Category Archives: Tips

Important Updates On Restaurant Revitalization Fund From 4/6/21 IRC Webinar

Spinning J Bakery & Soda Fountain, Chicago, IL – photo credit Clayton Hauck

(For an overview of the new Restaurant Revitalization Fund (RRF), please see my recent blog post.)

Today I attended an excellent zoom “roundtable” hosted by the Independent Restaurant Coalition.  Erika Polmar did a great job presenting, and Devita Davison monitored chat — they covered a lot of ground and answered many questions.

It was not recorded, as it was designed for participants to ask specific questions that may have revealed personal info. But there is a second session happening tomorrow (Wednesday 4/7) that I strongly encourage you to attend. Type your question in the chat and they will address it, or email questions@restaurantcoalition.com — they also have an FAQ at saverestaurants.com/resources that you can also download here.

There are still outstanding questions — see my notes below — but my main takeaway is that as a CPA firm, we are going to be pivoting to try to prepare draft 2020 tax returns for all restaurant clients before the program opens in the next two weeks. This will be a challenge, as we are simultaneously working on Employee Retention Credit calculations, 1Q 2021 estimates, and corporate tax returns; but we’re doing everything we can to make sure our clients have both 2019 & 2020 tax returns — at least in draft format — in time to apply for this grant the day it opens.

Please remember to sign up for the session tomorrow. It will be worth your hour of attendance.

My notes from today’s session:

  • They are expecting guidance at the end of this week (4/9) and a draft application at the beginning of next week (4/12).
    – They think the process will open end of next week (4/16) or beginning of the following week (4/19).
  • There are funds set aside for 60 days for businesses with <$500k in receipts.
    – Also funds set aside for women-owned, veteran-owned, and “disadvantaged” groups and first 21 days of the application period are specific for them.
     – We don’t know if they will change the 51% ownership rule to 50% or not yet, but it is under consideration.
  • If you opened before 2019, take 2019 revenue minus 2020 revenue, minus PPP loan. That’s the grant amount.
    – If you opened in 2019, take average monthly revenue from 2019 and divide by 12, then do the same as above.
    – If you opened in 2020, funding amount is equal to eligible costs incurred minus revenue received.
  • You may use the grant for expenses incurred during the period of 2/15/2020-12/31/2021 for: payroll capped at $100k per EE, benefits, mortgage, rent, utilities, maintenance, build-out for outdoor/indoor safe dining, supplies, food & beverage inventory, operating expenses.
    – May be extending it through 12/31/23 soon; hopefully before application goes live.
    – Cannot double-dip and use funds for anything you paid for with PPP, EIDL or other federal funds.
    – Very likely but not confirmed that Owner’s Draw will be considered an eligible operating expense.
  • Documents needed to prove revenue loss — must be able to show revenue loss between the two years (or alternatively as above if opened after 1/1/19):
    – Preferably 2019 & 2020 tax returns – may use certified P/L statement or documentation from Point of Sale system for 2020 instead, if tax return is not done.
    – Acceptable documents would be as follows (keeping in mind that if you use anything other than a tax return, a human being will have to review your application (rather than a computer) and that will slow it down:
     * Business tax returns (IRS Form 1120 or IRS 1120-S);
     * IRS Forms 1040 Schedule C; IRS Forms 1040 Schedule F;
     * For a partnership: partnership’s IRS Form 1065 (including K-1s);
     * Bank statements;
     * Externally or internally prepared financial statements such as Income Statements or Profit and Loss Statements;
     * Point of sale report(s), including IRS Form 1099-K.
  • For hybrid businesses like bowling alleys, RRF revenue replacement will only be for food/beverage portion of business (not wholesale or entertainment). 
    – F+B revenue has to be 33% or greater to qualify as a “restaurant”.
  • You may not use the RRF to pay off any other federal program, like the EIDL or PPP. (This might change.)
    – You CAN use it to pay off other debt, just not federal debt.
  • They are looking into payments to related parties like self-rental to see whether they will qualify or not.
  • If you close your doors temporarily, you can get RRF — if you closed permanently, you are not eligible. If you close permanently while using RRF money, you will have to repay it.
  • This money is very likely to run out quickly. Apply the moment it goes live on Day One.
    – The SBA will then hopefully go back to Congress to say “here’s how many applications for $X we have in the queue; please replenish the fund so we can continue funding the requests.” So even if you apply “too late”, there’s hope.

