Listen to Steve explain the Employee Retention Tax Credits as discussed on KGO radio.
Audio Transcript
Announcer:
The Pat Thurston Show continues on KGO 810. Listen at home by simply saying, “Google, play KGO 810.”
Automated:
Money, money, money. Must get money. In the rich man’s [inaudible 00:00:13].
Pat Thurston:
Good afternoon. I’m Pat Thurston. I’m just delighted that Steve Moskowitz is joining me. Steve Moskowitz, of course, Bay Area tax attorney. He’s a CPA and a tax attorney. And, you know, if you really want somebody who knows tax law, who knows how to really take care of your taxes, you want somebody who’s a tax attorney and a CPA. There are other advantages to that as well.
Pat Thurston:
But Steve’s here because of the new stimulus package, this rescue, the American Rescue Plan. There are some real benefits here for small business, and I’m so happy that you’re spending the time to tell us about it, Steve. Thanks for coming back on to talk for a little bit longer and give us some greater detail.
Steve Moskowitz:
Pat, thanks so much for inviting me. You know, I get excited about taxes, but this has gotten me super excited. I mean, how could you not? The government is giving away free money. This came into effect when President Biden signed this on March the 11th, and there’s two things, two major things, I want to talk about and I want to summarize them.
Steve Moskowitz:
And also, I have a warning to your listeners. If you start looking this stuff up on the internet, although that’s fine, these changes are so recent that a lot of the things you’ll look up under these titles are under the old law so you won’t get the full benefits.
Pat Thurston:
Ah.
Steve Moskowitz:
You want to have… Ah, yes. You want to have what’s effective March 11th and thereafter. Basically what happened is some of it’s brand new and some of it gave more benefits than it had. So let’s start talking about both of them.
Pat Thurston:
Okay. The first one is employee retention credit. That means that you didn’t fire anybody, you held onto your employees, or what? What does that mean?
Steve Moskowitz:
You did that, but also even if you cut their pay by 25%, it still counts, or if you hired them back. What happens under this newest one is… Because it had been, the credit was at 50%. Now it’s up to 70%. And originally it was going to be the first two quarters of this year, now is extended for the whole year.
Steve Moskowitz:
Let’s take a look at this. Suppose you have somebody all year for 2021, 7,000 a quarter times four quarters is $28,000 a year per employee.
Pat Thurston:
Right.
Steve Moskowitz:
Suppose you have 10 employees in my example. You just got a credit for $280,000. How do you get that money? Well, the first thing you do is anything that you’re doing right now where you’d be submitting money to the government, you subtract the credit.
Pat Thurston:
Oh.
Steve Moskowitz:
But, a lot of people are saying, “Wait a minute, I was losing money. I don’t really owe any taxes.” That’s okay, too. You apply to the government and they write you a check.
Pat Thurston:
No.
Steve Moskowitz:
Can you imagine it? Yes.
Pat Thurston:
Imagine what that’s going to do for some of these businesses because they hated cutting back on their employees. They hated what was going on, and yet they had to do it. A lot of people lost money. I mean, this is one thing that can really help people to get back on their feet.
Steve Moskowitz:
Yes. And another thing, if you lost money, although it’s not part of this law on March 11th, you should know that what previously happened is under the Cares Act, the government now has allowed NOLs, net operating losses. If you lost money last year in 2020, or ’19 or ’18, you can actually carry it back five years to 2014 and get the money back from that. There’s so many get the money from the government. It’s amazing.
Steve Moskowitz:
And here, another change they made was it used to… When the PPP came out, you had to choose between the employee retention credit or the PPP. Then the government said, “Nah, on December 27th, you know what? Even if you got PPP, you can still apply for the credit.” And then they expanded it still further.
Steve Moskowitz:
Basically, they keep changing things and they just keep making them better and better. But I really have to commend the Administration because they are really doing something to save American business and that’s employee retention.
Steve Moskowitz:
There’s all kinds of things. I could go on and on and on and take your whole show up, but I can always do that because I love talking about taxes. But another one that we want to talk about is the restaurant revitalization fund.
Pat Thurston:
I’m really excited about this one myself and I’m not a tax attorney and I don’t really know anything about taxes, but I’ll tell you why, because it sounds to me like there are so many people who called this show. People who own restaurants, people in Sonoma, in Napa, in Santa Clara, people in the East Bay, people in San Francisco, who’ve called the show and talked about how their businesses, how their restaurants, are going to go out of business because they’ve lost so much money. They just can’t keep it going. It sounds to me like this is something that can really put those people back on their feet. Tell us about this, Steve.
Steve Moskowitz:
Who doesn’t know a restaurateur that either suffered horribly or said, “You know what? I can’t come back.” But, under this new law that just signed into law March 11th, pandemic related… And again, I’m summarizing. Like everything else, there’s more to it than that. But for on air, I’m simplifying and giving you the gist.
Steve Moskowitz:
There’s a bunch of details that you need to know about, but let me give you the gist of this. The pandemic-related revenue loss, you subtract your 2020 gross receipts from 2019 and the government gives you the rest of the money up to $10 million.