August 25, 2022 

Tax increases and IRS funding commitments in the Inflation Reduction Act of 2022 are intended to affect larger corporations and high-income individuals. However, middle market businesses and their owners who understand how they might be affected can position themselves to take advantage of new credits and incentives, avoid unpleasant income tax surprises, and minimize IRS scrutiny.

Here are five things midsize companies should know about the tax components of the Inflation Reduction Act:

1. Nuances in the provisions of two tax increases could effectively broaden the reach of each.

The new corporate alternative minimum tax features a lower threshold for some U.S. corporations than others. A crucial distinction is whether the corporation is a member of a foreign-parented multinational group, as opposed to a corporation controlled by a U.S.-based parent.

Specifically, the new law imposes a 15% tax on the “adjusted financial statement income” of certain corporations and corporate groups that meet a $1 billion average annual adjusted financial statement income test.

However, the threshold is only $100 million for certain U.S. corporations that are members of a foreign-parented multinational group, provided the multinational group meets the $1 billion threshold. Various aggregation rules that factor into the income test also affect the applicability of the tax.

Similarly, the 1% excise tax on repurchases of corporate stock includes acquisitions of the covered corporation’s stock by specified affiliates of the covered corporation. Organizations can better navigate the tax by understanding how the legislation defines specified affiliates and by carefully analyzing the full scope of the new rules.

2. Unprecedented funding levels for the IRS heighten the importance of audit readiness.

The act commits $80 billion to the IRS, $45.6 billion of which is earmarked for enforcement activity. It will take time, of course, for the agency to operationalize that allocation. However, given the impending increase in examinations, businesses that work closely with a tax advisor to document their tax positions and processes and maintain accurate records will improve their ability to withstand IRS scrutiny.

IRS Commissioner Charles Rettig wrote a letter to members of the Senate on Aug. 4, saying this influx of resources “will get us back to historical norms in areas of challenge for the agency—large corporate and global high-net-worth taxpayers—as well as new areas like pass-through entities and multinational taxpayers with international tax issues.”

Taxpayers in those categories should be aware that the IRS, in the commissioner’s words, is building “sophisticated, specialized teams … that are able to unpack complex structures and identify noncompliance.”

A procedural matter in the Senate resulted in removal from the legislation of language specifying that provisions are not intended to increase taxes on any individuals or small businesses with taxable income of less than $400,000 or increase taxes on taxpayers outside the top 1% of earners.

However, Rettig’s letter reiterated that the IRS would adhere to those conditions: “These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans,” he wrote. “As we’ve been planning, our investment of these enforcement resources is designed around the Department of the Treasury’s directive that audit rates will not rise relative to recent years for households making under $400,000.”

In addition to funding enforcement activity, the act commits $3.2 billion to taxpayer services and $25.3 billion for operations support.

“We’re hopeful that is going to improve taxpayer service, and with improved service comes more compliant taxpayers because their questions are being answered,” said Patti Burquest, a partner and senior leader on the tax controversy team in RSM’s Washington National Tax practice.

3. Clean energy credits and incentives equate to opportunity.

The act contains 29 separate energy- and climate-related provisions that amount to the largest source of spending at $271 billion. As they are structured to strengthen the nation’s energy security, businesses that invest in clean energy projects may be eligible for tax credits, lower energy costs, and improved environmental, social and governance scores.

As a policy decision to create new and higher-paying jobs in the clean energy sector, some of the provisions incentivize the building of new manufacturing facilities for production of materials such as solar panels and wind turbines. Also, many of the credits tie higher credit rates to paying workers a prevailing wage and creating apprenticeship opportunities. Additionally, increased credit rates may apply for using American steel, iron and other “domestic content” in these projects.

Although there is a need for additional guidance with respect to the new provisions, businesses already recognize incentives and opportunities presented by the legislation. In fact, when attendees of RSM’s Aug. 11 tax policy webcast were asked whether they plan to invest in renewable energy in the next five years, a combined 45.3% said they either have projects planned, are very likely to invest or are considering the possibilities.

4. Tax proposals kept out of the final legislation help shape the year-end policy outlook.

Completion of the budget reconciliation process shifts the focus of federal tax policy toward a possible extenders package in a lame-duck session of Congress following the midterm elections.

Under consideration are certain provisions of the Tax Cuts and Jobs Act that, as of Jan. 1, 2022, are affecting taxpayers differently than they did in the years immediately following enactment. These include the tax treatment of research and development expenses and business interest expense.

“There will be discussion about whether to take those two provisions back to their pre-2022 form,” said Dave Kautter, RSM federal specialty tax leader, referring to sections 174 and 163(j).

Lawmakers also are considering extending some expired provisions in the American Rescue Plan, the most notable of which may be the child tax credit. Other candidates for an extenders package include miscellaneous provisions that Congress traditionally extends, such as state low-income housing tax credits and the health coverage tax credit.

More broadly, given how congressional negotiations about an economic, social, climate and tax package oscillated over the last year and a half, businesses may be as interested in the tax proposals kept out of the final legislation as they are in the enacted changes.

That long list includes several proposals that made headlines, including increasing the corporate tax rate, modifications to carried interest provisions and a proposed increase in top capital gains tax rates.

5. Whether the package will substantially reduce inflation for businesses in the short term is in question.

As many middle market businesses seek immediate relief from inflation strains, analysis by the nonpartisan Congressional Budget Office suggests that any meaningful macroeconomic price reductions would occur over a longer period.

CBO Director Phillip Swagel on Aug. 4 wrote that enacting the bill would have a “negligible” effect on inflation in 2022, and that the effect in 2023 would be plus or minus 0.1 of a percentage point. He applied that range to multiple measures of inflation, including the GDP price index and the personal consumption expenditures price index.

Swagel’s commentary addresses macroeconomic inflation as a complex function of numerous independent and dependent factors, while recognizing how elements of the legislation could provide timely financial support to individuals—for example, in the form of enhanced health care subsidies.