Questions I still have:

  • Will the Employee Retention Credit (ERC) and FFCRA Emergency Leave Credits count as gross receipts? Or will they be exempted like the PPP funds? If treated like PPP funds, will they have to be subtracted from the RRF grant amount?
  • Is other financial relief — local and industry grants — considered as part of revenue?
  • For a restaurant that has no outdoor space to build out for safe dining; could they use RRF money to buy/outfit a food truck so they could use it in place of outdoor dining?

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

Restaurant Revitalization Fund Opens Soon: April 2021

4/7/2021 UPDATE: I attended yesterday’s Independent Restaurant Coalition zoom call, and wrote up notes here. Please give it a read after you’ve taken a look at the blog post below, as it answers some FAQs.

4/1/2021 UPDATE: the SBA just announced that RRF applicants will not need a DUNS number or SAM account. This is a change from March, when it was expected that applications would require this process as they currently do under the Shuttered Venues Operators (SVO) grant program.  The shift by SBA recognized the significant demand for the program – up to hundreds of thousands of applicants are expected.

From the start of the Paycheck Protection Program (PPP), my small business clients — specifically the restaurants, bars, cafes and caterers — were confused and frustrated. We put so much time and effort into applying for PPP funds, working through the tortuous planning for spending in a way that would lead to 100% forgiveness, and had practically nothing left to show for it. Shuttered or take-out only, there was simply not enough revenue coming in to support the extremely high labor, inventory, and overhead costs typical of the industry. Had it not been for state and local grants, most of them would have had to close their doors permanently.

They weren’t alone — in fact, restaurant lobbyists have been working for many months on crafting financial relief legislation that suits the specific needs of the hospitality industry. And I’m amazed to say — they did a great job, and most of it made it into the final law. Unlike the constantly-changing mess that the PPP has been, this new program is thought-through, carefully-written, and has clearly learned from PPP’s mistakes. (It’s also taken the better part of a year to bring it into existence, so there are two sides to this coin, as is usually the case.) And it will be opening soon.

The Restaurant Revitalization Fund (RRF), as it is now known, was signed into law as part of the recent American Rescue Plan Act. Unlike the PPP, which was based on payroll costs, the RRF is structured to disburse tax-free federal grants in the amount of a restaurant’s “pandemic-related revenue loss“.

Grants are calculated by subtracting 2020 receipts from those of 2019. PPP funds received will offset (reduce) the grant amount, but those funds will not be considered part of gross receipts. The total grant amount for an eligible business and any affiliated businesses is capped at $10 million and is limited to $5 million per physical location of the business.

An example set of calculation scenarios from the National Restaurant Association:

In addition to basing the award amount on revenue loss rather than any other measure, other features of the RRF program that seem a better fit for restaurants are the flexibility on how the funds can be spent and over how long (Feb 15, 2020-Dec 31, 2021). Categories of eligible costs include:

  • payroll;
  • principal or interest on mortgage obligations;
  • rent;
  • utilities;
  • maintenance (including construction to accommodate outdoor seating);
  • supplies such as protective equipment and cleaning materials;
  • normal food and beverage inventory;
  • operational expenses;
  • and many other expenses that the SBA determines to be essential to maintaining operations.

Another area where there is a great deal of flexibility — eligible entities can be “a restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink.”

There will be an initial 21-day period when the SBA will prioritize awarding grants for businesses owned by women, veterans, or socially and economically disadvantaged individuals.

To learn more, I strongly encourage you to read the Independent Restaurant Coalition’s FAQ, and attend one of their upcoming zoom “round table” webinars. The next ones will be held on Tuesday, April 6th at 12pm ET / 9am PT, and Wednesday, April 7th at 11am ET / 8am PT.

It’s looking like the program will be opening up in the next few weeks, and there are steps you can take now to prepare.

First and foremost: get educated:
– Register for one of the IRC zoom round-table webinars and review their other resources, including an excellent FAQ.
Watch the most recent National Restaurant Association (NRA) webinar (keeping in mind that the DUNS and SAM are no longer required) and visit RestaurantsAct.com/rrf for more resources, including a fact sheet.
– There are also many articles on the topic, including this extensive one from Forbes.

4/1/2021 UPDATE: In today’s AICPA Town Hall, they shared that the SBA has announced that RRF applicants should prepare with the following next steps —

The “checklist similar to SVOG” refers to another program, the Shuttered Venue Operators Grant — their checklist can be found on a download via the SBA website. We expect a similar one to be released specifically for RRF soon, but this is probably a good guideline.

