proposal from Gov. Andrew M. Cuomo to exempt the COVID-19 Pandemic Small Business Recovery Grant Program from state income tax. The grants vary between $5,000 and $50,000.
The money will serve as reimbursement of employee wages, rent and mortgage payments, taxes, utility bills and other operating expenses from the pandemic, between March 1, 2020 and April 1, 2021. Also reimbursable is the purchase of masks, gloves, face shields and other personal protective equipment and improvements to ventilation systems to slow the coronavirus’ spread during the period.
Read more on eligibility and apply here:

New York Forward Loan Fund accepting Pre-Applications

New York Forward Loan Fund (NYFLF) is a new economic recovery loan program aimed at supporting New York State small businesses, nonprofits and small landlords as they reopen after the COVID-19 outbreak and NYS on PAUSE.
Pre-applications for the New York Forward Loan Fund are now open. This is not a first-come, first-served loan program. Applications will be reviewed on a rolling basis.  For small businesses and nonprofits, you are encouraged to prepare your pre-application in advance by taking advantage of the application preparation resources available here.
Vaccine Hesitancy: Why We Have It and How It Affects Employers and Employees thumbnail

Vaccine Hesitancy: Why We Have It and How It Affects Employers and Employees

Vaccine Hesitancy, Covid 19 Vaccine HesitancyAccording to a Tufts University survey, six in ten of those surveyed are now vaccinated against COVID-19. However, almost 40 percent of the unvaccinated respondents said they won’t get the vaccine. Only 28.5 percent of the remaining unvaccinated respondents said they will get vaccinated against COVID-19 in the future, with the remaining unvaccinated respondents unable to decide whether they will take the vaccination. With vaccine hesitancy a concern, how can employers encourage more people to get the vaccine?

It is important to understand why some view vaccines skeptically in order to overcome vaccine hesitancy among employees.

The Johns Hopkins University Coronavirus Resource Center attributes vaccine hesitancy to these factors:

The first factor is safety. Since the vaccine was developed faster than most vaccines have been traditionally, many individuals are concerned about reactions, side effects and quality assurance. More can be read from the CDC VAERS Report.

The second reason has to do with the vaccine’s effectiveness, and how well it works against the coronavirus.

The other reasons for hesitancy are due to things like religious beliefs, vaccine phobias and current health issues of the unvaccinated.

This phenomenon is not isolated to the United States. Based on a global survey of 32 nations that Johns Hopkins cites, 98 percent of Vietnamese would get the vaccine, while only 38 percent of those in Serbia would get the vaccine once it’s available.

Navigating Vaccinations in the Workplace

Requesting a Vaccine Exemption Due to Religious Beliefs

Businesses that fall within the purview of Title VII (Civil Rights Act of 1964), must accommodate an employee’s sincerely held religious belief, practice or observance unless it causes an undue hardship on the business.

The CDC says that once a company is aware of a worker’s “sincerely held religious belief, practice or observance [that stops him from accepting the flu shot], the employer has to provide a reasonable accommodation [except if it causes] an undue hardship.” While this refers to influenza, the reasoning behind it applies equally to an employee expressing their religious objection to a COVID-19 vaccination.

Accommodations for Disabled Employees

According to the Equal Employment Opportunity Commission (EEOC), the Americans with Disabilities Act (ADA) covers employers in the private sector and state and local governments that employ 15 or more workers. The ADA offers guidance for employers when an employee requests to be exempt from a COVID-19 vaccination due to a disability. This Act says that employers are able to implement a workplace standard specifying that a person cannot “pose a direct threat to the health or safety of individuals in the workplace.”

If, however, this workplace standard either sorts out or will likely sort out a disabled person from meeting the workplace safety standard by being unvaccinated, the employer must demonstrate that such person without a vaccine would pose a direct threat of risk to another person in the workplace that cannot be reduced by a reasonable accommodation.

The Equal Employment Opportunity Commission (EEOC) believes a direct or proximate threat exists from the unvaccinated person through four tests: length of the danger, how severe and the type of harm that could occur, the chances of the potential harm that will happen, and proximity of the realistic harm.