Given that current high inflation rates are partly the product of global supply and energy shocks, the act could help alleviate inflationary pressures to the extent that clean energy provisions succeed in their design to reduce American dependence on foreign oil and increase Americans’ use of renewable energy. Also, the act is structured to reduce the federal deficit by more than $300 billion over the 10-year budget window. Of course, those are longer-term outcomes.

Moving forward

Middle market businesses can work with their tax advisor to translate what the tax components of the Inflation Reduction Act of 2022 mean for them and to sharpen their tax policy focus on a possible extenders package in the final weeks of 2022.

Given the Jan. 1, 2023, effective date for several of the tax provisions in this legislation, businesses should act now to take advantage of the new credits and incentives that are effective immediately, while implementing a plan to deal with provisions that have deferred effective dates. That approach will allow them to avoid unpleasant income tax surprises that could result from new laws and minimize the likelihood of IRS scrutiny.

RSM’s tax professionals continue to analyze the legislation and identify areas that would benefit from additional IRS guidance. Subscribe to our tax alerts to receive our latest insights.

Share

Gallagher, Flynn & Company, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how the Gallagher, Flynn & Company, LLP can assist you, please contact us.

August 11, 2022

Executive summary

The Inflation Reduction Act of 2022 was passed by the Senate on Aug. 7, 2022, and is expected to be passed by the House this week and signed by President Joe Biden next week. The bill provides long-awaited funding of $80 billion to the IRS over the next 10 years to enhance taxpayer service, operations, business system modernization and enforcement.  

Some say only two things are certain, death and taxes. Another adage that applies today: Few things move quickly in the government and fewer bills are proposed to raise the revenue to support their own expenditures. At a time when inflation has hit the ceiling, the Democratic Senators proposed and passed (with the vote of the Vice President) the Inflation Reduction Act of 2022, legislation that would help increase and expedite processes at the IRS to assist in funding the bill itself.

Over half of the $80 billion in funding will be allocated to enforcement, including examination, collection and litigation. The balance will also support taxpayer services, IRS operations support and business systems modernization. It is estimated that $124 billion in tax revenue will be raised as a result of enhanced enforcement efforts and other service enhancements that support voluntary compliance.  Another portion of the bill creates a task force to design an IRS-run free, direct efile tax return system. 

It is important to walk through some of the key provisions of the IRS proposed budget of the bill to get a sense of the benefits and burdens.

Increased funding for taxpayer services

The Inflation Reduction Act of 2022 allocates approximately $3.2 billion for taxpayer services. Taxpayer services include pre-filing assistance and education, filing and account services and taxpayer advocacy services.

RSM insight

Taxpayers have had difficulty receiving quick and efficient service from the IRS. The bill proposes that the IRS make it easier for taxpayers to get the help they need and access to tax filing information. The taxpayer advocate, who has the ability to expedite resolution of unique taxpayer problems with the IRS and address systemic IRS issues, will have an increased ability to handle cases. Taxpayer issues that have been backlogged may be resolved faster with the proposed increased funding.

Increased funding for enforcement

The bill allocates approximately $45.6 billion for enforcement. Enforcement includes, among other things, the IRS’s ability to determine and collect taxes, provide legal and litigation and support, conduct criminal investigations, provide digital asset monitoring and enforce criminal statutes.

RSM insight

The Bill provides a benefit to some and a burden to others. Funding for legal and litigation support may make the ability to negotiate settlements with the IRS more readily available; however, it also gives the IRS attorneys more support to litigate. 

The initial budget portion of the bill noted that IRS funding is not intended to raise taxes on any taxpayer or small business with taxable income below $400,000 or those who are not in the top 1 percent.  During the review of the bill under the Byrd rule, Republicans raised a budget point of order, and this “limitation” language was removed. With the removal of this “intention” language, the IRS will be free to examine taxpayers regardless of income level, under their normal process. So, it is now more important than ever for taxpayers to work closely with their tax advisors to ensure that they have the support and documentation they need to successfully manage any IRS examination of their returns.

Taxpayers who hold digital assets including digital currency, may begin to see more correspondence from the IRS as it focuses on digital asset monitoring and compliance.

Increased funding for operations

The Bill allocates approximately $23.5 billion for operations support. Funding departments within the agency including IT development, telecommunications, facilities services and printing and postage will provide the IRS the ability to increase taxpayer services and enforcement.

RSM insight

With the largest appropriations of funds, the IRS has ever received, new equipment and new software should help make the resolution of taxpayer issues easier. While the IRS will be able to disseminate more informational materials this also makes it easier to send more automated notices of assessments and other audit requests.

Increased funding for business systems modernization

The Bill allocates approximately $4.7 billion for business systems modernization. Business systems modernization includes the development of call-back technology and other technology to provide a more personalized customer service. The bill language suggests that the funding will not be used for operation and maintenance of legacy systems.

RSM insight

No one wants to wait on hold while listening to fully synthesized melodic music. Even reading about hold music can send shivers down the spine of the most stoic. Perhaps however, it is music to the ears of nearly all taxpayers (and certainly your favorite tax practitioners) that call-back technology will be implemented. This feature will provide more of a concierge system for the taxpayer and improve customer service. The hope is that this increased funding will enable the IRS to be more responsive to taxpayer inquiries and assistance requests and that customer service will be improved significantly even with high call volume. 

Proposal to fund and implement a free e-File system

The bill proposes the creation of a task force to design an IRS-run free “direct file” tax return system.  The bill sets the expectation that the IRS will, within nine months from the date of enactment, deliver a report to Congress on the cost of developing and running a free direct efile tax return system with a focus on multi-lingual and mobile-friendly features and safeguards for taxpayer data. The report must also capture taxpayer opinions, expectations and level of trust based on surveys for such a free direct e-file system as well as the opinions of an independent third party on feasibility, approach, schedule, cost, organization design and IRS capacity to deliver such a tax return system.  

RSM insight

This Bill gives the IRS only nine months to provide guidance on developing and running free direct e-file software. Free direct e-file software is a benefit that may ease the cost and burden of filing a tax return and increase compliance for some. This initiative is aimed at taxpayers with simple returns. Taxpayers with complex returns will likely continue to need the guidance of tax professionals. 