I’m looking forward to seeing at least one Covid-19 financial relief program play out right and run smoothly — which I recognize may be too much to ask, but for the sake of all our beloved community watering holes, gathering spots, and the places that nourish our bodies and souls, I will keep my fingers crossed. They’ve been through so much already and I would love to see this program help them make it to the finish line.


If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

How To Cancel Or Reschedule Illinois 2020 Income Tax Return Electronic Payment

As I’m sure you’re aware, the Illinois Department of Revenue (IDOR) has extended the due date for individual tax filings (but not corporate or estimated taxes) to coincide with the new IRS due date of May 17, 2021.

However, many have already filed their taxes and have scheduled their tax payments to be direct-debited on April 15th. IDOR has released instructions for how to move these payments to the new due date.

From the Illinois Department of Revenue on March 26, 2021:

If you scheduled an electronic payment for 2020 income taxes to be paid on or before April 15, 2021, your payment will not automatically be rescheduled to May 17, 2021. If you do nothing, the payment will be made on the date you chose.

If the payment has not been processed, you may be able to cancel or reschedule it. You must cancel or reschedule the payment before its scheduled date.

Here is information on how to cancel and reschedule your payment:

  • If you scheduled a payment through MyTax Illinois, you can login to your account and cancel any pending payment. If you made your payment through the non-login option, you can use Retrieve Saved or Submitted Request to view and withdraw any pending future payment using the email address and confirmation code associated with your payment. For specific instructions, see Cancel a MyTax Illinois Payment.
  • If you scheduled a payment through a credit card or your bank, you must contact your financial institution to stop the payment. (financial institution stop payment fees may apply.)
  • If you scheduled a payment through a tax professional or using tax preparation software, you may cancel your payment or request the date be changed. You must email us at REV.TaxPay@illinois.gov to make a payment cancellation no later than 11:59 p.m. CT two business days prior to the scheduled payment date and include ALL of the following information:
    1. Your first and last name or your company name if you are a business
    2. Identification number:
      • For individuals, last four of your social security number (SSN) or your Illinois PIN
    3. Mailing address and phone number
    4. Specify if you are requesting to Cancel or Reschedule your payment
    5. Exact dollar amount of your original payment
    6. Date the original payment was scheduled to be paid (Month, Day, and Year)
    7. If rescheduling, you must include the new date to which the payment will be changed.

Note: Checks and money orders are cashed upon receipt. We are unable to stop these transactions, therefore your check or money order will be cashed. You may contact your financial institution for more information regarding your options.


If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

FREE Webinar Series For Small Biz Owners – Making Sense of Financial Relief Programs

My trusted colleagues over at Wegner CPAs are putting on a two-week series of FREE webinars geared toward small business owners. They will go through each of the following current Federal relief programs designed to help small businesses make it through to a brighter day:

  1. Employee Retention Credit 2021
  2. Employee Retention Credit 2020
  3. Shuttered Venue Operator Grants
  4. Paycheck Protection Program
  5. Restaurant Revitalization Fund
  6. Economic Injury Disaster Loans

All of these programs have been changed over the past month to make them more useful to small business owners — often with the effect that multiple programs are available simultaneously. The resulting complexity is a real challenge, but the amount of financial relief available makes it worth learning what you can (and potentially working with a professional to make it happen).

We have been reaching out directly to clients who we believe qualify for each of these programs — but if you work with us and think you are eligible, yet haven’t been contacted, please let me know.

Webinar Series: Making Cent$$ of Stimulus Money

You can view Wegner CPAs’ Covid-19 Resources and click “webinars”, or see a calendar of all their upcoming webinars and view a selection of previously recorded webinars.

Employee Retention Credit 2021
Tuesday, March 30, 2021
10:00 am – 10:30 am CDT (8:00 am PT / 11:00 pm ET)
ERC in 2021 can result in big dollars for your organization. We will discuss how to determine if you’re eligible and how to be sure you file for the credit timely.
Register

Employee Retention Credit 2020
Wednesday, March 31, 2021
10:00 am – 10:30 am CDT (8:00 am PT / 11:00 pm ET)
Were you eligible for ERC in 2020? Find out as we take a deeper dive into the credit eligibility requirements and rules for last year. We’ll also review what you need to do to claim the credit for 2020.
Register

Shuttered Venue Operator Grants
Thursday, April 1, 2021
10:00 am – 10:30 am CDT (8:00 am PT / 11:00 pm ET)
The SVOG portal opens on April 8th. Are you eligible and ready to apply? Join us to learn more about the program and what you need to be doing now to prepare.
Register

