Auto Dealers

The Employee Retention Tax Credit (ERTC) is one of the remaining federal tax incentives left over from the pandemic era. Although the program is no longer in effect, taxpayers can continue to file retroactive claims. This is certainly good news for eligible businesses that previously did not claim the savings. At the same time, it has also opened the door to unscrupulous ERTC mills and others falsely promising huge tax savings to unsuspecting business owners. The result has been a sharp increase in the number of fraudulent ERTC claims. In fact, the IRS has already identified over 11,000 fraudulent returns

Despite the return to “normal,” many companies are still experiencing residual effects from the pandemic. While Georgia’s economy grew by 10% in March of this year, continuing supply chain issues and rising interest rates have put a damper on the encouraging news. This does not even consider the effects of the Great Resignation, which triggered a 25% increase in the number of resignations. When coupled with the concern about a looming recession, organizations need to leverage every savings opportunity available.

The recently passed Inflation Reduction Act (Act) features several tax changes and benefits that incentivize the migration to energy-efficient systems. This not only includes changes to commercial, industrial, and retail buildings but also to housing and vehicles.  Currently, there are an estimated 10M electric vehicles on the road representing less than 1% of the global auto stock. The combination of advancements in technology and the popularization of recharging stations, and other infrastructure modifications, is expected to result in increased energy-efficient vehicle sales.

Supply chain disruptions are nothing new to auto dealerships at this point. Chip shortages and the difficulty obtaining new semiconductors are just two factors that have strained the automotive industry. More than two years after COVID-19 was declared a global pandemic, dealerships using the last-in-first-out (LIFO) inventory method are still hurting, but for a less obvious reason.

During the height of the COVID-19 pandemic, many Atlanta businesses were struggling to maintain operations while navigating uncertainty, new safety regulations, and an assortment of government-issued restrictions. One of the federal relief programs offered to help offset the hardships, the Employee Retention Tax Credit (ERC), provided a much-needed cash boost to business owners. However, when the program unexpectedly came to an end 3 months early (end of 3rd quarter of 2021) it created an issue for those who were not expecting to pay employment taxes. Unfortunately, the withheld amount became due, and many employers were simply unable to repay it. Since December 2021, the IRS has been providing relief to these taxpayers and those who filed an amended return but has yet to receive a refund.

The Paycheck Protection Program (PPP) was an invaluable tool that helped many Atlanta companies manage through the COVID-19 pandemic. The loan program, which was initiated through the CARES Act, offered funding designed to keep operations going through government orders and restrictions. It even included a forgiveness option assuming funds were used on certain expenses including payroll, rent, mortgage interest payments, and more. The PPP was so successful there was a second draw option available for the hardest hit. In fact, Georgia companies alone received over $11B in PPP loans.  

Dealing with the Internal Revenue Service (IRS) can certainly be a challenging endeavor for Atlanta individuals, businesses, and organizations. There are numerous notices that are sent including those requesting additional information, notices of balances due, changes in refund amount, questions about information on the return, or notifications about delays in return processing. Although part of standard operating procedure, the significant backlog of unprocessed returns (and other communications) has resulted in inaccurate automatic notices being sent. The combination of budget constraints, staffing shortages, and worker shortages, has created a “perfect storm” at the IRS. In fact, the volume of unprocessed returns includes 2.3M unprocessed amended individual returns and 2M unprocessed employee quarterly tax returns. Although it will be some time before unprocessed returns will be addressed, new steps are being taken to relieve issues caused by inaccurate automatic notifications. The IRS recently announced a temporary suspension of over a dozen IRS notices, including automated collection notices.

Cyberattacks are more prevalent than ever.  Unfortunately, it is not a question of if an Atlanta business will have to deal with one, but when. Hackers continue to look for new ways to take advantage of organizations and often accomplish that through unsuspecting and unprepared users. While this most commonly occurs through email phishing or some other form of deception, it is now also taking place within business software as well. More specifically, there has been an alarming increase in the past few months in the malware found within Excel add-ins. These useful additions provide professionals with the additional data management capabilities necessary to completed advanced analysis. Unfortunately, they also carry risks.

The change of focus has created new challenges for independent auto dealers especially when it comes to inventory acquisition. As franchised dealers search for used car inventory, it makes it more difficult for independent dealers to keep lots full. According to the Cox Automotive Dealership Sentiment Index, 4th Quarter, inventory acquisition is the biggest challenge facing dealers.

The chaotic situation which followed the arrival of the pandemic created significant financial challenges for many Atlanta businesses. The variety of government orders combined with public concern about transmission changed the business landscape virtually overnight. The shift meant many businesses needed new and immediate capital infusions to make it through the transition. The Employee Retention Tax Credit (ERC) which was implemented as part of the CARES Act was one of several programs designed to help. Along with other federal relief programs, many were saved from financial uncertainty.