The increase in IRS funding will enable the IRS to improve taxpayer service and ease of filing as well as provide for enhanced enforcement. These efforts should improve taxpayer compliance and reduce the annual tax gap.  

Share

Gallagher, Flynn & Company, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how the Gallagher, Flynn & Company, LLP can assist you, please contact us.

May 19, 2022

The pandemic introduced new trends and challenges for CFOs and their finance teams. From disruptive technology to executive talent outsourcing, finance transformation today looks different than it did yesterday.

RSM Directors Kristen Oats and Cody Roth joined ACG’s Middle Market Growth Conversations podcast to talk about how finance and accounting departments are adapting to remote work, supply chain disruption, talent shortages, and increased merger and acquisition activity. 

Oats and Roth share how they’ve seen finance and accounting teams bridge their talent gaps, and when to consider temporary or fractional resources. They also discuss how strains on finance departments are affecting M&A activity in the middle market, and what finance teams should focus on post-transaction.

The conversation closes with a look at the trends to watch in the year to come, and how rising input costs, salaries, and interest rates are affecting forecasts.

Middle Market Growth (MMG): Kristen, as we look back on the two years since the start of the pandemic, which developments would you say have had the biggest impact on finance and accounting?

Kristen Oats: Historically when we talked about finance organizations, it has been people, process, and technology. Now it’s starting to transition more toward people, process, technology, and data—and organizations have a large amount of data easily captured, but harder to determine how to use in a meaningful way. Over the past couple of years, the FP&A (financial planning and analysis) function has become more front and center to organizations, becoming more of a business partner to provide insights and more proactive, data-driven reporting for the business to make more real-time decisions.

This shift has continued to drive finance organizations from being less transactional and more of a strategic function. Additionally, finance organizations have invested heavily in technology to help drive efficiencies and support more remote or more of the hybrid work environment—for instance, automating the close process.

Many finance organizations had typically been in person before COVID, and during close, CFOs would walk down the aisle and learn what journal entries had been performed and what was still outstanding. Finance team members used to collaborate in person during the close, and what became a priority during COVID was still being able to close the books in the same amount of time, but more in a remote world. This drove companies to implement automation tools such as Blackline to help CFOs and finance organizations obtain visibility to the close and drive efficiency within the close process.

Other areas companies invested in were quick wins in terms of allowing employees to work more remotely—for instance, transitioning from cutting checks in-office to having the bank cut their checks, or working with vendors to move from paper invoices that would be sent to them in the mail to electronic invoices.

Some areas we’ve seen more recently are specifically around the supply chain. There’s been a lot of unpredictability in terms of when goods are expected, and from a forecasting and budgeting standpoint and impact in terms of how much was expected to be sold versus what was actually in inventory able to be sold. Ultimately, across all industries, it seems as if talent from a retention and hiring standpoint is difficult—and understanding what the future of work looks like going forward.

Organizations are still working on how to manage flexibility, and it’s an evolving process that they are still trying to figure out.

MMG: All of that makes me wonder how prepared finance executives were to deal with these changes, especially coming from all these different fronts. You mentioned technology, but also supply chain and talent. Cody, how prepared were these finance executives, from what you’ve observed?

Cody Roth: That preparedness is dependent a lot on the executives themselves—whether they’re strategic or transactional, as Kristen mentioned. So, transactional: pretty reactive, want to keep plugging away, solve some of the problems by throwing bodies at it, or just buying a technology they thought would help. The strategic, they want to look at their business more as a whole.

Once this new working environment was stabilized, it became an optimal time to invest and focus on how to improve your business. This wasn’t limited to a transaction, necessarily, or where you are; you’re able to do this at any stage.

Then with what’s become a little bit of a war on talent, and these supply chain issues we’re all experiencing, it’s been an unprecedented time, and very difficult to plan. Strategic executives can see a holistic view of the company and understand the dynamics of it, how things are working together, how different employees are reacting to the new environment, and so on.

Some of the issues have been historical knowledge of the company itself. That’s a difficult thing to transition and a very difficult thing to replace. And it’s also led to less ties between the employee and the company. So that retention risk has really been front and center. And again, what Kristen said, (not) being in person has been really detrimental and a big change to finance organizations.

It’s very easy to stand up and shout across a cube or go into an office to understand where people are and what’s being done. It’s been a complete shift on the way work is done, going from all-day workshops to splicing up some of the time and especially the time together. So that’s been a difficult thing to balance when you’re working from home or in a hybrid environment and aligning those schedules.

MMG: Going back to your point on supply chain, in a lot of ways this was unprecedented, and I wonder if this was a major learning curve for CFOs or if they essentially knew what they needed to do. But it became more of a resource question and not having enough people or technologies to manage some of the supply chain disruption.

Roth: Well, in a lot of organizations, the supply chain, I wouldn’t say it was an afterthought for CFOs, but that was something the CIO or the procurement team handled, that finance kind of consumed. And now with planning and forecasting and having to understand when you can’t fulfill a need, that’s been something the CFO has really been pulled into and has to then balance their business, their expectations, their financial reporting as a result.

MMG: Both of you have touched on talent a little. We hear so much about the Great Resignation in a lot of different industries, and job functions are experiencing a shortage in the talent they need to run their operations. Within finance and accounting, I wonder what roles are most in-demand or hardest to find right now.

Oats: It’s really a challenge at every level. If you think about slicing it between your more skilled, experienced, and entry-level employees, at your skilled level, you have your senior accountants, your controllers, CFOs. Organizations—especially that are remote or hybrid—need employees able to come in with the right skill set. If employees came in during COVID, they may lack ties to the organization. With the amount and volume of opportunities out there, it’s easy for them to leave and not necessarily stay with the company as long as they may have previously.

On the entry-level side we’ve seen the pay scale compensation structure has changed, so companies are looking to adjust that. But it’s the same, where employees coming in out of college or in more of an entry-level position may not feel as if they need to stay tied to a company—especially if they came in during COVID, because they don’t feel as attached as they would have if they were actually there in person on a day-to-day basis.

