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Thursday, March 18, 2021 – Issue 300!

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A preview excerpt from the update to The Employee Retention Credit Guide

SCORE Manasota presents: The American Rescue Plan Act

Upcoming Events

Forbes Corner

For Finkel’s Followers

Humor

 

A preview excerpt from the update to The Employee Retention Credit Guide

Alan Gassman

The Employee Retention Credit Guide is available for purchase through Leimberg Information Services. Early purchasers will receive the IRS Notice 2021-20 update when published.

PLANNING FOR THE ERC

The following are planning techniques that can help assure qualification for the Employee Retention Credit or increase the amount the employer would receive.

1. If the business does not qualify when the fourth quarter of 2020 is compared to the fourth quarter of 2019, under the first test above, then steps can be taken to help assure that gross receipts for the first quarter and second quarter of 2021 are 80% or less than the corresponding gross receipts for the first and second quarter of 2019, in order to fulfill the second test.

Here are some ways that this might be accomplished:

a. Postpone sending invoices and reminder notices to customers who can be expected to pay for its products services at a later time if the business is on the cash method of accounting for income tax reporting purposes.

b. If any customers or third parties are owed refunds that would cause a reduction in gross receipts, make sure that the refunds are given.

c. Some businesses may even consider closing down nominally profitable or loss operations if this will reduce gross receipts in an amount sufficient to allow for qualification for the credit.

2. If the primary revenue generator is a service provider or salesperson, consider taking a long-deserved vacation during a quarter that may otherwise not qualify for the credit. 

3. Certain businesses must include costs and advances that they pay for customers in gross receipts.  These businesses can request that the customers purchase these items on their own so that they will not be included in gross receipts for purposes of the credit calculation.

For example, construction firms that buy appliances and major components of a building concerning a renovation may request that customers purchase these items directly so that the amount included thereof will not be included in gross receipts.

Law firms may request that clients pay directly for deposition services, title insurance, trustee services and related items.

4. The wages of children, siblings, and certain other relatives of more than 50% owners are not eligible for the wage credit. 

The statute does not indicate when the ownership should or should not exist to qualify.

Therefore, it may be appropriate to transfer ownership to get individuals below 50% ownership if there are working relatives of the owner that fall under this rule before an application is filed, or at least on or before the first day of a calendar quarter where the wages may qualify.

5. Employers may also pay increased wages or compensation for services rendered in the past when merited. While the rules for the 2020 Employee Retention Credit provide that wages exceeding historical compensation for an employee will not be counted as eligible for the credit, the 2021 rules do away with this limitation.

Given that 70% of the first $10,000 paid to each employee for a qualifying quarter will be reimbursed, it would make sense to grant the employee a bonus as compensation for prior services rendered, or a pay raise as merited since these payments will be subsidized by the government.

It is vital to note that there should not be any “under the table” understandings that monies paid will be considered as a prepayment for future services.

How aggressive can the above planning be? Judge Learned Hand stated in the famous Tax Court case of Helvering v. Gregory that “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.” The same standards of conduct and practice have historically applied for tax litigation and IRS controversy work with respect to tax credits. Nevertheless, given the extreme budgetary issues that our country is facing and that this program is intended to benefit employers impacted by COVID-19, this may not be the best time to be as aggressive as some taxpayers and tax advisors may want to be in normal income tax planning.

In particular, it is not acceptable to take checks that have been received in the mail in March and simply deposit them in April due to the doctrine of constructive receipts or to return money to a customer any amount they have recently paid, and ask them to pay it again later.

 

The American Rescue Plan Act: Important New Updates for Small Business Owners

Barry Portugal, Alan Gassman, and Brandon Ketron

Free LIVE Stream April 7th

5:30 PM to 7:00 PM 

Register Now

This free LIVE stream will cover important topics to small business owners regarding: 

  1. The American Rescue Plan Act (ARPA) signed by the President in March. Learn how the latest stimulus bill includes more funds for PPP loans, EIDL, EIDL Advance and related employer/employee issues. 
  2. The Employee Retention Tax Credit Act allows up to $10,000 in tax credit per employee for eligible businesses. 
  3. The recently announced $28.6 billion in grants for the Restaurant Revitalization Fund and the soon to be available $2 billion Shuttered Venue Operator Grants. 

Find out if your business qualifies for any of the above grants and loans and how to apply to receive them. You can also direct your questions to the most prominent experts in this field. 

 

Upcoming Events

Register for all future free webinars from Gassman, Crotty & Denicolo, P.A. using this link

When Who What How
Saturday, March 20, 2021 Free webinar from our firm

Kevin Cameron presents:

PPPL Excel Workbook Tune-up

from 10 to 10:30 AM EDT

Register
Saturday, March 20, 2021 Free webinar from our firm

Alan Gassman, Brandon Ketron and Kevin Cameron present:

PPP, ERC, Restaurant Revitalization, and Shuttered Venue Update

from 11 to 11:30 AM EDT

Register

Wednesday, March 24, 2021

FICPA CFO & Controller Conference

Ken Crotty and Christopher Denicolo present:

What’s New with the Lobster Trap? An update on C Corporations

 from 12:50 to 1:40 PM EDT

Register
Friday, March 26, 2021 Florida Bar: Tax Section

Alan Gassman, Leslie Share, Brandon Ketron & Friends present:

Creditor Protection Nuts & Bolts

from 9 AM to 2 PM EDT

Register
Saturday, March 27, 2021 Free webinar from our firm

Kevin Cameron presents:

