12 minute read
Accounting on Tap
THE EMPLOYEE RETENTION CREDIT
BY DAN BERGS, CPA
On December 27, 2020, an additional stimulus package was signed into law and part of it will affect payroll tax credits. The Employee Retention Credit (ERC) modifications are significant for businesses that have had declines in revenue or have been shut down due to lockdown orders. Every restaurant and bar that has been closed down for indoor seating or limited for socially distanced seating is likely going to qualify for this credit. Furthermore, for many restaurants, the credit could be tens of thousands of dollars.
The ERC is a refundable tax credit for quarterly payroll taxes equal to 50% of the qualified wages an eligible employer pays to employees. If an employer qualifies, the wages paid that could be used for the 2020 credit are from March 12 to December 31, 2020. Companies that took out Paycheck Protection Program (PPP) loans could not participate in this program originally, so it was not as popular. However, the new stimulus bill allows companies that took out PPP loans to utilize this credit as well.
Companies can correct their 2020 reporting with these newly implemented changes by reporting their qualified wages and health insurance costs on the fourth quarter Form 941 filing instead of amending previous quarters. Since many restaurants and bars have already filed the Q4 Form 941, they can amend the Q4 filing in order to take advantage of the ERC. Companies should analyze if they then qualify for significant tax credits.
Let us dig into some comparisons between the original and modified ERC.
These credits should not be ignored as they could result in significant cash flow for your business. Reach out to your advisors or feel free to contact me to help with credit computations. TLW
How do I qualify for the credit?
Is there a limitation based upon number of employees?
When is the credit available?
ORIGINAL RULES
1. Business operations must be either fully or partially suspended by a COVID-19 governmental authority shutdown for any quarter in 2020 OR 2. For any quarter in 2020, gross receipts are less than 50% of gross receipts for the same quarter in 2019. Companies can continue to claim the credit until gross receipts in the prior year quarter are more than 80% of what they were in 2019. 1. Business operations must be either fully or partially suspended by a COVID-19 governmental authority shutdown for any quarter in 2021 OR 2. For any quarter in 2021 prior to July 1, gross receipts are less than 80% of gross receipts for the same quarter in 2019.
No credit is available for employees performing services (only for paying employees to not work) at employers with greater than 100 employees. Employers with 100 employees or less are eligible for the credit even if employees are working. The employee threshold is now raised to 500 employees from 100 in 2021. Companies with 500 or fewer employees are eligible for the credit even if employees are working.
It’s available for qualified wages paid after March 12, 2020, and before January 1, 2021.
What is the amount of the credit? The credit is 50% of the qualified wages paid to the employee plus the cost of health benefits provided to the employee. Starting on January 1, 2021, the credit is 70% of qualified wages, plus the cost of health benefits provided to the employee.
Is there a maximum amount for the credit? The credit is capped at $5,000 per employee in 2020.
What if my business took out a PPP loan? A company that received a PPP loan was ineligible for the ERC.
NEW RULES
It’s available for qualified wages paid after March 12, 2020, and before July 1, 2021.
The credit is capped at $7,000 per employee per quarter (Q1 + Q2). The total credit could be $14,000 per employee. A company taking a PPP loan can also claim the ERC, but the claimed wages for the credit cannot be wages paid from a PPP loan that has been forgiven. This change is retroactive for wages paid after March 12, 2020.
Dan Bergs, CPA, is a supervisor in the tax and business services department with Wegner CPAs LLP. The firm has offices in Madison, Baraboo, Waukesha and Janesville. This article is not intended to give complete tax advice, but a general review of subject matter. For more information, please contact Bergs at (608) 442-1986 or dan.bergs@wegnercpas.com.
LEAGUE PROFILE
PORTAGE COUNTY TAVERN LEAGUE
Left to right in the front row are Jody Kluck, Kim Krayecki and Jayne Marchal hanging out at a TLW Fall Convention. Pictured in the back row, from left to right, are: Matt Disher, Christine Almanza, Tony Almanza, Jim Billings, Laura Wheeler and Erin Wanta.