MMG: In this environment of limited resources but high demand, what are organizations doing to bridge that gap?

Roth: Companies are focused on driving efficiencies, how you can do more with less, while also balancing burnout. That can be investing in technology to drive efficiency, or moving to a shared service or an outsourcing model. One thing we’ve seen in the market a lot is temporary staffing. That used to be bridging some gap and just reacting to a situation, and now it’s becoming more of a norm with our clients.

Temporary staffing has been great in the past for some of that entry-level transactional processing—just kind of throwing some bodies at one of the problems. And now we’re hearing that they need more senior-level people, such as interim CFO, chief revenue officer, and so on. Organizations have and will continue to leverage third parties and professional services organizations to help support some of the larger strategic initiatives with these longer-term impacts and planning for the future.

MMG: What are some questions a business should consider as it decides whether it needs a permanent on-staff professional, or if it should utilize a temporary or fractional resource?

Roth: What is the need? Is it a short-term need or a longer-term need? Temporary staffing, historically you’ve had the opportunity to hire that resource full-time if you liked them and the need continued. They have a little bit more power in the business world these days because there’s so much demand for it.

Is it just temporary? You’ve lost a lot of employees and you have to fill the gap and you don’t want to hire just anyone that applies, you want to hire the right person. That could be a good time to use temporary staffing. Other times maybe you just can’t find the resources out there or your pay scale isn’t where you need it to be—and you have to react from that budgeting and forecasting and need to fill in the gap while you’re doing that.

MMG: All the challenges we’ve been talking about are happening against this backdrop of a heightened M&A environment in the middle market. I’m interested to know how these challenges are complicating M&A today.

Roth: They complicate it a lot. It kind of goes both ways. M&A can complicate issues as well. Your execution time on an investment is very fast-paced. We’ve talked before about this, where teams are already stretched, you’re doing more with less. You want to retain talent. Now you’re trying to balance the execution of their day-to-day job with this new transaction.

You’re piling more on top of them, so that’s going to just lead to more burnout. You’re going to have to perhaps staff up. That’s where temporary staffing could help. But you’ve got to have the right people in place as well. And as you’re doing this—using temp staffing or hiring quickly or reacting—having a resource that has M&A experience that can help you go through this transaction becomes a substantial risk and an unknown.

Also, you lose a lot of that institutional knowledge of the company as employees move around and you have temporary people.

MMG: It’s interesting, too, given that so many private equity investing strategies are predicated on the plan that they’ll make a series of acquisitions within a really short time frame. But it’s sounding like, if you don’t have the right people or they’re leaving the organization, it’s going to make that all the more challenging, to achieve what essentially underscored the original investment thesis.

Roth: That’s right. On top of that, the transactions are happening at a near-record rate. There’s a lot of transactions going on in the business. It’s a really good time to do that. Throwing the Great Resignation and retention and all these problems on top of that leads to some large risk potential in these investments.

MMG: Then looking toward post-transaction, Kristen, what types of improvements or changes related to the finance and accounting function should be made after a deal closes?

Oats: One of the main areas is around financial reporting and making sure the books can be closed for a private equity firm to get accurate and on-time reporting. Typically this has been a little bit more flexible in the past. So, understanding the financial close process. And it really is the result of upstream processes. It’s not just a finance function, but very cross-functional, to close the books. So, understanding what are the data, systems, and processes involved and what can be improved to expedite the close.

Also top of mind is typically companies have a lot of data. So understanding what data is out there and leveraging the data and packaging it in a concise and effective format for stakeholders to gain visibility to real-time financials in order to drive revenue and manage costs is critical.

Other areas that we see private equity firms and companies focused on post-transaction is around investments in technology and RPA (robotic process automation). There’s a lot of institutional knowledge, legacy systems and manual processes at organizations, versus private equity firms, are looking to build efficiencies. So standardization in the back office, both from a technology and a process standpoint are top of mind, especially with roll-ups.

Overall, there are two levers. It’s either increasing revenue and stabilizing costs or decreasing costs while maintaining revenue—or pulling on both levers. Evaluating the opportunities based on the PEG (price/earnings-to-growth) strategy is important in terms of determining how to get there. And as Cody alluded to, trying to retain people as you’re driving these efficiencies and they have more to do with less.

Companies are trying to figure out how to make this work. It’s a balance they’re still trying to figure out.

MMG: Of the two levers you mentioned, I wonder if the stabilizing cost option becomes more challenging in a time like we’re in now, where we have rising input costs due to inflation, imminent interest rate increases, salary increases. I wonder if businesses are going to be kind of forced into focusing more on that first lever.

Oats: Exactly. I think it’s still an evolving aspect in terms of what the costs are going to look like over the next year and what the new norm is going to be, especially as we look at interest rates increasing and the impact in terms of compensation and what needs to be provided to employees, either from a hiring standpoint or to retain existing employees.

I think companies are going to need to reevaluate how they were looking at it in terms of are they actually able to stabilize cost as they originally thought or are there other levers they’re going to need to pull.

MMG: Beyond what we’ve talked about so far, which trends within the accounting and finance arena should investors or operators be focused on through the rest of this year?

Roth: All the issues you’re going to see post-transaction that are going to have more of a spotlight on we’ve hit on, I know with the retaining talent. A lot of times you don’t know what you’re walking into through the transaction process. You’re having to quickly assess that at the front end.

You need to identify who knows the critical finance and accounting information. It might be one person knows everything, and that can cause a problem. If you don’t have that person and you don’t have a retention plan in place, you’re going to have to document what’s going on now to reduce risks and really help through the transaction going forward.

That’s the target company having experience with the acquisition process. Have they gone through this before? That’s why so many companies reach out to professional service organizations like RSM, because they may have people that have never done this or done this three times, whereas we have people doing this six to eight to 10 times a year.

