Business Update – September 9 2021
Thanks to tight supply chains and logistics in the developed world, many people have grown accustomed to receiving whatever they ordered promptly and predictably. That era may be over, as shortages are likely to continue. Toyota will be slashing production of cars by 40% in the face of a continuing chip shortage. It may be another year – or two – before shortages in sectors from construction to medical testing to kitchen supplies are fully resolved. Quaarantines at key ports and a lack of dock workers at other ports mean that shipping containers are in short supply, a problem exacerbated when traffic through the Suez Canal was halted for a week when a giant container ship got stuck there.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Employee Retention Credit
This credit didn’t get as much attention as the Paycheck Protection Program when both were passed as part of COVID-19 relief, and it may be curtailed early as a mechanism to fund infrastructure bills being proposed. This credit allows employers to receive a refundable credit of up to $7,000 per quarter for 2021, or up to a total of $28,000 per employee. To be eligible, a business must either be fully or partially closed due to government orders or have experienced a decline of 80% or more in gross receipts compared to the same calendar quarter of 2019. Startup companies may also be eligible. Employers can claim a refundable credit of 70% of wages, up to $10,000 in wages, or $7,000 per employee per quarter. The credit is claimed on the quarterly tax form, Form 941. As the credit now stands, it is available through the end of 2021, but there are discussions in Congress of cutting it off at the end of September. For more information, see the IRS FAQs for this credit.
Paycheck Protection Program (PPP)
Although the promise of the PPP was that if borrowers used the funds correctly, their loans would be forgiven, 6% of borrowers are being told they need to repay part of their PPP loans. About half of borrowers have not yet completed the forgiveness process. Some problems stem from the speed at which the program was rolled out, resulting in several updates to SBA’s guidance, applications, and forgiveness processes.
Meanwhile, a new report finds that as much as $3.6 billion in PPP loans were made to ineligible businesses, among other types of fraud in COVID relief programs. Nearly $87 billion in fraudulent unemployment payments will be made by the end of September, and $918 million in Economic Injury Disaster Loans may have been made to ineligible businesses.
Monthly Child Tax Credit Payments
September payments for the advance Child Tax Credit will be going out by direct deposit if the IRS has your banking information, which you can update at the IRS Child Tax Credit portal. You can also use this portal to update your mailing address if you prefer a paper check. The agency will also use this address to send out an end-of-year summary of the payments received, which will be needed for filing 2021 tax returns. This portal can be used to verify enrollment status, update banking information and mailing addresses, and to unenroll from future payments.
As a reminder, if you want to opt out of future payments, you must opt out by the deadline for the next month’s payment. Check out the IRS FAQs where you’ll find everything you need to know about opting out in Section J.
Student Loans and Fraud
Although the federal government has not yet clarified whether and how any student loans will be forgiven, this confusion has opened up opportunities for fraudsters to take advantage of financial pain for those with outstanding loans. The best way to avoid exploitation is prevention. Be cautious about providing information to anyone who requests personal information via email or over the phone. Beware of companies that offer forgiveness from programs that do not exist, and who send emails from email addresses that do not end in “.gov.” Federal loan forgiveness does not require an extra payment Contact your loan servicer if you have any doubts. If you’ve been a victim of fraud, report it to the Federal Trade Commission and your state attorney general.
Due to Hurricane Ida, Louisiana residents and business owners have an extension until January 3, 2022 for any tax filings or tax payments due after August 26, 2021 through January 3, 2022. This includes tax returns that have been extended to October 15, quarterly estimated tax payments due September 15, quarterly payroll tax and excise tax returns due November 1, and tax-exempt organizations with an extended due date of November 15, 2021 for tax returns. This relief also extends to relief workers in the disaster area.
SOCIAL SECURITY TRUST FUND
A steep drop in employment during the pandemic may cause the Social Security trust fund reserves to be depleted in 2033, a year sooner than the estimate from a year ago. After 2033, continuing payroll tax revenues will be sufficient to pay only 76% of scheduled benefits. Congressional action will be needed in the coming years to shore up this program.