The Portage County Tavern League isn’t letting the pandemic keep it from doing good for its members and their communities. “We know the good work we do for the community and we are keeping that going,” says Erin Wanta, general manager of Shooter’s Supper Club in Plover and president of the Portage County Tavern League.
Located in central Wisconsin, the Portage County Tavern League has 106 members, including three members who have dual memberships with neighboring Wood County. Plover and Stevens Point are the county’s largest municipalities, but Wanta proudly says, “We have members in every village and town in the area. We have the county well-covered.”
The Portage County Tavern League has been busy with fundraising and charitable giving the past few months. Around Christmas, the league donated $10,000 to local groups, including The Salvation Army, Operation Bootstrap and more. “We had money and, with COVID-19, there’s a lot of need,” explains Wanta.
In February, the Portage County Tavern League also held its annual bowling tournament. Proceeds from the tournament benefit the league, but $1,000, plus matching funds, are donated to a local charity or cause each year. This year’s cause was a local scholarship fund named to honor a member who recently passed away.
On April 5, the league plans to host its annual spring fundraiser, too. A $50 ticket gets attendees food and drinks for six hours, plus the option to enter a variety of raffles. This fundraiser supports the league and generally brings in $17,000 to $18,000. were able to fill it,” says Wanta. The outing supports the SafeRide Program and typically raises about $10,000. This funding is particular helpful as the Portage County Tavern League offers free rides for anyone, members and nonmembers, each New Year’s Eve, starting at 10 p.m.
“Whether someone is at a hotel party, going from their house to a bar or back, or a babysitter who needs a safe ride home, those rides are free,” describes Wanta. While total rides were down this year, between 200 and 250 people took advantage of the offer.
The Portage County Tavern League meets the first Monday of the month (unless it’s a holiday). In addition, each quarter, the league meets with local law enforcement, including the Portage County Sheriff’s Office, and the Stevens Point and Plover police departments.
“It’s something we do on top of our regular meetings,” says Wanta. “It’s a good chance to stay in touch with what’s going on and to have a good rapport with our local law enforcement.”
One thing that Wanta appreciates about the Tavern League is that you don’t have to own an establishment to be part of the organization. She has worked at Shooter’s since 1998, and when her boss, Gene Shulfer, was president, she’d help with newsletters and other county league tasks. She’s now been on the board in some capacity for more than 15 years. She also serves as the District 5 secretary.
“You don’t have to be an owner — you can be an employee and be treated the same way as everyone else,” she says. “Here you’re part of a community that wants to make sure everyone can stay in business.” TLW
Pictured left to right at the Portage County Tavern League annual bowling tournament are: Mary Tepp, Dale Jastromski, Darryl Jastromski, Erin Wanta and Jim Billings.
BUSINESS SPOTLIGHT
CARBO’S JUNCTION BAR
Steve “Carbo” Carr is all about supporting the local community. Carr owns Carbo’s Junction Bar in Amherst Junction with his wife, Cindy. In addition to running their cozy establishment, the Carrs are deeply involved in their community. “We like to give back,” he says. “We host gun raffles for a few different organizations — the local Ducks Unlimited, some snowmobile clubs and more.”
Carr is particularly supportive of conservation groups, and organizations and events that get people outdoors. In fact, he once had a float in the fair parade that gave away fishing poles to kids. “When you hand kids a fishing pole instead of a candy bar, the look on their faces is pretty special,” he recalls.
The Carrs have owned Carbo’s Junction Bar since 1992. He previously leased the bar with another partner, so when they split ways, the couple purchased it outright. “It’s been good to us,” says Carr. “We’ve been blessed with good friends, good help and staff, and great clientele.”
Carr explains that, out of school, he started working construction, but 10 years into it, things got slow and he started to tend bar at a couple of places. “I liked it and then this became available,” he says. “It’s all history from there.”