So just kind of knowing everything that pops up, what are those first hundred days looking like? And finance and accounting is the ultimate consumer of all the changes and updates that happen through an M&A process. Having that finance and accounting leadership and representation is going to help them understand the downstream effects and the impacts on the business that someone in an operations role may not understand their decisions are making.

The finance and accounting challenges are somewhat dependent on the environment and the transaction. As Kristen alluded to earlier, you could just be getting acquired by a PE firm, and that’s going to change the landscape of your financial reporting, make it much more complex. You may be measuring your business on 10 to 15 KPIs (key performance indicators), and now you’ve inherited a 96-page board deck to report on monthly, and that is a significant bandwidth issue for companies. If it’s a merger of two like companies, how are you looking at the people, the processes, technology, data—how are you merging those? What do those steps look like to get there? And then you could be going public, so you’re going to add regulatory and compliance issues on top of that.

On the talent, what we’ve talked about over and over and we’re just seeing it so much is, what does the wage increase look like? What are those retention bonuses? Who do you need to keep in place and for how long? And how do you incentivize those employees to go through this transaction, and add value, while still doing what they’re expected to do on a day-to-day basis?

MMG: Kristen, any parting thoughts, any things that executives or investors should be keeping an eye on in 2022?

Oats: I agree with everything Cody mentioned. The one point I would add is around the interest rate, in terms of pricing and how much is passed on to the consumer—repricing of goods and services. Also, kind of on the flip side of that, what are the employee salary increases? What’s going to be passed on in terms of the benefit to employees throughout this?

So that’s going to be another variable from a budgeting and forecasting standpoint that organizations are going to be working for this year.

Podcast originally published by Middle Market Growth.

Share

Gallagher, Flynn & Company, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how the Gallagher, Flynn & Company, LLP can assist you, please contact us.

December 05, 2021

Share

Gallagher, Flynn & Company, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how the Gallagher, Flynn & Company, LLP can assist you, please contact us.

November 01, 2021

American Rescue Plan Act of 2021 becomes law

The $1.9 trillion relief and stimulus package known as The American Rescue Plan Act of 2021 was signed into law by President Joe Biden on Thursday, March 11, a day after Senate amendments were passed by the House of Representatives.

The legislation provides funding for coronavirus-related relief to millions of families, state and local governments, small businesses and exempt organizations, schools, infrastructure initiatives, public transportation entities, cybersecurity measures and more. The primary purpose of the act is relief and recovery from the public health and economic crises, and it includes several tax provisions worth discussing with those objectives in mind.

This alert provides a broad overview of the major components of coronavirus-related funding made available by the Act and tax law changes associated with the relief.

Recovery Rebates to individuals

The Act provides for a refundable tax credit of $1,400 to each eligible adult individual ($2,800 in the case of most married couples) and an additional $1,400 for each dependent as defined for tax purposes. The credits phase out in ranges of income that vary by filing status, while the highest range is $160,000 for married joint filers. The credit will be paid out in advance like the Economic Impact Payments under the CARES Act and the 2020 Tax Relief Act. The Congressional Research Service estimates that these payments—also known economic impact payments, recovery rebates or stimulus checks—will go to 145.4 million households and total approximately $380 billion.

Paycheck Protection Program (PPP) modifications 

The Act appropriates an additional $7.25 billion to the Small Business Administration for purposes of carrying out the PPP. In addition, it expands the organizations and entities eligible to receive PPP loans. However, the Act does not appear to extend the March 31, 2021, program deadline.

Expansion of Paycheck Protection Program (PPP) for nonprofit organizations

The Act expands PPP eligibility in two ways for nonprofit organizations. First, all organizations described in section 501(c), except for organizations described in section 501(c)(4), are eligible to receive PPP loans if they otherwise meet the eligibility criteria. Second, certain nonprofit organizations qualify for a per-physical-location employee threshold, which permits an organization with more than one physical location to qualify for PPP provided that the employee threshold is not exceeded on a per-physical-location basis.

Additional PPP expansion

The Act also expands PPP eligibility to certain internet publishing organizations that are assigned a NAICS code of 519130, certify in good faith as an internet-only news publisher or periodical publisher, and are engaged in the collection and distribution of local or regional national news and information.

Shuttered Venue Operator Grants (SVOG) 

The Act appropriates an additional $1.25 billion to the SBA to carry out the SVOG program, of which $500,000 is restricted to provide technical assistance to help applicants access the System for Award Management (SAM), a successor, or an alternative grant application system.

The Act removes the limitation that SVOG recipients are ineligible to receive PPP loans after Dec. 27, 2020. Prior to this change, potential SVOG applicants needed to decide between the two programs. As a result of this modification, any PPP funds awarded after Dec. 27, 2020, to an SVOG applicant will simply reduce the amount of SVOG grant dollars the applicant may receive.

Restaurant revitalization grants

Restaurants also finally got relief they have been asking for. The Act establishes a new grant program—the restaurant revitalization fund containing $28.6 billion in available funds. An eligible entity can receive a grant that is equal to the amount of the pandemic-related revenue loss of the entity, which is defined as the gross receipts of the eligible entity during 2020 subtracted from the gross receipts of the eligible entity in 2019. There are special rules for (1) an entity that was not in operation for the entirety of 2019, (2) an entity that opened between Jan. 1, 2020, and the date before the date of enactment of the Act, and (3) an entity that has not yet opened but has incurred eligible expenses. Grants are limited to a maximum of $10 million, with an additional limit of $5 million per physical location of the eligible entity. The provision reduces eligibility for any amounts received from a covered loan made under the 2020 or 2021 PPP.

Eligible entities include an expansive list, including restaurants, food stands, food trucks, food carts, caterers, saloons, inns, taverns, bars, lounges, brewpubs, tasting rooms, taprooms, certain breweries, wineries, distilleries or other similar places of business in which the public or patrons assemble for the primary purpose of being served food or drink. Also included are entities located in an airport terminal or one that is a Tribally-owned concern.

Excluded entities are state or local government-operated businesses; businesses that, as of March 13, 2020, owned or operated (together with any affiliated businesses) more than 20 locations, regardless of whether those locations do business under the same or multiple names; entities that have a pending application for or have received a SVOG; or publicly-traded companies.