When it comes to determining if a reasonable accommodation exists, the EEOC lists three criteria: the worker’s professional responsibilities, if there is a different job the worker could transition to in order to make the vaccination less necessary, and how serious it is to the company’s function that the worker be vaccinated.

How to Encourage More Vaccinations

The U.S. Chamber of Commerce cautions that employers who are contemplating mandating their workers take the COVID-19 vaccination, state law varies on how far they can go. However, a good way to get employees vaccinated is by encouraging and not requiring vaccination. Forcing employees to get the COVID-19 vaccination might make workers look for new employment or face a lack of motivation. Depending on the state laws, a vaccine mandate from an employer might lead to a legal battle if employees refuse to get vaccinated or in rare cases an employee dies from the vaccine.

One way to incentivize employees to get the COVID-19 vaccine is by offering them a cash payment to do so. Average incentives range from $50 to $500 with most being $100.

Based on recommendations from the Centers for Disease Control and Prevention (CDC), there are many things employers can do to help get their employees vaccinated against COVID-19.

One recommendation is to have management explain to employees why it’s important to get the vaccination by creating flyers, posters and other forms of communication when staff are entering and leaving the building.

Offering workers, the ability to get vaccinated onsite could encourage people who are on the fence, especially after they see their co-workers get vaccinated.

One part of the American Rescue Plan, which passed in 2021, as the Internal Revenue Service (IRS) outlines, permits businesses to claim tax credits if they give their workers paid time off to get vaccinated. This tax credit is eligible for employer reimbursement through paid sick and family leave. It also provides an employer tax credit if employees need time off to recover from any post-COVID-19 vaccine side effects.

Businesses with fewer than 500 employees are eligible for this tax credit for paid sick and family leave that occurs between April 1, 2021, and Sept. 30, 2021. This includes for-profit, tax-exempt organizations and some government employers. Self-employed taxpayers also are eligible for an equivalent tax credit.

Taking the time to encourage workers to get vaccinated, learning how to navigate certain aspects of employment laws and state laws, and making sure to maximize one’s business balance sheet are all essential tools to make the most of 2021 and set up an even better 2022 fiscal year.

Sources

https://www.uschamber.com/co/start/strategy/employee-vaccination-incentives

https://www.cdc.gov/coronavirus

https://coronavirus.jhu.edu/vaccines/report/building-trust-in-vaccination

https://www.irs.gov/newsroom/american-rescue-plan-tax-credits-available-to-small-employers-to-provide-paid-leave-to-employees-receiving-covid-19-vaccines-new-fact-sheet-outlines-details

https://www.irs.gov/newsroom/employer-tax-credits-for-employee-paid-leave-due-to-covid-19

https://www.eeoc.gov/coronavirus

https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

https://www.ada.gov/regs2010/smallbusiness/smallbusprimer2010.htm#whoiscovered

Tax Highlights of New York’s 2021-2022 Budget Bill

On April 19, 2021, New York State Gov. Andrew Cuomo signed the state’s 2021-2022 Budget Bill, which contains significant tax measures including, but not limited to, increased taxes on businesses and high-net-worth individuals and an elective pass-through entity (PTE) tax.

Read the key tax provisions in this comprehensive Budget Bill  HERE. To this end, we anticipate that additional guidance will be issued by the New York State Department of Taxation and Finance (“the Department”), especially addressing the newly enacted PTE tax.

Corporation tax 

The Budget Bill sets the tax rate for corporations with business income that exceeds $5 million at 7.25%, up from 6.5%. It also delays the scheduled phase-out of the capital base tax to Jan. 1, 2024, and establishes a tax rate of 0.1875% for tax years beginning on or after Jan. 1, 2021. Note that the phase-out delay does not apply to manufacturers and small businesses.