Paycheck Protection Program
Tuesday, April 6, 2021
10:00 am – 10:30 am CDT (8:00 am PT / 11:00 pm ET)
Updates continue to roll out for PPP. We’ll discuss what the soon to be signed extension means for applicants and tips on getting through the application process. We’ll also review the updated loan calculation for Schedule C filers. Don’t forget about PPP loan forgiveness!
Register

Restaurant Revitalization Fund
Wednesday, April 7, 2021
10:00 am – 10:30 am CDT (8:00 am PT / 11:00 pm ET)
The SBA announced that they hope to have RRF up and running by early April. We will review timely released guidance and how to prepare for applying to the program.
Register

Economic Injury Disaster Loans
Thursday, April 8, 2021
10:00 am – 10:30 am CDT (8:00 am PT / 11:00 pm ET)
The EIDL program has continued to evolve over this last year. There are EIDL loans and EIDL grant advances. Are you eligible for either? Learn more about this program and the changes that have come from the last two stimulus bills.
Register

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

Covid-19 Sick & Family Leave Credits For Employers Extended Through 9/30/21 & Expanded

The American Rescue Plan Act (ARPA), just recently signed into law, offers many generous tweaks to federal programs for employers trying to take care of their staff, and for former employees. There are six in particular every employer should research on their own behalf and for the benefit of workers:

  1. Paid Sick & Family Leave
  2. COBRA Subsidies
  3. Dependent Care FSAs
  4. Employee Retention Credit
  5. Short-Time Compensation
  6. Unemployment Insurance

The Department of Labor will be issuing regulations or other guidance regarding these changes to the FFCRA.

Ellen M. Bronchetti & Syed H. Mannan of McDermott Will & Emery have done an excellent job summarizing these updates in this article. I’m including their sections on Paid Sick & Family Leave as well as COBRA Subsidies almost in their entirety — as no amount of summarizing seems to do them justice. I’ve included additional information on the COBRA Subsidies from L. Renee Lieux of McNees Wallace & Nurick.

Homework: Fox Rothschild has a nice Guide For Employers to the American Rescue Plan Act — it’s a good place to start digging into all the provisions.

Paid Sick & Family Leave

Under the previously passed Families First Coronavirus Response Act (FFCRA), companies with fewer than 500 employees were required to provide paid leave to employees who were unable to come to work for a number of Covid-19 related reasons. FFCRA provided employers a refundable tax credit, which would offset for employers the costs of providing the paid leaves.

The requirement to provide paid leave expired for employers with fewer than 500 employees at the end of last year. But employers can still voluntarily choose to provide FFCRA paid sick or paid family leave to employees and receive refundable tax credits for costs related to providing the leave through March 31, 2021.

This is a great value for staff and to employers, and helps keep customers and the community safer as well.

With the passage of the American Rescue Plan Act of 2021, employers should note the following additions and changes:

  • Refundable Tax Credits Available through September 30, 2021: Employers who choose to voluntarily provide FFCRA paid sick or paid family leave may now receive refundable tax credits through September 30, 2021.
  • Additional Covered Reasons for Providing Paid Sick Leave:
    Previously under the FFCRA, qualifying reasons for providing paid sick time were limited to if the employee is unable to work (or telework) because (s)he:
    (1) is subject to a federal, state or local quarantine or isolation related to Covid-19;
    (2) has been advised by a healthcare provider to self-quarantine;
    (3) is experiencing Covid-19 symptoms and seeking a diagnosis;
    (4) is caring for an individual who is subject to quarantine or is self-quarantining;
    (5) is caring for a child whose school or place of care is closed (or child care provider is unavailable) because of Covid-19; or,
    (6) is experiencing any other substantially similar condition specified by the US Secretary of Health and Human Services.