$5 billion of the grants are to go to entities with gross receipts during 2019 of not more than $500,000, and the remainder will be awarded by the SBA in an equitable manner to eligible entities of different sizes based on annual gross receipts.

Grants can be used for payroll costs, payments of principal or interest on any mortgage obligation, rent payments, utilities, maintenance expenses, supplies, food and beverage expenses, covered supplier costs, operational expenses, paid sick leave, or any other expenses that the SBA deems essential to maintaining the eligible entity.

During the initial 21-day period for awarding grants, the SBA is to prioritize grants to small business concerns owned and controlled by women, veterans, or socially and economically disadvantaged small business concerns.

Economic Injury Disaster Loans (EIDL) and similar funding

The Act provides additional recovery funding for targeted EIDL advances in the amount of $15 billion, to remain available for targeted advances until expended. $10 billion is appropriated for entities covered under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act) and $5 billion for certain entities covered under the EIDL advances of the CARES Act.

Exemptions from taxation and other tax provisions

As with prior COVID-19 relief packages, Congress has provided exceptions to the taxation of various recovery programs. Under the Act, Congress suspends the taxation of up to $10,200 of unemployment compensation for a taxable year beginning in 2020 if the adjusted gross income of the taxpayer for that year is less than $150,000.

Exempted from taxation under this bill are EIDL advances issued as part of the Economic Aid Act. The Act further provides that no deduction is to be denied, no tax attribute is to be reduced, and no basis increase denied due to the exemption from gross income. Similar income tax treatment is provided for the restaurant revitalization grants that will be issued as part of the Act.

Although the Act does not currently offer any student loan forgiveness, it does introduce a gross income exclusion provision. Specifically, the forgiveness of student loans from Jan. 1, 2021, through Dec. 31, 2025, generally does not result in taxable income. This exclusion applies to loans expressly provided for postsecondary educational expenses and does not apply to discharges resulting from the provision of services to the educational organization or the lender.

Employee Retention Credit

The Act extends the employee retention credit (ERC) to Dec. 31, 2021, with certain changes.

A large employer that is severely financially distressed (more than a 90% decline in gross receipts) can use the small employer “all employee wages” rule in determining the credit.

A “Recovery Startup Business” provision allows “a company that began carrying on a trade or business after Feb. 15, 2020,” that is not otherwise eligible for the ERC under the gross receipts or the governmental order test, to receive up to a $50,000 maximum credit per quarter. Two other requirements apply:

• Average annual gross receipts for such employer under section 448(c)(3) for the up to 3 year period before such quarter do not exceed $1 million.
• Only wages up to $10,000 can be counted for the quarter and it appears the $7,000 limit also still applies.

The statute of limitations period for new employee retention credits shall not expire before the date that is five years after the later of two dates: either the date on which the original return is filed, or the date on which the return is treated as filed under section 6501(b)(2) (generally April 15 of the following year for information returns filed during a given year).

Current rules apply through the June 30 period under prior legislation. The rules added in this Act apply for wages paid after June 30, 2021, and before Jan. 1, 2022.

Affordable Care Act premium tax credits

For 2021 and 2022, the premium tax credits available for health insurance purchased on the health insurance marketplace (also known as the exchange) are increased. In addition, eligibility for the credits for those two years is expanded to include individuals with household incomes exceeding 400% of the federal poverty level.

Individuals receiving unemployment benefits in 2021 can qualify for larger premium tax credits for that year.

For 2020, individuals who received advanced premium tax credits in excess of the amount to which they were entitled may not need to repay the excess credits.

Paid sick leave and paid family leave credits

The Act extends tax credits for employer-provided paid sick and family leave established under the Families First Coronavirus Response Act (FFCRA) through Sept. 30, 2021; adds vaccination-related events in the list of eligible leave reasons; and increases the wages covered by the paid family leave credit to $12,000 per worker, from $10,000. The Act also implements a five-year statute of limitations and nondiscrimination rules for the paid leave eligible for the credit.

Similarly, the Act extends tax credits for paid sick and paid family leave to eligible self-employed individuals.

These provisions are effective for April 1, 2021, to Sept. 30, 2021. Note that the mandatory paid leave has not been extended, but the tax credits are available to employers whose paid leave would have fallen under the FFCRA provisions had they still been in effect.

Changes to existing tax law

The 2017 Tax Cuts and Jobs Act enacted provisions preventing noncorporate taxpayers from deducting business losses in excess of $500,000 for joint filers ($250,000 single or married filing separately) against nonbusiness income, wage and/or investment income. The CARES Act in 2020 eliminated this provision for tax years beginning before Dec. 31, 2020. The Act extends the applicability of this provision through tax years beginning before Jan. 1, 2027.

The Act also repeals a provision allowing U.S.-affiliated groups to elect to allocate interest on a worldwide basis. section 864(f) was enacted as part of the American Jobs Creation Act of 2004 and was originally slated to become effective in 2009. Congress, however, delayed the election’s effective date three times, largely because of its cost. section 864(f) was finally scheduled to become effective in 2021, but the Act permanently repeals section 864(f) retroactively before it can ever take effect.

The section 864(f) election would have been relevant for taxpayers in computing the section 904 foreign tax credit limitation, and would likely have been particularly beneficial for taxpayers subject to residual U.S. tax on global intangible low-taxed income (GILTI) due to apportionment of interest expense to the GILTI basket. The election could have generally enhanced the ability of taxpayers to take foreign tax credits, and its repeal will have particular impact on taxpayers with significant debt in offshore subsidiaries.

The Act also expands the exclusion from gross income for employer-provided dependent care assistance from $5,000 to $10,500 (or half that amount for married filing separately) for taxable years beginning during 2021. An employer can amend its plan retroactively to the first day of the plan year as long as it adopts such an amendment by the last day of the year.