Personal income tax 

The Budget Bill increases the personal income tax rates on high-income earners for the 2021 through 2027 tax years. The new rates are as follows:

  • 65% for individuals with income over $1,077,550 but not over $5 million; joint filers with income over $2,155,350 but not over $5 million; and heads of household with income over $1,646,450 but not over $5 million
  • 30% for all classes of taxpayers with income over $5 million but not over $25 million
  • 90% for all classes of taxpayers with income over $25 million

Factoring in the current New York City personal income tax rate (3.876%), these new rates will result in a combined state and local personal income tax rate of 14.776% for affected high-income taxpayers with taxable income exceeding $25 million. Clearly, high-net-worth individuals will be significantly impacted by this increase in personal income tax rates.

Pass-through Entity Tax

Partnerships and S corporations can elect to pay an optional pass-through entity income tax on the entity’s taxable income at rates ranging from 6.85% to 10.9%. Partners/shareholders of electing partnerships and S corporations will be allowed to take an offsetting personal income tax credit for the portions of the PTE tax paid by the entity that are attributable to such partners/shareholders.

An irrevocable, annual election must be made by the due date of the first estimated tax payment. For the 2021 tax year, the election must be made on or before Oct. 15, 2021, and there are no estimated taxes required to be remitted.

Resident Tax Credit

The Budget Bill also amends the resident tax credit provisions, and, effective for the 2021 tax year, New York residents who are partners or shareholders in entities that pay “substantially similar” PTE in other jurisdictions will be allowed a credit for their respective share of PTE taxes paid to other states. Prior to this amendment, it was the Department’s position that residents were not eligible for such a resident tax credit for entity-level taxes paid.

Sales and Use Tax 

The Budget Bill increases the threshold from $300,000 to $500,000 for gross receipts from property delivered into New York State and maintains the threshold of 100 sales transactions in the state to require vendors to register in response to the Wayfair decision.

Real Estate Transfer Tax 

The Budget Bill clarifies that the Real Estate Transfer Tax is the responsibility of the grantor. The grantor cannot pass the liability to the grantee unless there is a contract or a written agreement between both parties.

Real Property Tax Relief Credit

Individuals with qualified adjusted gross income of less than $250,000 will be eligible for a new credit if New York real property taxes on their New York State principal residence exceed 6% of qualified adjusted gross income. The credit is based on the real property tax paid in excess of that 6% amount, and the rate is determined on a gradual sliding scale from 14% to 0%.

Qualified Opportunity Funds 

Effective Jan. 1, 2021, taxpayers will no longer be able to defer current capital gains by reinvesting them into Qualified Opportunity Funds. The Budget Bill no longer allows a federal exclusion of the reinvested capital gain amount, and now requires an add-back modification for the gains deferred in the year of such deferral.

Restaurant Return-to-Work Tax Credit

The Budget Bill creates a new “Restaurant Return-to-Work-Tax Credit” program. Eligible businesses can claim a $5,000 credit for each full-time net employee increase, up to a total of $50,000 in tax credits. To qualify, the restaurant should have experienced at least a 40% decrease in gross receipts and/or average full-time employment due to the pandemic.

Employees working outside N.Y. due to COVID-19

Due to COVID-19, many businesses have New York-based employees working remotely. The Budget Bill allows these businesses to treat “such remote work as having been performed at the location such work was performed prior to the declaration of such state disaster emergency,” in order to claim tax credits and incentives requiring a minimum number of employees.

It is critical to note that the Budget Act does not address the personal income tax implications of remote workers. That is, the Department has already made its position clear on remote workers and its interpretation of its “convenience of the employee” rule. In this regard, “if you are a nonresident [of New York] whose primary office is in New York State, your days telecommuting during the pandemic are considered days worked in the state unless your employer has established a bona fide employer office at your telecommuting location.”

Given the magnitude and complexity of the tax changes in the Budget Bill, all taxpayers (New York and non-New Yorkers) should review the new provisions to see how these changes impact their specific tax positions. In addition, given New York State’s tax rate increases on high-net-worth individuals and businesses, coupled with the pandemic’s current remote workforce climate, we would anticipate more individuals contemplating a change in domicile/residency outside of New York State and businesses exploring whether they need to have a physical location within the State of New York.