PPPL Excel Workbook Tune-up

from 10 to 10:30 AM EDT

Register
Wednesday, April 7, 2021 SCORE Manasota

Barry Portugal, Alan Gassman and Brandon Ketron present:

The American Rescue Plan Act: Important New Updates for Small Business Owners

from 5:30 to 7 PM EDT

Register
Tuesday, April 20, 2021 Free webinar from our firm

Alan Gassman, Shannon Summerlin and Andrea Fourman present:

Tax-Smart Giving for UF Law Alumni

from 12:30 to 1:20 PM EDT

Coming soon
Wednesday, April 21, 2021 Free webinar from our firm

Alan Gassman and Dr. Luz D. Randolph present:

A Survey of Charitable Gifting Vehicles

from 12:30 to 1:30 PM EDT

Register
Monday, May 10, 2021 Paralegal Association of Florida: Pinellas Chapter

Alan Gassman presents:

Making Your Job Better and Your Firm More Successful – the Legal Assistant’s Guide to Liberation and Effectiveness

from 12 to 1 PM ET

Coming soon
Thursday, May 13, 2021 FICPA-FSU Spring Accounting Conference

Alan Gassman presents:

Fine Tuning and Improving Estate and Asset Ownership Planning For All Categories of Clients 

from 12:50 to 1:40 PM EDT

&

The Florida CPA’s Practice Guide to Effective Creditor Protection Planning

from 1:50 to 2:40 PM EDT

Register
Wednesday, May 19, 2021 Free webinar from our firm

Alan Gassman and Dr. Luz D. Randolph present:

Private Foundations from A to Z. How Private Foundations help Donors help Public Charities and Causes

from 12:30 to 1:30 PM EDT

Register
Friday, May 21, 2021 Michigan ICLE Annual Probate & Estate Planning Institute

Alan Gassman presents:

Prebankruptcy and Bankruptcy Avoidance Strategies for Challenging Situations

from 11:15 AM to 12 PM CT

Register
Tuesday, June 15, 2021 Association of Insolvency and Restructuring Advisors’ Pre-conference Bankruptcy Tax Toolbox

Alan Gassman and Christopher Denicolo present:

Tax Planning for Troubled Companies Involving CODI

Coming soon
Wednesday, June 16, 2021 Free webinar from our firm

Alan Gassman and Dr. Luz D. Randolph present:

Life Insurance Planning, including Term Life Insurance for Charitable and Non-Charitable Purposes

from 12:30 to 1:30 PM EDT

Register
Wednesday, July 21, 2021 Free webinar from our firm

Alan Gassman, Dr. Luz D. Randolph and Michael Lehmann present:

Charitable Planning for the Business Owner

from 12:30 to 1:30 PM EDT

Register

NEW DATES!

Thursday, July 26-29, 2021

AICPA & CIMA ENGAGE 2021 in Las Vegas, NV

Alan Gassman and Ken DeGraw present:

Pre-Bankruptcy and Creditor Planning During the COVID-19 Pandemic

Register
Thursday, November 4, 2021 Estate Planning Council of Birmingham

Alan Gassman presents:

Hot Topics In Estate Tax And Creditor Protection

from 8 to 10 AM CT

Coming soon

Call us now! Bookings accepted for haunted houses, bar mitzvahs, weddings, seminars, and symposiums (or symposia)!

 

Forbes Corner

This Common Accounting Practice Leaves You Susceptible To Fraud

David Finkel

Is your company susceptible to fraud? According to the Association of Fraud Examiners, the answer is yes. Their findings report over seven billion dollars in total losses due to fraud in 2018 alone. What’s even more interesting is that small businesses with less than 100 employees lost twice as much ($200K+) per fraud attempt than their larger counterparts. This is likely due to the fact that internal control weaknesses were responsible for nearly half of all fraud attempts.

So, today I wanted to share one way that you can help prevent fraud from occurring within your own business.

Checks and Balances

Over the last twenty-five years, I have worked with thousands of business owners on how to grow and scale their businesses through the use of systems and controls. And one area that we examine closely is how money flows in and out of their businesses.

If you are like many small business owners, you may have an accountant or a bookkeeper handle your finances. You likely have one person doing receivables and payables, and they may report back to you directly on a regular basis. This method of accounting is ripe for fraud however. This is why I recommend always having two unrelated parties involved in any money flow in and out of your business.

The idea behind this financial control concept is pairing two unrelated team members on a given financial job so they can be a check and balance for each other. This does two things. First, it reduces the temptation for fraud as both parties know that the other will likely see any bad behavior and report it immediately. Second, it makes it so two people would both have to collude and keep the secret before any serious theft could happen in those areas.

This means one person opens the mail, lists all checks received on a spreadsheet, and preps these checks for depositing, with a second, unrelated person who double-checks the math and reviews the deposit amounts before it goes to the bank.

This also means one person who sets up the ACH payments for the payables period, and another who goes in and approves the payments to go out.

Strategic Depth

Not only does this method make it much harder to commit fraud within your business, but it also serves as a good strategic depth exercise. If you have at least two people trained on how to do an ACH payment, for example, you will still be able to conduct business if someone is out sick for the day or moves on to another position. Having more than one person trained in a particular area makes training their replacement much easier as well.

Preventing fraud within your company is a big undertaking, but with some strategic systems and controls in place, you can make it much more difficult for fraudsters to take advantage of your business. Be diligent, create checks and balances, and question anything that is out of the ordinary.

 

Humor

Gassman, Crotty & Denicolo, P.A.

1245 Court Street

Clearwater, FL 33756

(727) 442-1200

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