    ARPA expands on the list and now allows employers to provide leave to employees for three additional reasons:
    (1) obtaining a Covid-19 immunization;
    (2) recovering from an injury, disability, illness or condition related to the immunization; or,
    (3) seeking or awaiting the result of a Covid-19 test or diagnosis when the employee has either been exposed to Covid-19 or the employer has requested the test or diagnosis.
  • Additional Covered Reasons for Providing Paid Family Leave: The scope of reasons for providing emergency family leave is now expanded. Originally, tax credits were available to employers for providing paid family leave only if the employee was unable to work (or telework) to care for a child whose school or place of care was closed or unavailable because of the public health emergency. Now, employers can claim tax credits for providing family leave which arises from any of the six qualifying reasons provided for in the FFCRA and the additional three reasons added under ARPA (noted above).
  • Duration of Paid Sick and Family Leave for Receiving Tax Credits: ARPA allows employers to receive the tax credit for providing up to 10 days of paid sick leave beginning on April 1, 2021, even if the employer previously took a tax credit for providing paid sick leave to an employee for a covered reason before April 1, 2021. In addition, employers can receive a tax credit for providing up to 12 weeks of paid family leave. In other words, the clock sort of “re-sets” on sick and family leave.
  • Amount of Tax Credits Available for Paid Sick Leave: Employers providing voluntary paid sick leave receive a tax credit, up to a cap of $511 a day, at the employee’s regular rate of pay if the employee is on leave because of coronavirus quarantine, self-quarantine or has symptoms. ARPA now includes the additional covered reasons (discussed above) for receiving tax credits at the employee’s regular rate of pay. For any other paid sick leave reason, the amount of tax credit available to an employer is calculated at two-thirds the employee’s regular rate of pay and capped at $200 a day.
  • Amount of Tax Credits Available for Paid Family Leave: Employers providing paid family leave receive a tax credit, up to a cap of $200 a day, at two-thirds the employee’s regular rate of pay for leave which is due to any of the covered reasons for providing paid family leave. ARPA also removes the two-week waiting period (during which the leave was unpaid) for taking paid emergency family leave. The Act also increases the cap on the aggregate paid leave from $10,000 to $12,000, meaning employers can now take an additional $2,000 in tax credits per employee for providing qualifying leave.
  • Addition of Non-Discrimination Rules: Employers who are voluntarily providing leave and receiving tax credits must also follow the new non-discrimination rule. The anti-discrimination rule makes the tax credit available only to those employers who provide leave to all employees without discriminating against certain categories of workers. Specifically, the tax credit is not available to those employers who discriminate (1) in favor of highly compensated employees, (2) full-time employees or (3) on the basis of the employment tenure of the employee.

Cobra Subsidies

Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage allows employees to continue to remain covered under their employer’s health insurance for up to 18 months after coverage is lost because of a reduction in work hours or the employee’s involuntary termination of employment.

Prior to ARPA, workers and dependents assumed full responsibility for payment of premiums. ARPA now provides up to six months of 100% subsidized COBRA coverage to those who are eligible for COBRA because of an involuntary termination from employment or a reduction in work hours. The premium subsidy will last from April 1, 2021, through September 30, 2021, and sponsors of group health plans will be subject to new notice requirements. Employers will receive reimbursements for the subsidy through a payroll tax credit.

Employers must provide three notices to eligible former employees notifying them of the premium subsidy, the extended opportunity to elect coverage, and when the premium subsidy will be terminated.

In addition, employers may, at their option, allow former employees who are currently electing COBRA to elect coverage under a different plan offered by the employer as long as (i) the premium for the new coverage does not exceed the premium for the current coverage, (ii) the new coverage is not an excepted benefit, a QSEHRA, or a FSA, and (iii) the employee did not voluntarily terminate employment.


If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

Paycheck Protection Program (PPP) Updates As Of March 21, 2021

Ah, the PPP. We thought our daily struggle with you last summer was as challenging as it would get. How naïve we were!

Lots of changes to the program have occurred as of late — all to the theoretical benefit of borrowers, though in practice not as welcome as one might expect.

Here’s a summary:

1) Schedule C filers (self-employed, independent contractors, freelancers, most single-member LLCs, and others) may now — moving forward — use a new calculation that is more advantageous when calculating the loan amount. The total loan is now based on 2.5 (or 3.5 if in hospitality) months of gross income (Line 7) rather than net income (Line 31).

Per the AICPA, “if a Schedule C filer has employees, the borrower may elect to calculate the owner compensation share of its payroll costs based on either net profit or gross income minus expenses reported on lines 14 (employee benefit programs), 19 (pension and profit-sharing plans), and 26 (wages (less employment credits)) of Schedule C. If a Schedule C filer has no employees, the borrower may simply choose to calculate its loan amount based on either net profit or gross income.”

This is indeed excellent news, but a) why this didn’t get applied to partnerships as well — which are entities following the same concept as Schedule C filers, only with more than one owner — is totally illogical; and, b) this is a slap in the face to the many millions of PPP borrowers who got practically nothing under the old rules and are now bound to them, as this new rule is not retroactive. AICPA has issued a statement about the inherent unfairness, calling on Congress to correct it.