Moreover, partnerships and S corporations also need to evaluate whether the newly enacted PTE tax should be timely elected and whether this would be beneficial to their respective entities and partners/shareholders. We expect that the Department will need to issue clarifying guidance on the PTE, as we anticipate there will be many open questions that will have to be addressed based on what we have seen in other states that are administering a PTE.

 

SBA Rolls Out New $5B Grant Program for Small Businesses

Small businesses and nonprofit groups hardest hit by the coronavirus pandemic now are eligible for additional support under a $5 billion Small Business Administration program.
The new round of Economic Injury Disaster Loan assistance, known as Supplemental Targeted Advances, is available for up to 1 million small businesses and nonprofits with no more than 10 employees.

To qualify, applicants must be located in a low-income community; suffered greater than a 50% economic loss over an 8-week period since March 2, 2020 compared to the previous year; and have 10 or fewer employees.

You can get more information at SBA.gov/eidl. You can also email questions to TargetedAdvance@sba.gov.

To see if your business is located in a designated low-income area, you can use this map.

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How Businesses Can Hedge Against Increasing Inflation

Inflation is on the rise. According to a recent Economic News Release from the U.S. Bureau of Labor Statistics (BLS), the Producer Price Index for final demand grew by 1 percent in March. February saw “final demand prices” grow by 0.5 percent; and January’s final demand prices increased by 1.3.

According to BLS, the Producer Price Index (PPI) consists of many indicators and evaluates the mean difference over a period of time for the “selling prices received by domestic producers of goods and services.” In other words, PPI is a way to gauge how much manufacturers and similar businesses face in increased costs due to inflation.

This inflation gauge takes a broad survey of approximately 10,000 unique manufactured items and the amount of inflation businesses face. The BLS’ PPI measure looks at items produced by fisheries, food growers, miners, manufacturers, etc. It also includes 72 percent of production of the service sector, as the 2007 Economic Census found.

Hedging with Futures  

One way to reduce risk is by hedging. A popular example is with futures contracts. Much like buying an insurance policy, futures contracts can reduce the impact of a negative event, such as a spike in commodity prices.

If a company is worried about the price of oil for their planes or coffee for their cafes, they can enter into a futures contract to buy a designated quantity of that particular commodity at an agreed-upon price, with the ability to exercise it on or before the expiration date.

With a futures contract, a company can better plan its budget based on the contract’s parameters and the cost of the contract. If the price of the commodity rises in the future due to increased demand or limited supplies, the business can save money by taking delivery of the particular commodity at the originally agreed upon price through the futures contract.

Since the goal of hedging is to protect against losses, it’s important to weigh the cost of the futures contract. If the price of the commodity falls for the above-mentioned futures contract example, the company would still be forced to buy the commodity at the contract’s price, which would be a poor investment. If, however, it sells the futures contract before its expiration to avoid receiving the physical commodity at a poor price, that would lead to a loss. Having a contingency plan to reduce losses in futures contracts is always a good part of a hedging strategy.

Negotiate with Suppliers

Much like businesses enter into specified timeframes with suppliers, companies can do the same with their purchased supplies to provide more predictable prices. When the PPI measurement is used, the purchasing company can contract with its supplier to settle on the initial product’s price, and how price fluctuations will be determined going forward. Since the PPI is released monthly, the price can adjust accordingly (decrease or increase, depending on the PPI) for the supplier and purchasing company. It can be re-evaluated every three, six or 12 months, for example.

While there’s no predicting the future and if and how much commodity prices may rise and impact businesses, the more tools that businesses have to mitigate increased costs, the more likely they are to survive rising inflation.

Sources

https://www.bls.gov/ppi/ppifaq.htm

https://leg.mt.gov/bills/2007/fnpdf/HB0204.pdf

https://www.bls.gov/news.release/ppi.nr0.htm

SVOG application portal reopens today at 12pm ET

The U.S. Small Business Administration, citing negative feedback to previously announced plans to reopen the Shuttered Venue Operators Grant (SVOG) application portal on Saturday, announced Friday night that it was rescheduling the reopening for today at noon EDT.

“We heard you and we are taking action,” the SBA said in an emailed statement. “It is our top priority to deliver on the promise and commitment to provide economic lifelines to you ASAP. Yet, we understand the challenges a weekend opening would bring and to ensure the greatest number of businesses can apply for these funds, we decided to reschedule.”

