Tax

Unfortunately, COVID-19 continues to present complications for Atlanta organizations. While it appears, the restrictive regulations will not return, the arrival of virus variants (delta and MU) have become a cause for concern. It was reported by the Georgia Department of Public Health that for the two weeks ending on August 30th, both Fulton and Gwinnett Counties had experienced a sharp increase in new infections. Although far less than what was reported during the height of the pandemic, it does mean that businesses will have to plan for this new risk factor. It is also a prompt to review internal policies on COVID-19 including safeguards, exposure notification, and other policies.

Continuation of Health Coverage (COBRA) benefits are available to individuals who lose health insurance after being laid off, furloughed, have hours reduced, or other qualifying events. During and after the pandemic, it's estimated that as many as 16 million U.S. workers lost employer-sponsored health coverage. Even though COBRA is an option for 18 to 36 months or longer for some plans, the cost of premiums can prove too much for many to afford. The result is that many will simply have to go without healthcare coverage due to the high cost. To address this issue, there is a temporary and fully subsidized COBRA premium available for certain individuals throughout the summer.

For Atlanta businesses hit hard by the COVID-19 pandemic, the relief programs offered by the Small Business Administration (SBA) including the Paycheck Protection Program (PPP) and the Restaurant Revitalization Fund (RRF) provided needed funding. However, as the pandemic subsides and programs close, options appear to be dwindling. Despite this fact, there are still ways to receive assistance from the federal government including the Employee Retention Tax Credit (ERC). This federal payroll tax credit provides a credit equal to 70% of up to $10,000 in qualified wages per eligible employee.

The economic conditions created by the COVID-19 pandemic have been easing in recent months due to the widespread distribution of the vaccine. Rolled-back restrictions have restored consumer confidence and increased demand. It was reported that the state unemployment rate for June had fallen to 4%, sharply lower than the 5.9% national average. Despite this, many Atlanta businesses are still struggling to overcome a year of lost sales and lackluster financials. Unfortunately, the recent closure of the Paycheck Protection Program (PPP) and Restaurant Revitalization Fund (RRF) has made it even more difficult. Although it may seem options are running out, it is important not to forget about the Employee Retention Tax Credit (ERC).

How is the IRS doing? According to key leaders on the inside, not so good. The Treasury Inspector General for Taxpayer Administration’s (TIGTA) interim report combined with the National Taxpayer Advocate's midyear report highlighted a federal agency that was already struggling to keep up … and then COVID-19 hit. Subsequent rounds of stimulus legislation and changing tax laws created what Erin Collins, National Taxpayer Advocate, called a “perfect storm.”

The financial and economic conditions created for Atlanta families, individuals, and businesses, by the COVID-19 pandemic have been very challenging. For many businesses, initial stay-at-home and forced business closures meant a steep drop in revenue almost overnight. Faced with this reality, difficult decisions about employee furloughs and terminations were made. The result was a sharp increase in unemployment.

At the end of April, the Biden Administration introduced the American Families Plan (AFP), comprehensive legislation that calls for an investment of $1.8T through grants and tax credits for family and educational programs.  As part of President Biden’s larger economic recovery package, it proposes universal preschool, two years of free community college, paid medical leave, an extension of the Child Tax Credit, Earned Income Credit, and the Child and Dependent Care Credit.

As the COVID-19 pandemic persists, Atlanta individuals, families, and businesses are feeling the impact of restrictive government orders and health mandates in schools, at work, and other public places. While the arrival of the vaccine has helped to curb the number of new infections, there is still much work to be done as Georgia has only distributed 67% of received doses. Over the coming weeks, many will line up to receive either the first or second inoculation and manage with the side effects.

For businesses substantially affected by COVID-19, the employee retention credit (ERC) has been one of the more valuable incentives to keep workers on the payroll. Since its inception in March 2020, the ERC has undergone several modifications and extensions which has increased the credit’s value. There was an initial extension for the first half of the year in the Consolidated Appropriations Act, 2021, (CAA) and then another through the end of the year in the American Rescue Plan Act. The changes are meant to provide additional relief to businesses challenged by the pandemic.

Since the American Rescue Plan Act of 2021 (ARPA) was signed by President Biden, there has been a flurry of changes and updates impacting individual taxpayers. Initially, attention was focused on the distribution of the $1,400 economic impact payment and shifted to other issues such as the 2020 tax exemption on certain unemployment benefits. Attention quickly changed when it was announced the IRS would extend the individual tax filing deadline by 32 days to May 17th.