Furthermore, many lenders have not bothered to re-program their systems with the new rules, as the program is slated to close by March 31 (see below re: pending extension).

2) The safe harbor for the “good faith loan necessity certification” for First Draw loans using the new Schedule C calculation is reduced from $2M to $150,000. If your loan is in this range, carefully consider which calculation you wish to use and weigh the difference against the risks.

3) Businesses that receive a first- or second-draw PPP loan after Dec. 27, 2020, may now also receive a Shuttered Venue Operators Grant (SVOG), with the proceeds from the PPP loan subtracted from the amount of the SVOG. Venue operators do not have to subtract any PPP funding received before Dec. 27, 2020. (More here.)

4) Many more non-profits are eligible for PPP loans than in previous iterations of the program, as well as internet-only news and periodical publishers. (More here.)

5) Costs eligible for loan forgiveness in the revised PPP include payroll, rent, covered mortgage interest, and utilities, as well as these types:

  • Covered worker protection and facility modification expenditures, including PPE, to comply with COVID-19 federal health & safety guidelines.
  • Covered property damage costs related to property damage and vandalism or looting due to public disturbances in 2020 that were not covered by insurance.
  • Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
  • Covered operating expenditures, which refer to payments for any business software or cloud computing service that facilitates business operations; product or service delivery; the processing, payment, or tracking of payroll expenses; human resources; sales and billing functions; or accounting or tracking of supplies, inventory, records, and expenses.

6) To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period between eight and 24 weeks’ long (no longer either/or, but any period in-between).

7) Improvements in the PPP have unfortunately led to slowdowns. Though the program is now more focused on and directed toward helping the struggling businesses who need it most — smaller ones, minority- and women-owned, hospitality industry, etc. — it’s been handled in a haphazard way that has confused applicants and lenders alike. And safeguards put in place by the SBA to combat fraud had the unwelcome consequence of holding up millions of valid applications.

8) There is legislation currently pending to extend the current PPP round’s deadline to May 31, but that has not yet been approved. The House voted almost unanimously to extend, but the Senate has not yet acted. Unless they act soon, this week will be the last in which to submit applications.

9) The program our firm uses — AICPA’s CPA Loan Portal — as well as many others, is already closed to new applicants as well as the public, and one must go through a validated partner firm such as ours in order to apply. However, I have heard that Cross River Bank (my favorite lender from the first round) is still accepting applications. Their FAQ, as well as their list of required documents by entity type, are both quality-information and well-organized. Please read those sections before applying. I have recently been informed that Lendio is also still accepting applications. (These are not affiliate links; I do not earn anything for referrals.)


If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

What The ARPA, ERC, PPP And Other Laws Mean For Your 2020 Taxes

Recent new legislation from Congress and the White House, as well as guidance from the IRS and DOL, has caused sweeping changes for small business owners and individuals, and we tax preparers are still trying to wrap our heads around it — during what was already the most complex and demanding tax season on record.

Specifically, the American Rescue Plan Act (ARPA) included a few provisions that are retroactive to 2020 — and the IRS, various state Departments of Revenue, Department of Labor, and tax software programs are trying to figure out how best to implement these changes as efficiently as possible. (For a breakdown of key provisions in the Act, see this excellent summary.)

These changes include:

1) The first $10,200 per person of 2020 unemployment benefits will no longer be taxable at the federal level, though certain states will continue to tax the full amount (Illinois has asked all taxpayers with unemployment income to hold off on filing returns until the Dept of Revenue has addressed the situation). The IRS will be releasing a worksheet that the tax software companies then need to incorporate into the 1040 returns.

2) A 2020 “Repayment Holiday” for the Marketplace Health Insurance Advance Premium Tax Credit was issued, but implementation questions remain; IRS guidance is expected soon.

3) Another economic impact payment (stimulus check) is on its way. You do not need to file your 2020 tax return right now to claim your check, as the law allows for an additional payment in a few months if your 2020 tax return shows you are entitled to more (vs your 2019 tax return). Conversely, if your income went up in 2020 and you are now ineligible for the full benefit, you’ll want to wait to file your 2020 taxes until after your payment arrives, since you won’t have to pay back the overage on your 2021 tax return.

In addition to the above legislative shifts, the IRS recently released guidance concerning the Employee Retention Credit (ERC) that changed our expectation of how it would be handled on business tax returns for cash-basis business tax filers. Previously we had expected that those who received PPP funds in 2020 and can now (as of the Dec 21 Consolidated Appropriations Act) retroactively claim ERC would adjust for the related deductions on their 2021 tax returns. Not so. These adjustments will have to be made on the 2020 tax returns. As a result, we have had to put approximately 75% of our client business returns on extension.