The Friday announcement came less than 24 hours after the SBA had announced the Saturday reopening. In a brief statement issued late Thursday night, the agency said it had completed rigorous testing on the portal, which was forced to shut down due to technical issues only hours after it opened on April 8. The SBA also provided updated documents and guidance Friday. The agency said that interested applicants should register for an account in advance through the portal.

In addition, the SBA released updated FAQ guidance related to the SVOG program. The FAQs are reorganized for clarity, and content that is new or substantially changed is marked with an asterisk. Among the new information included is a Question 31 in the Application section that provides a sample statement that applicants can use for their Certification of Need. Also, a clarification in Question 11 in the Revenue section indicates that the SBA will look to the entity’s calendar year 2019 earned revenues as the basis for determining the award amount.

The application portal for the SVOG program ran into technical difficulties almost immediately on April 8, with venue owners and other eligible businesses saying on social media that they could not upload supporting documents for their applications. The SBA then shut down the portal for repairs.

The SBA said last week that its vendors had fixed the root cause of the initial problems but that more in-depth risk analysis and stress tests identified other issues.

Here is what you need to do:

WHERE IS MY FEDERAL TAX REFUND

April 21, 2021
Dear Clients, Business Associates and Friends:
Typically the IRS processes electronic returns and pays out the tax refund within 21 days of receipt.
However, the high volume of 2020 tax returns being filed daily, the backlog of 2019 paper tax returns, IRS resource issues, and IRS technology problems are causing delays in issuing the tax refunds. This is due, in part, to the IRS’s need to manually verify the large number of Refund Recovery Credits, as well as the Earned Income Tax Credit, Advanced Child Tax Credit and 2019 adjusted income lookback claims.
Currently, the vast majority of processing delays are a result from tax returns that are not loaded onto the IRS system or are in “suspense” status awaiting IRS action. As of March 25, 2021, over 6 million electronic returns have been “suspended” due to issues requiring manual processing or return inconsistencies. Until the returns are loaded into the IRS system, the IRS cannot see or access the return information so if you call them, they cannot provide any further insight on the status of your tax return.
The Taxpayer Advocate Service is working with the IRS to identify how taxpayers can use the Where’s MY Refund website to determine the status of their return.
In conclusion, until the IRS resolves all of the issues stated, taxpayers just need to sit back and wait for their refunds as there is nothing else that can be done by WZ or the taxpayer, to accelerate the refund process.

 

5 Ways to Stay off The IRS Audit Radar

Millions of Americans filed their 2020 taxes and a handful of some will be picked out to be audited by the Internal Revenue Service.

In 2019,  0.45% of the individual tax returns were audited, according to agency data. The rate of audits per year has significantly dropped in the last decade due to staff and budget cuts. But certain red flags may make you more likely to fall into that unfortunate group, experts said.

If the IRS sends you an adjustment letter when you made a miscalculation or underreported small amounts of your income, this is not an audit. A correspondence audit — the lowest form of an audit and not a full examination — is performed via mail and may require you to provide additional information. But a correspondence audit can turn into an in-person audit if the issues become more complex.

Here are five ways to avoid tax scenarios that catch the IRS’s attention in the first place.

