PRESS RELEASE
We’re proud to announce that we’ve been named a Top Workplace by the Baltimore Sun. A big thank you to all of your employees who helped make this happen. Read more in our press release below!
Inspiring your corner of the world.
6th Annual WCS Cup Golf Championship
Work Hard, Play Hard
WCS held its 6th Annual Golf Championship last month at Fox Hollow Golf Course in Lutherville. Rich Huffman, Andrew Ondish, Rayma McRoberts, and Taylor Gomez outplayed the competition and were named Champions! Congrats to the winners and all our employees who participated!
WCS Goes Axe Throwing!
Axe Throwing Outing
WCS recently treated its employees to a day of Axe Throwing at Autobahn International Speedway in White Marsh. The crew learned different throwing techniques and held competitions to show off their new skills! Scroll through to see the fun!
Pictures courtesy of Autobahn.
Comptroller Franchot Extends Tax Relief in Wake of Tornadoes, Flash Floods
In the wake of the severe storms on Wednesday in several parts of Maryland, Comptroller Franchot has extended tax relief to businesses. The Comptroller’s Office is providing a waiver of interest and penalties for businesses and taxpayers who are unable to meet the September tax filing deadlines for certain tax types. The full release below has all the details.
FULL RELEASE: Comptroller Franchot Extends Tax Relief
As always, please do not hesitate to call our offices for additional information and to MD In speak to your representative about how this could affect your situation.
I95 Feature: Aligning Tax & Wealth Planning with Jeffrey Jacobson
WCS Partner, Jeffrey Jacobson, CPA, Esq recently contributed to I95 Business magazine. “Aligning Tax and Wealth Planning” explores important tax issues for preserving wealth and possible solutions! Read the full article below.
As always, please do not hesitate to call our offices for additional information and to speak to your representative about how this could affect your situation.
FULL ARTICLE : Aligning Tax & Wealth Planning
IRS Issues ERC Guidance as Congress Mulls Early Termination
The IRS has published new guidance on the Employee Retention Credit (ERC). The credit was created in March 2020 to encourage employers to keep their workforces intact during the COVID-19 pandemic. Notice 2021-49 addresses various issues, particularly those related to the extension of the credit through 2021 by the American Rescue Plan Act (ARPA).
The guidance comes as Congress weighs ending the ERC early to help offset the costs of the pending infrastructure bill. As of now, the credit is worth as much as $28,000 per employee for 2021, or $7,000 per quarter.
ERC essentials
The CARES Act generally made the ERC available to employers whose:
- Operations were fully or partially suspended due to a COVID-19-related government shutdown order, or
- Gross receipts dropped more than 50% compared to the same quarter in the previous year (until gross receipts exceed 80% of gross receipts in the earlier quarter).
The credit originally equaled 50% of “qualified wages” — including health care benefits — up to $10,000 per eligible employee from March 13, 2020, through December 31, 2020. As a result, the maximum benefit for 2020 was $5,000 per employee.
And initially, businesses couldn’t benefit from both the ERC and the popular Paycheck Protection Program (PPP). Most opted for the PPP, which, among other advantages, put money into their pockets more quickly than the credit.
In December 2020, the Consolidated Appropriations Act (CAA) provided that employers that receive PPP loans still qualify for the ERC for qualified wages not paid with forgiven PPP loans. It also extended the credit through June 30, 2021.
In addition, the CAA raised the amount of the credit to 70% of qualified wages, beginning January 1, 2021, and boosted the limit on per-employee qualified wages from $10,000 per year to $10,000 per quarter — so employers could obtain a credit as high as $7,000 per quarter per employee.
The CAA also expanded eligibility by reducing the requisite year-over-year gross receipt reduction from 50% to only 20%. And it increased the threshold for determining whether a business is a “large employer,” and therefore subject to a more stringent standard when computing the qualified wage base, from 100 to 500 employees.
The ARPA extended the ERC through the end of 2021. It also made some changes that apply solely to the third and fourth quarters of 2021.
Guidance on ARPA changes
The majority of the IRS guidance deals with issues raised by the ARPA’s ERC-related provisions, including:
Applicable employment taxes.
Under the CARES Act, employers could claim the ERC only against Social Security taxes. The guidance states that, for the third and fourth quarters of 2021, employers are entitled to claim the credit against their share of Medicare taxes, with the excess refundable.
Maximum amount.
The maximum credit of $7,000 per employee per quarter for the first and second quarters of 2021 continues to apply to the third and fourth quarters. A separate limit applies to so-called “recovery startup businesses,” though.
Recovery startup businesses.
The ARPA expanded the pool of ERC-eligible employers to include those that:
- Began operating after February 15, 2020, and
- Have average annual gross receipts for the three previous tax years of less than or equal to $1 million.
These employers can claim the credit without suspended operations or reduced receipts, up to $50,000 total per quarter for the third and fourth quarters of 2021.
The guidance clarifies that a taxpayer hasn’t begun operating until it has begun functioning as a going concern and performing those activities for which it was organized. It also provides that the determination of whether a taxpayer is a recovery startup business is made separately for each quarter.
Qualified wages.
The ARPA directs extra relief to “severely financially distressed employers” with less than 10% of gross receipts for 2021 when compared to the same calendar quarter in 2019. These businesses may count as qualified wages any wages paid to an employee during any calendar quarter — regardless of employer size.
Note that the ARPA prohibits “double dipping.” Wages taken into account for several business tax credits (for example, the research, empowerment zone and work opportunity tax credits, as well as credits for COVID-related paid sick and family leave) can’t also be taken into account for purposes of the ERC.