(Technical note: keep in mind if you are doing tax returns for a client that claimed ERC, not only do you have to reduce deductible wages by the amount of the credit, but also recognize this reduction may impact Section 199A eligible wages for purposes of the 20% qualified business income deduction.)

And yet we are still awaiting essential guidance on whether or not the Employee Retention Credit can be taken on wages paid to >50% owners of a company. Interpretations by tax analysts so far are pretty much split evenly between whether the law as [sloppily] written provides reasonable basis in this area.

I’m guessing you see the challenge here: we don’t yet know the rules for claiming the ERC, and yet we have to report related adjustments (as a direct result of the credit calculation) on the 2020 business tax returns. Most of these returns have a flow-through relationship with the business owners’ personal tax returns — so those may have to be placed on extension as well if we do not get guidance soon.

(Related blog post: please call your representatives and ask for all taxes — estimated quarterly as well as corporate — to be extended; not just the Form 1040.)

We are also expecting guidance about how the IRS wants business owners to treat basis reporting for owners where PPP forgiveness causes issues.

Yet another example of a forced need to wait on certain returns: using tax filing software, we can e-file a return today, but set the payment direct-debit date to a future date — not later than the return due-date. This date has not yet been updated in most tax prep systems to go beyond April 15th to the new due date of May 17th.

It’s particularly frustrating for us as small business advocates, because filing a tax return is the only way to get a refund if you’re owed one, and many of our clients may be more in need this year than usual. And yet, for a large number of taxpayers right now, holding off on filing is the recommended approach.

All the while we are trying to help our small business clients respond to 2021 changes, such as important employment law updates; alterations to COBRA and Marketplace subsidies; major modifications to the current round of the Paycheck Protection Program (PPP); new relief programs such as the Shuttered Venue Operators Grant (SVOG) and the Restaurant Revitalization Fund (RRF); the aforementioned ERC/PPP maximization… and so much more.

The provisions noted above — and others — may affect your return. Tax professionals everywhere need some time and space to learn about these changes, analyze their impact, and develop personalized recommendations to maximize your COVID-19 tax benefits. Please be patient with us during this extremely stressful time.


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PLEASE Ask Congress To Extend Key Tax Filing Dates

As I outlined in a recent post, the IRS extended the individual tax date for filing, but not business and estimated tax dates, which are the ones that small business owners and their tax preparers truly need.

We are asking everyone to please take a moment to contact their Representatives and Senators in Congress to request these types of taxes be included in the recent extension announced by the IRS.

You can share this great article from Money Magazine with them, outlining the issues, or just ask them to google “AICPA tax deadline small business” — there are a ton of great articles that explain why the need for them to act is so great.

From the American Institute of CPAs:

For reference, here’s a copy of my personal message to them — I called and emailed both of my senators as well as my representative.

We in the small business accounting and tax world would immensely appreciate your taking a few moments of your time to help us and our small business clients out — it has been a tax season like no other and we need your assistance to make it to the other side.


If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

Tax Day Extended to 5/17… Kinda. Small Businesses Need Your Help!

As I’m sure you’ve heard, it’s official — though it has a lot less meaning and impact than expected. The IRS has moved the individual income tax filing and payment date from the “usual” April 15 to my birthday: May 17, 2021.

But they did not include estimated tax payments or business returns in this extension. Please give me a real birthday present and contact Congress to request this essential small business relief.

IRS Commissioner Rettig neglected to do a few key things that were necessary to assist small business owners and their CPAs:

– Same as last year, the new date was announced after the March 15 deadline for filing S-Corp and Partnership tax returns; due to a long list of new guidance and still-awaited guidance, this forced us to do extra work to put approximately 75% of our clients in this category on extension.
– The extension does not apply to C-Corps and Co-ops, whose returns are still due on the original date of April 15th. This category represents approximately 15% of our struggling small business clients.
– The May 17th extension is only for 2020 tax year filings and, quite problematically, does not apply to first-quarter 2021 estimated taxes due on April 15th, which almost all of our clients are required to pay.

Furthermore, when recently questioned about whether or not there was a way the IRS could help small business owners by coordinating the first-quarter payment with the new deadline, Rettig flatly refused: “no”. Pressed regarding the consequences that not extending this due date would have on small business owners, Rettig said that they had to draw a line somewhere to keep wealthy taxpayers from “gaming the system” (for one month, really?); that small business owners challenged by this could just call the IRS if they have a problem (because that’s been going so well this season?); and tried to point out that the penalties aren’t really that high (so suck it up, and never mind that the state penalties are out of control?).