In addition, the Act expands the group of covered employees of public companies under section 162(m) to include another five highest-paid employees (seemingly whether officers or not) to the current group of the three highest paid officers and the CEO and CFO. Thus, public companies will be limited to deducting $1 million in compensation to a larger group of employees. The new group of five will be covered employees for the years they are in the highly compensated group, but the law does not include them in the forever-covered provision that applies to the other officers. This provision takes effect for tax years beginning after Dec. 31, 2026.

Unemployment benefits

The Act extends through Sept. 6, 2021, most unemployment provisions originally enacted as part of the CARES Act. Included among these extensions is the unemployment reimbursement for nonprofit and government employers. In addition, from April 1, 2021, through Sept. 6, 2021, the reimbursement rate increases from 50% to 75%.

COBRA premium assistance

Individuals eligible for COBRA continuation coverage under a group health plan due to termination of employment or reduction of hours can have all of their COBRA premium costs covered for the period April 1, 2021, through Sept. 30, 2021. This premium assistance received by individuals is not subject to federal income tax. Premium assistance is not available if the individual is eligible for COBRA due to a voluntary termination of employment.

Individuals eligible for premium assistance can elect to enroll in a different health plan than the one they were enrolled in at the time of the COBRA qualifying event, if certain conditions are met.

COBRA premium assistance is also available to individuals who did not elect COBRA, or who discontinued COBRA before April 1, 2021, if otherwise eligible. In addition, individuals eligible for COBRA premium assistance but who pay COBRA premiums for the applicable periods are entitled to reimbursements for those premiums.

Notices about premium assistance must be provided to individuals, and the government is expected to issue model notices within 45 days of enactment of the Act.

The Act allows the employer maintaining the group health plan to claim a refundable payroll tax credit against its Medicare tax for the amount of the premium assistance. This credit must be coordinated with certain other credits, such as the employee retention credit and the paid sick leave and paid family leave credits. Advanced refunds of the credit and reductions in payroll tax deposits in anticipation of the credit are allowed. Special rules apply for multiemployer plans and for railroad employers.

Pensions

The Act provides the Pension Benefit Guaranty Corporation with the ability to make direct cash grants (funded by the U.S. Treasury) to those multiemployer pension plans that are the most financially troubled. The Congressional Budget Office estimates the costs of these grants to be more than $85 billion.

Multiemployer pension plans will have the ability to amortize investment losses over 30 years; to delay, temporarily, any requirement to designate the plan as in either endangered, critical or critical and declining status; and plans that are already in critical and endangered status can temporarily extend their funding improvement and rehabilitation periods.

The Act also provides single-employer plan funding relief by extending the amortization periods for funding shortfalls and the pension funding stabilization percentages.

Pandemic relief funding not centered on tax 

Several components of the spending package that are not centered on tax issues stand out for the amount of funding they entail and their potential effects on Americans and the economy. They include:

State and local fiscal aid: $350 billion to states, territories, Tribes, and local governments for their response to the pandemic, to offset revenue losses, strengthen economic recovery and provide premium pay for essential workers. Also, $10 billion as part of a new Critical Infrastructure Projects program to help states, territories, and Tribal governments complete capital projects directly enabling work, education, and health monitoring, including remote options, in response to the pandemic.

COVID-19 vaccines and testing: $48.3 billion for testing, contact tracing, personal protective equipment for health workers and enabling mitigation measures sure as isolation and quarantine. Also, $7.5 billion in Centers for Disease Control and Prevention funding for vaccine distribution, and $5.2 billion to the Biomedical Advanced Research and Development Authority to support advanced research, development, manufacturing, production, and the purchase of vaccines.

Health care workforce: $7.66 billion to bolster the size of the public health workforce and its COVID-19 response.

K-12 schools: $125 billion for public K-12 schools to safely reopen for in-person learning, address learning loss, and support students as they work to recover from the long-term impacts of school closures and remote education due to the pandemic.

Higher education: $39.6 billion to colleges and universities and their students. At least  half of such funding must be spent on emergency financial aid grants to students, with the other half available to defray lost revenue and increased costs from declining enrollment, the transition to online learning, closures of revenue-producing services and facilities, and COVID-19 testing, vaccination, PPE and classroom retrofits.

Child care: $39 billion for child care, including nearly $24 billion for Child Care Stabilization grants and almost $15 billion for the Child Care and Development Block Grant (CCDBG) program. States must use Child Care Stabilization funds to award subgrants to qualified child care providers that are either open or temporarily closed to help support their operations during the pandemic. CCDBG funds can be used flexibly by states, including for child care subsidies.

Broadband for remote learning: $7.2 billion to the Federal Communications Commission to help schools and libraries ensure that schoolchildren can fully participate in remote learning.

Emergency Rental Assistance: $21.6 billion in Emergency Rental Assistance to augment the $25 billion provided by the Consolidated Appropriations Act in late December.

Public transportation: $30.4 billion of additional relief funding to transit agencies to prevent layoffs of transit workers and prevent severe cuts to transit services.

Small Business Capital: $10 billion for the State Small Business Credit Initiative to help states support small businesses.

Defense Production Act: $10 billion to expand domestic production of personal protective equipment, vaccines, and other medical supplies.

Information technology and cybersecurity: $2 billion to equip federal agencies with modern technology and cybersecurity tools to deliver services and benefits (e.g. vaccine development and distribution, transition to remote work) that Congress has provided to fight COVID-19.

Economic Development Administration: $3 billion to aid communities in rebuilding local economies, including $750 million for the travel, tourism, and outdoor recreation sectors.

Food supply chain: $4 billion to support the food supply chain through the purchase and distribution of food, the purchase of PPE for farmworkers and other frontline food workers, and financial support for farmers, small- and medium-sized food processing companies, farmers markets and others.

Share

Gallagher, Flynn & Company, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how the Gallagher, Flynn & Company, LLP can assist you, please contact us.

August 10, 2021

Share

Gallagher, Flynn & Company, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how the Gallagher, Flynn & Company, LLP can assist you, please contact us.