Interplay with shuttered venue and restaurant revitalization grants.
According to the guidance, recipients of a Shuttered Venue Operator Grant or a Restaurant Revitalization Fund grant may not treat any amounts reported or otherwise taken into account as payroll costs for those programs as qualified wages for ERC purposes. Such employers must retain documentation that supports the ERCs they claim.
Miscellaneous issues
The guidance addresses several other lingering issues related to the ERC for 2020 and 2021. For example, it clarifies the definition of a “full-time employee.”
The notice explains that employers needn’t include full-time equivalents when calculating the average number of full-time employees for purposes of determining whether an employer is a large or small eligible employer. But, for purposes of identifying qualifying wages, an employee’s status is irrelevant, so wages paid to non-full-time workers may be treated as qualified wages (assuming all other applicable requirements are met).
The guidance also sheds further light on the:
- Treatment of tips and the Section 45B credit,
- Timing of qualified wage deduction disallowance,
- Alternative quarter election for 2021,
- Gross receipts safe harbor, and
- Exclusion of wages paid to the majority owners of corporations.
The rules regarding the last item above, which attribute ownership to owners’ family members, could significantly reduce the amount of the ERC for family-owned corporations. A footnote in the guidance indicates that even the wages paid to minority owners might end up excluded from the ERC computation.
ERC’s future is uncertain
The U.S. Senate has passed infrastructure legislation that would eliminate the ERC for the fourth quarter of 2021. However, the House of Representatives is on recess until the fall, so the fate of the credit remains uncertain.
As always, please do not hesitate to call our offices for additional information regarding the latest ERC guidance and to speak to your representative about how this could affect your situation.
© 2021
PPP Loan Repayments May Begin Soon
The Paycheck Protection Program has issued over $798 billion in loans since its inception in April 2020. Presently, only about half of that amount has been forgiven by the SBA. Borrowers can apply for forgiveness any time up to the maturity date of the loan. However, if borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making payments to their PPP lender.
What Does this Mean?
Many borrowers applied and received a PPP loan in Spring 2020, which means a significant number of PPP loans will require payments to start this July or August if an application for forgiveness has not been submitted. There are three different loan forgiveness applications that are available for borrowers: SBA Form 3508, SBA Form 3508EZ, and SBA Form 3508S. Borrowers who meet specific requirements are allowed to use the shortened versions of the application. In addition to these applications, the SBA recently announced that it will launch a new application portal allowing borrowers with loans of $150,000 or less to apply for forgiveness directly with the agency instead of having to go through their lender.
Questions?
If you need assistance, WCS is here to provide guidance and support as you navigate through the PPP loan forgiveness process. Please contact Brianne Baccaro Norris to arrange a time to discuss assistance with completion of these forms.
UPDATE: Maryland Form 511
There has been an update to our previous news brief regarding the Maryland Form 511 .
Comptroller Peter Franchot has announced Maryland Pass-Through Entities (PTEs) are now extended through September 15, 2021 for 2020 income tax returns. This additional two month extension is automatic and requires no additional action for it to be granted for a PTE. Maryland will not assess any penalties or interest if liabilities for these returns are paid by September 15th.
Additional Details
While the extension applies to 2020 PTE returns and related payments, 2021 Q1 & Q2 estimated payments for PTE’s and individuals were not extended and remains due July 15th. In addition 2020 individual Maryland tax returns are not impacted by this announcement and will require a formal extension and payment before the July 15th due date. Individuals whose returns cannot be filed until a PTE files and issues them a Schedule K-1, may request a waiver of penalties and interest.
For the Comptroller’s full message please read more here.
As always, please do not hesitate to call our offices for additional information and to speak to your representative about how this could affect your situation.
Maryland Pass-Through Entities: Impact of MD Form 511
As a result of the Maryland Pass-Through Entity Tax legislation that was passed in 2020 (for more information please read more in our article here) the Comptroller’s Office of Maryland has been working on a new tax form to administer the new tax regime, Maryland Form 511. Senate Bill 787 was enacted on May 28, 2021 and made additional changes to the Maryland Pass-Through Entity Tax. Due to these changes the Comptroller’s Office has yet to release Form 511. While we are expecting Form 511 to be available the last week of June software vendors will require additional time to update their software and their e-file database for these changes.
As a result, while we will make every effort to prepare impacted returns by the July 15th Maryland due date, we anticipate some returns impacted by Form 511 will need to be extended to allow our staff and our vendors to properly prepare the related tax filings.
To the extent returns that have already been filed claiming the Maryland Pass-Through Entity Tax and accepted without the Form 511 we do not anticipate any need to amend the returns at this time.
For questions on Form 511 or other tax and accounting matters do not hesitate to contact us.
bFile System Ready for RELIEF Act Sales & Use Tax Credit
Maryland Comptroller Peter Franchot announced on Tuesday, May 18th that the State’s bFile system is now available for qualified business owners to claim a Sales and Use Tax Credit under the Relief Act of 2021.
If vendors report $6,000 or less in gross collected sales tax in that period, $3,000 will be the tax credit. If less than $3,000 of sales tax was collected, the credit will be the amount of sales tax collected, bringing the balance owed for that period to zero.
To be eligible for the credit, business owners must file timely returns and sales collections for March, April and May cannot exceed $6,000. The returns are typically filed in April, May, and June. However, the filing deadline for those months have been extended to July 15, 2021.
As always, please do not hesitate to call our offices for additional information and to speak to your representative about how this could affect your situation.