Carbo’s Junction Bar opens every day (except Tuesdays) at 11 a.m. As a bar and restaurant, it serves food from 11 a.m. to 3 p.m. every day but Sundays. On Packer Sundays, the bar normally has a potluck, so everyone brings a dish to pass. “Those are the days the cook — that’s normally me — takes off,” jokes Carr.
While Carbo’s is a small operation, it offers a variety of food, including sandwiches, wings, chicken strips and more. The item that seems to draw the biggest crowd, however, is the Carbo Burger, which one Yelp reviewer called “the best bar burger ever,” says Carr. stand out, says Carr, is how clients are treated: “I believe that, if you treat them well, they will come. We serve good drinks and good food, and we treat people right. We have good clientele who are faithful to us and we appreciate that.”
Carr has been an active member of the Tavern League for 28 years and on the board for 14 years. “I believe in the Tavern League,” he says of his longtime commitment to the association. “It has done a lot of fighting for us with the smoking ban, gambling machines and more. Being a member just makes good sense.”
In fact, he’s proud of his membership. “I’ve had the red Tavern League sign in front of the bar for 28 years. People stop when they see that sign and that makes me glad to be a member,” he says.
He adds that the Portage County Tavern League is a strong one: “We have a good Tavern League … one of the strongest in the state.” TLW
— Steve Carr, Carbo’s Junction Bar
CARBO’S JUNCTION BAR
3986 Second St., Amherst Junction, WI 54407 (715) 824-3367
CHARITY SPOTLIGHT
THE POWER OF $5
Nicole Stroik knows that even small gifts can mean a lot. Six years ago, Stroik started asking friends and family, through her personal Facebook page, to donate just $5 twice a year to help her support local organizations. In January 2020, she decided to take the giving to a larger audience and created a separate Facebook group for her effort — The Power of $5.
“I have always liked helping people. And I thought $5 was such an easy amount to give — it’s a cup of coffee or a slice of pizza,” says Stroik. “A lot of people want to help, but they don’t know how to give, or they don’t have a lot of money or time. The Power of $5 makes it very easy to give and help others.”
Stroik chooses at least one organization or recipient each month, and then solicits donations via the Facebook group. In 2020, more than $17,000 was donated to various organizations, most of them in Portage County and all in central Wisconsin. Stroik takes suggestions for organizations and individuals to support each month. She also uses the group to bring awareness to organizations that are a “little more outside the box,” as well as local families or individuals in need.
For instance, in early February, Stroik focused on helping secure items on the local family crisis center’s wish list. People could either donate the items or money, with Stroik organizing the effort. For the second half of February, she chose to concentrate the group’s charity on supporting a local woman who recently learned that she has stage 4 colon cancer and just a few months to live.
“What we raise will help with bills so she and her husband can focus on being together in her last months,” explains Stroik. $5. Stroik, who also has a full-time job, reports that, through the third week in February, the group had already donated $10,000. And in January, she filed paperwork to make The Power of $5 an official nonprofit. She’s just waiting for the process, which has been slowed because of the pandemic, to be finalized.
While Stroik is the face of The Power of $5, “the community is the reason this is possible. I get the credit because I organize it, but if it were not for the community backing me, it would be nothing,” she says.
The Portage County Tavern League, which provided The Power of $5 with a donation in December 2020, is part of that community. “It was so huge when the Tavern League gave that donation to us in December,” says Stroik. “It was the worst year the TLW ever had … my husband is a bar owner [Joe’s Bar in Stevens Point], so I know how terrible 2020 was. That they made a donation after all that says so much about this community, our local businesses and the Tavern League. It was so amazing.”
Whether it’s through The Power of $5 or elsewhere, Stroik encourages everyone to find something they can support.
“I think if you are able to donate, you should … it could be you needing help the next day. And this group shows that, when you put small gifts together, it can change someone’s world. When we dropped off donations, the family crisis center said it would last them for months because of how much we were able to give. It’s just $5, but when you put it all together, it’s huge.” TLW
THE POWER OF $5
facebook.com/groups/3912791848738951