  1. Underreporting income – Underreporting income would be the first red flag. Unintentionally leaving out a small portion of your income may not get you audited. But if there’s a bigger discrepancy between the income you actually earned and what you reported on your return — and if it’s intentional — chances are higher that you may get audited.
  2. Overstating your tax deductions – Whether you’re claiming business tax deductions like meal and entertainment expenses or personal ones like charitable donations, you may hear from the IRS if the claimed amount seems off based on your income. The IRS system that roots out suspicious tax returns may flag a return that has deductions that are too high for the reported income level. Additionally, mixing business and personal expenses can be a red flag for the IRS. Some small business tax deductions that could pose a problem if disproportionate to your income are expenses for vehicles, home office, meals, and entertainment, among others.
  3. High-income earner – if you are in a higher income bracket, your chances of being audited increase. While the overall audit rate for 2018 was 0.6%, the chances of being audited was much higher for high-income earners. Taxpayers reporting income from $500,000 to $1,000,000 were almost twice as likely to be audited at 1.1%. That rate went up to 2.2% for taxpayers making from $1,000,000 to $5,000,000. Those earning $5,000,000 to $10,000,000 saw an audit rate of 4.2%, while those making above that threshold saw the highest rate of 6.7%.
  4. Claiming a dependent – Only one parent is allowed to claim a child on their taxes, even if the parents are filing their taxes separately. The IRS may send an audit letter to determine which taxpayer is entitled to claim the child as a dependent. A child can be claimed as a dependent if the child is under the age of 19 or is a full-time student under the age of 24 and lives with you for more than six months of the calendar year.
  5. Foreign accounts and income – Failing to report a foreign financial asset like a bank account, brokerage, or mutual fund may also bring the IRS knocking. If you hold foreign assets worth over $50,000 for a single filer and $100,000 for joint filers, you must fill out Form 8938, identifying the institution where the assets are held and the highest value of those assets in the last year. Additionally, if you take the Foreign Earned Income Exclusion break, the IRS may carefully review your return for any discrepancies. U.S. citizens who are bona fide residents of a foreign country can exclude up to $107,600 of their 2020 income if they were in that country for at least 330 full days during any period of 12 consecutive months.

Cultural Venues’ Quest for Billions in Federal Aid Is Halted by Glitch

The Small Business Administration launched with great fanfare a long awaited portal for that would allow arts venues closed down by pandemic to apply for grant money to cover rent, utilities, insurance and other accumulated expenses. Unfortunately, the site was shut down due to technical difficulties on its first day of launching.

In a statement, the SBA explained that the agency “temporarily suspended the portal and will re-open it as soon as possible to ensure all applicants have fair and equal access.” The SBA said it would share advance notice of the time and date before the reopening so that all applicants can be prepared and have equitable access to the program, which will award grants on a first-come, first-serve basis within different areas of priority.

After opening the application window Thursday, the agency made it clear in a news release issued late Wednesday night that the grants won’t start going out until later this month.“The SBA is accepting SVOG applications on a first-in, first-out basis and allocating applicants to respective priority periods as it receives applications,” the release said. “The first 14 days of SVOG awards, which are expected to begin in late April, will be dedicated to entities that suffered a 90% or greater revenue loss between April and December 2020 due to the COVID-19 pandemic. The second 14 days (days 15–28) will include entities that suffered a 70% or greater revenue loss between April and December 2020. Following those periods, SVOG awards will include entities that suffered a 25% or greater revenue loss between one quarter of 2019 and the corresponding quarter of 2020.”

The technology issues weren’t the only concern. The Office of Inspector General (OIG) for the SBA expressed “serious concerns” with the control environment and tracking of performance results with the SVOG program, which is designed to provide eligible applicants with grants equal to 45% of their gross earned revenue, up to a maximum of $10 million. The report criticizes the audit plan established by the SBA’s Office of Disaster Assistance (ODA).

The ODA’s plan allows for a total of no more than 10 audits across all of the low-risk loans but this limitation is problematic because program officials estimate that the majority of SVOG grants will be characterized as low-risk, meaning that most grants will “be disbursed in sweeping lump sum payments with minimal requirements and expectations for post-award accountability,” the report said.

Noting that the ODA estimates the SBA will receive 15,000 applications and that the average SVOG size will be $1 million, the inspector general said that the low level of auditing and spending reviews for low-risk grants means that “the bulk of grant funds will not be subject to a reasonable degree of scrutiny.”

The Shuttered Venue Operators Grant program (SVOG) is a $16 billion grant program that was set up to help qualifying live music venues, independent theaters, museums and other live-event spaces hit hard by pandemic-prompted shutdowns. It was passed with a bipartisan effort as a part of the coronavirus relief package signed into law by President Trump in December. But it’s taken a long time to arrive: the agency has said that it’s a first-of-a-kind program for them, and they had to build it from the ground up.