August 04, 2021

Employers impacted by COVID-19 that may be eligible for the employee retention tax credit (ERTC) finally have some additional guidance from the IRS that addresses a few unanswered questions, although some outstanding questions are still unanswered.

Background

The ERTC was originally enacted by in the CARES Act in March 2020. Its use by taxpayers was significantly increased when additional statutes expanded and extended it. First, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act) passed in December 2020 provided a number of changes to the ERTC including allowing employers to take the ERTC and a PPP loan both. Most of these changes were applicable starting Jan. 1, 2021 and (at the time) only applied to the first two quarters of 2021. 

We discussed many of the Relief Act changes in our article on the IRS’s initial guidance in Notice 2021-20 that was issued in March 2020 covering the 2020 ERTC. 

Subsequently, the IRS issued Notice 2021-23 with some additional guidance on the Relief Act changes that are effective in 2021. These are covered in our prior alert from April 2021.

Congress again extended the ERTC from June 30, 2021 to Dec. 31, 2021 in the American Rescue Plan Act (ARPA) passed in March 2021.

Now, the IRS has issued Notice 2021-49 (the Notice) to clarify some previously unanswered questions in the prior two notices and to include provisions for the extensions and additions to the ERTC provided in ARPA that were not addressed in the prior guidance.

American Rescue Plan Act additions to 2021 ERTC

The Notice restates that the ARPA extended the ERTC for the third and fourth quarters of 2021 and that the credit now applies against Medicare taxes (or the RRTA equivalent) rather than Social Security taxes. The credit remains refundable so this change does not limit employers’ credit but rather is a reporting and government funding matter. The maximum credit remains $7,000 per employee per quarter for the third and fourth quarters. 

The ARPA added a “recovery start-up business” to the list of eligible employers as a third category of eligible employer (beyond being impacted by government orders or having a significant decline in gross receipts). The Notice clarifies that when a trade or business is started is determined using section 162 principles, and that a tax-exempt employer would use all of its operations and average annual gross receipts under section 6033 in determining whether it is a recovery start-up business. Further, a recovery start-up business that is a small employer can include all wages paid as qualified wages up to the $50,000 maximum credit allowed for recovery start-up businesses.

The Notice also provides some guidance for “significantly financially distressed companies” which is a new provision added by ARPA that allows certain large employers to use all wages paid for ERTC purposes.

For the third and fourth quarters, wages used for (i) PPP loan forgiveness, (ii) the shuttered venue operators grant or (iii) the restaurant revitalization grant cannot also be used for ERTC purposes. The Notice also discusses ARPA “double dipping” rules for credits described in sections 41, 45A, 45P, 45S, 51, 1396, 3131 and 3132 of the Code. Under these rules, the same wages cannot be used for both these credits and for ERTC purposes.

As a reminder, ARPA extended the statute of limitations from the normal three years to five years for any ERTC claimed in the third and fourth quarters, as restated in the Notice.

The Notice further provides that the guidance in Notices 2021-20 and 2021-23 continues to apply for the third and fourth quarters as much of the ARPA extension mirrors prior statutes on ERTC provisions.

Clarifications on unanswered questions for 2020 and 2021 ERTC

In addition to covering changes and additions by ARPA, the Notice also covers some areas that were still uncertain based upon the statute and prior notices. Specifically, the Notice provides:

• Full-time equivalents do not have to be included in the full-time employee count but their wages are considered for qualified wages for purposes of the credit calculation.
• Tip income is generally included in qualified wages, with limited exceptions per the section 3121(a) definition; further, the same wages can be used for the employee retention credit and the section 45B credit. 
• Taxpayers claiming 2020 employee retention credits must reduce the wage deduction on the 2020 income tax return, requiring an amended return or administrative adjustment request (AAR) for taxpayers that filed the 2020 federal income tax return prior to calculating the 2020 employee retention credit. 
• The election to use the preceding quarters’ gross receipts to measure a significant decline in gross receipts applies quarter-by-quarter allowing the employer to make a different decision each quarter in 2021.
• Wages paid to a majority (more than 50%) owner of a corporation, or a majority owner’s spouse are not qualified wages unless the majority owner does not have any living parents, children or siblings. This is because of interaction in sections 51(i)(1), 152(d)(2) and 267(c). Certain related minority owners may fall under the same rule. These requirements are complex; any company in this situation should carefully review these rules.   
• A partner cannot be an employee of the partnership in which the partner is an owner and thus generally should not have 3121(a) wages from that entity for purposes of the ERTC.
• Rules in Notice 2021-20 for calculating 2019 gross receipts when acquiring businesses in 2020 or starting a business in 2019 apply the same to businesses acquired in 2021 or businesses started in 2020.

Takeaways

Some employers have little time left before the extended due date for filing 2020 federal income tax returns. This puts pressure on determining a reasonable estimate for any 2020 employee retention credits without having to file an amended return or AAR. Those that have already filed 2020 income tax returns without analyzing the applicability of the credit still have the opportunity to do so while the statute of limitations remains open; however, the burden and cost of filing those amended returns or AARs will have to be weighed with the amount of anticipated credit. This also highlights the need to analyze 2021 credit applicability sooner rather than later so that the same time crunch does not apply to the 2021 income tax filings.

As a note, the infrastructure bill released on August 1st includes a provision which would limit qualified wages (for employers that are not a recovery start-up business) to those paid on or before Sept. 30, 2021; in other words, the employee retention credit may no longer apply in the fourth quarter of 2021 if the bill passes as currently drafted.  As of the date of this article, the bill has not yet been considered by the House or the Senate.  

Share

Gallagher, Flynn & Company, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how the Gallagher, Flynn & Company, LLP can assist you, please contact us.

April 04, 2021

Share

Gallagher, Flynn & Company, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how the Gallagher, Flynn & Company, LLP can assist you, please contact us.

March 01, 2021

Share

Gallagher, Flynn & Company, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how the Gallagher, Flynn & Company, LLP can assist you, please contact us.

February 23, 2021

Share

Gallagher, Flynn & Company, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how the Gallagher, Flynn & Company, LLP can assist you, please contact us.