I cannot begin to express the frustration and disappointment with this decision, and I am not alone.

“The announcement is far too selective in who is receiving relief,” Barry Melancon, AICPA’s president and chief executive, said in a statement. “Failure to include estimated payments nullifies any benefit of a postponement since the tax return work has to be done to calculate estimated payments.”

“While this is welcome news for some taxpayers, there are a number of concerns that this limited extension does not address,” writes Frank Washelesky of ORBA. “The IRS extension does not extend the time for paying first quarter estimated income taxes for the 2021 tax year. It is difficult for taxpayers to determine the amount of the estimated tax required without, at least, a reasonable estimate of their 2020 tax situation. Without an extension of these payments, the filing extension to May 17, 2021 has minimal value for many taxpayers.”

Here’s what the problem is: most small business owners need to pay quarterly estimated taxes to the IRS based on either:
1) 100% of the prior-year’s tax liability; or,
2) 90% of the current-year’s tax liability (which we can’t know yet, so we extrapolate based on the actual profit from the quarter).

Based on a somewhat complex set of rules (which are often different at the state level), small business owners and their tax advisers calculate the actual amount to submit. But they generally need to know both these amounts — which is impossible if their tax return for 2020 hasn’t been filed yet. See why this mismatch in dates is a problem?

And to spice things up even further, not all states are going along with the IRS rules. Taxpayers and their advisers need to check with each agency separately (here’s a good running list at-a-glance). Illinois recently decided to comply with the IRS dates, meaning that the quarterly estimated tax problem exists with our Department of Revenue as well.

“This selective decision by the IRS unfortunately creates more bureaucracy and confusion and is out of sync with real world stresses that taxpayers, tax practitioners and small businesses are dealing with,” said Melancon.

How can you help?

You can call or email your politicians and ask them to include estimated and corporate taxes in the new deadline.

We in the accounting profession would be greatly appreciative if you could contact your Congressional Representatives and Senators and ask them to move ALL tax return and payment due dates, including estimated tax payments and corporate taxes.

I know it’s a pain, but AICPA insists that this type of grassroots work really does have an impact… and if you care about the physical and mental health of your tax preparer, and about the anxiety level and financial well-being of millions of small business owners, you’ll hopefully take a moment to make our request go a bit further.

Thank you!


If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

How To Make IL Dept Of Rev (IDOR) Business Tax And Extension Payments Online

UPDATE 12/31/21: Sigh. The step-by-step instructions I painstakingly wrote out below, with screenshots (for making business replacement income tax estimated and extension payments) are now out-of-date because IDOR revamped their MyTaxIllinois website in September (grrrrr). Please see this blog post instead: How To Make IL Dept Of Rev (IDOR) Business Tax Payments Online: Estimates & Extensions – UPDATED | The Dancing Accountant — the basic concepts are the same, but the layout and workflow is totally different now.


Unlike individual tax payments — extensions, estimated tax, etc. — for business payments you will need to log in to MyTax Illinois, using the same credentials you usually use for paying sales tax or monitoring state payroll taxes.

On the main page, you should see a list of all your accounts with IDOR & IDES, something like this:

Click on the “Business” link. You will see a list of periods.

Click on the period for which you want to make the payment. It is very important to pick the correct period. Keep in mind this is usually the prior year’s ending date, if you’re trying to pay income tax (aka “business replacement tax”) for a return or an extension. You would choose the current year’s ending date if you are trying to make a quarterly estimated tax payment for your business.

Then click “Make a Payment” in the upper-right corner of this portion of the screen, under “I Want To”.

Then click “Bank Account Debit”.

That link will take you to a page where you will select a payment type. It is very important that you select the correct payment type.

They changed the forms a couple of years ago so that there’s no separate extension tax payment form — you just make a payment under the type of income tax form that your business usually files.

For example, a partnership or multi-member LLC would usually select IL-1065 payment — whereas an S-Corp would file an IL-1120-ST. Confirm that you are selecting the correct type that corresponds with your annual business tax return.

It will prompt you to enter your payment information.

And then click Submit. Make sure to save or print the confirmation page that pops up as a pdf — for your files, but also please send it along to your amazing and dedicated tax preparer.

(If you miss that last bit, then please go into your payment history for this account and do a print-screen that includes the status section; it will show the amount, confirmation number, and date/time.)


If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.