Business Update – August 4 2021
The Delta variant is more contagious than other virus variants, which is changing the public-health advice on preventing its spread. With the previous strains, a rule of thumb was that it took 15 minutes of close contact with an infected person to become infected. With the Delta variant, infection may happen in less than five minutes, and possibly with only fleeting contact, such as in an elevator. Recent studies show the Delta variant is about 50% more contagious than the alpha variant, about as contagious as chicken pox. While current vaccines are less effective against the Delta variant, vaccinated people in general have less risk of serious illness. It appears that vaccinated people may still be able to transmit the virus to others. For these reasons, the CDC is once again recommending that people who are vaccinated begin wearing masks indoors in parts of the country with rising levels of covid infections.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Paycheck Protection Program (PPP)
Starting August 4, many businesses that received PPP loans of $150,000 or less will be able to apply for forgiveness directly with the SBA rather than through their bank. To be eligible, the borrower’s bank must have opted in to the process. Eligible businesses will receive an email from the SBA with a link to a new portal where they can apply for forgiveness. This process should take less than 10 minutes to complete.
Monthly Child Tax Credit Payments
If you’re behind on taxes and the IRS has already begun to levy your bank accounts to pay down the debt, IRS employees have been instructed that they are not to levy any amounts received as an advance Child Tax Credit payment through the end of 2021.
For many families, opting out of the monthly Child Tax Credit payments makes sense. Some families plan on a large refund when they file their tax return as a method of saving up for a large expense, such as a car or refrigerator. Divorced parents who claim their children in alternating years as part of a divorce agreement may want to opt out. Because the amount of the credit is based on 2020 tax returns, divorced parents may receive an advance payment for a child they will not be claiming when they file their 2021 tax return. Other parents may want to opt out if their income for 2021 will be significantly higher than in 2020. Freelancers and the self-employed may also want to opt out due to income fluctuations that could make them subject to interest and penalties for underpayment of taxes.
If you want to opt out of future payments, you must use the IRS portal for the advance Child Tax Credit by the deadline for the next month’s payment. The next payment is scheduled to go out August 13, and parents must have unenrolled by August 2 to opt out of that payment. To opt out of the September 15 payment, you must unenroll by August 30. Both spouses must separately unenroll if they file jointly; otherwise, they will receive half of the maximum allowed payment. Check out the IRS FAQs where you’ll find everything you need to know about opting out in Section J.
At present, the portal only allows taxpayers to verify enrollment status, update banking information and to unenroll from payments. Eventually, taxpayers will also be able to update marital status, dependents, and income for 2021 and to re-enroll if they have previously unenrolled. For more information, taxpayers should consult the IRS webpage for this credit.
Paid Leave Credits
The IRS is expanding the COVID-related paid leave tax credit to include time that workers take off to take family members to get the COVID vaccine or to help that family member recover from the effects of the vaccine. This expands the list of COVID-related reasons that qualify for a payroll tax credit. Leave must be taken by September 30, 2021 to be eligible.
Shuttered Venue Operators Grants
The SBA has so far awarded $7.5 billion in grants to live entertainment venues and other entertainment-related business that saw a decrease in revenue during the pandemic. Applications for $12 billion have been so far submitted for a program with $16.25 in funds allocated. This means that applicants who were previously rejected or who received less than they applied for can appeal those decisions through mid-August.
Have you moved or has the leadership team at your organization changed since you applied for the Employer Identification Number (EIN) for your business? If so, you may be receiving a letter from the IRS prompting you to update the contact information and the responsible party for your organization. The IRS needs up-to-date information for a business’ responsible person for businesses in case of problems with tax administration or payment.
Most taxpayers are aware of the IRS backlog of 35 million pieces of unopened and unprocessed mail sent since the pandemic began, which is slowing the payment of refunds and processing of paper-filed returns and correspondence. Anyone who has tried to call the IRS has likely spent a frustrating time on hold or has been disconnected. Only 3% of people calling the IRS for help with their personal tax return have spoken with a representative.
However, passing the issue off to a tax professional to handle doesn’t always expedite matters these days due to a backlog in the IRS process for approving third parties such as CPAs, EAs, or attorneys to discuss tax matters on behalf of taxpayers. Taxpayers must first authorize a tax professional by filing Form 2848, Power of Attorney or Form 8821, Tax Form Authorization, by fax, mail or online. Processing these approvals has been taking three to six weeks instead of the IRS’ internal benchmark of five days. While the IRS recently opened an online portal for uploading those requests, the entire approval process is something of a black hole, and practitioners may not find out that a tax authorization has not been granted until they call the IRS, hoping to resolve a tax matter.
REOPENING THE OFFICE
The rapid spread of the highly contagious Delta variant of the corona virus is prompting some companies to delay their plans to bring employees back to the office. Google and Apple have all announced that their workers will return in October instead of September, and Lyft and Asana have both pushed their return dates to February 2022. Some public health experts are warning that even February may be too soon.
Before the pandemic, many of us assumed that certain business tasks and functions needed to be done in person, and that meetings were a reasonable way to accomplish those tasks. But after a year or more of Zoom meetings, many of us have realized that we don’t need quite so many meetings. This article in the Harvard Business Review includes six questions to ask before deciding to schedule a meeting. For example, “Should this be a meeting?” Some tasks can be accomplished just as well asynchronously or in writing, but those that require everyone’s creative input may be more effective in meetings.
Hiring and Retaining Employees
Employers are having an increasingly difficult time finding people to fill job openings, according to a study of job postings performed by Axios. Almost 10% of job openings in the health care field include terms like “urgently” as do 4.7% of construction job postings. Hiring incentives are being offered for truck driving, nursing, and veterinary jobs.
What employees most value in their compensation and benefits packages has changed, but the offerings from many employers have not adapted to those changes. Hiring the best and retaining them may mean rethinking reward strategies. A standardized, one-size-fits-all approach won’t work in today’s increasingly heterogenous worker population. Many employees are willing to trade up to 25% of their salary for a better work-life balance, and many new hires will choose a company that offers strong training and career development options even if they will be paid more elsewhere. Focusing on productivity instead of hours spent at work, and discussing what’s important to your team can help you craft options that work for each person.
Of the $45 billion in rent relief allocated by Congress, only $3 billion has so far been distributed, and with the expiration of the moratorium on evictions at the end of July, many renters may soon be scrambling to find a new place to live. States are using different processes to distribute the funds, and many tenants do not know that they are eligible for relief. Landlords are also facing financial pressure with the loss of rental income.
Although the world economy has returned to its pre-pandemic size, poorer countries are still lagging. During the second quarter, the eurozone economy grew at 8.5% while the US economy grew at 6.5%, in a speedier recovery that from most other recessions, and despite having seven million fewer workers in the US. However, in Asia, covid outbreaks combined with slow vaccination rollouts have slowed factory output, and supply chains still have not recovered to pre-pandemic activity.
While wages in the US have been rising quickly, those income gains may be erased by inflation. In June, average hourly earnings rose 3.6% but the consumer price index (CPI), which measures inflation rose by 5.4%, resulting in a net loss of 1.7% of buying power. However, because the consumer price index measures an aggregate of many items, not all households will feel the pinch. One of the biggest contributors to the increase in the CPI is the price of used cars and trucks, which has risen by 45% since last June. During the same period, food prices have risen by only 2.4%.
- IRS resources for stimulus payments:
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- Fast Company has a listing of the best productivity apps for 2020
- The Wall Street Journal has a collection of articles on education
- The Louvre has digitized 482,000 artworks from its collection
- PC Magazine explains how to carry your vaccination card on your phone
- How to create a strong password
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!