To avoid phishing attacks by clicking on bad links in emails, a commonly advised strategy is to hover the over the link to check on the destination before clicking on that link. However, a recent spate of phishing attacks has targeted Office 365 customers by leading victims to a fake login page where Office 365 credentials are stolen. Bad actors have been exploiting open redirects to redirect visitors from trustworthy sites to malicious sites. Google warns that the mouse hover trick is not a reliable tool to prevent phishing.
So far this year, scammers have stolen $545 million in COVID-related fraud from Americans, according to the FTC. These scams include overcharging consumers for sought-after goods such as hand sanitizer, toilet paper, and masks and fraudulent online shopping sites that never ship the purchased goods.
THE GREAT REASSESSMENT
In the U.S. there are currently 10 million job openings and 8.4 million unemployed seeking work. Business owners can’t find enough people, so stores and restaurants are short-staffed. These are all symptoms of a massive shift in employment that has been called “The Great Resignation,” but which appears to be more of a reassessment of work and a mismatch between the skills that employers want and the opportunities that employees seek. Some want to work remotely, some want more time for family, and some want a more meaningful career. In several job sectors, there are many more job openings than there are people with experience in those fields. These include professional and business services, education and health, wholesale and retail trade, and leisure and hospitality. This contrasts with the situation after the Great Recession, where the number of unemployed outnumbered available jobs in all sectors for years. Compounding the issue is the reluctance of many employers to hire people who have been out of work for six months or more, which, in the wake of the pandemic, is not an unusual situation.
For employees ready to participate in the Great Resignation, here are a few things to think about before quitting your current job. First, think about whether you’re running away from something or towards something new. It may be possible to make a few changes to your current situation that might shift it to something you enjoy more. No job will give you everything you need, so prioritize the “need-to-haves” from the “nice-to-haves.” Evaluate your financial situation and determine how long your savings will cover your current expenses.
REOPENING THE OFFICE AND REMOTE WORK OPTIONS
Hiring remote employees opens the talent market to the world, not just to those living nearby, so it’s important to create a process for onboarding remote employees. A successful process includes these four building blocks:
- Employee support. Create a resource where employees can access all of the information they need to start their jobs and get their questions answered. Some organizations are using online chat bots that help employees resolve questions.
- Update your onboarding process. You will need a different process for on-site employees and remote employees.
- Introduce new hires before they start. Virtual meetings with new hires and their managers allow everyone to hit the ground running instead of spending the first few days introducing the new person.
- Monitor new hires and ask for feedback on the onboarding process. Like any other process, regular feedback and improvements ensure the process remains relevant.
The pandemic changed the workplace forever, but it’s not yet clear what the workplace will look like whenever it is that workers do return. Large companies such as Amazon, Apple, and Google are all pushing back their return to office plans, but most companies remain eager for team members to return some day. Remote and hybrid work are here to stay, a trend that began before the pandemic, but which accelerated over the last year. Key team members are leaving firms that require in-person work and moving to firms that allow remote work. Compensation for remote workers may change to reflect prevailing rates where they live, rather than where the company is located.
Even as COVID cases increase, the stock market is booming. Since hitting bottom in March 2020, the S&P 500 index has more than doubled, with August marking a seventh consecutive monthly rise. At the same time, other parts of the economy are not faring so well – businesses are not planning to reopen this fall, staffing shortages abound, and supply chain bottlenecks continue. Investor confidence seems to be related to two factors: the Federal Reserve will keep interest rates low and the federal government will continue spending to keep the recovery going.
States that ended federal COVID-related unemployment benefits saw about the same job growth as those that continued the additional benefits, according to analysis by the Wall Street Journal. However, it may be too early to detect any impact, and effects from state reopenings and restrictions may be offsetting any impacts. While the enhanced benefits did keep some people out of the labor market, other factors such as school closures, family-care responsibilities, employee fears about COVID and a mismatch between available jobs and the locations and qualifications of prospective workers have all likely had an impact as well.
- IRS resources for stimulus payments:
- Use the Get My Payment tool to check on EIP payment status
- Eligibility and general information about Economic Impact Payments
- A list of frequently asked questions for stimulus payments
- IRS information about the Advance Child Tax Credit Payments
- Portal to update information
- A list of frequently asked questions on the advance Child Tax Credit Payments
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- Fast Company has a listing of the best productivity apps for 2020
- PC Magazine explains how to carry your vaccination card on your phone
- How to create a strong password
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!