Why Restaurants are Facing ERTC 2022 Cash Flow Issues and How We Can Help You

The Employee Retention Tax Credit was instituted as an aid to companies affected by mass layoffs, loss of revenues, and forced government shutdowns as the Coronavirus gripped the nation.

Records indicate that the Internal Revenue Service has issued upwards of 4 billion dollars in income tax refunds during the first portion of the current tax season with hundreds of millions of those funds having been earmarked for business owners. However, many employers still find themselves struggling as they cope with a lack of cash flow while waiting to receive funds guaranteed to them as a part of the pandemic recovery effort.

How the Hospitality Industry is Coping with ERTC 2022

The National Restaurant Association (NRA), a group of restaurants comprised of members in all fifty states, has recently sought unconventional measures in hopes of a reprieve from upcoming financial constraints ahead of filing for ERTC 2022, resulting from the lack of funds accessible through their most recent round of business tax returns. Although many of them were approved for refunds that entitled them to advanced payments of the ERTC, the monies have yet to be received. This comes on the heels of data from the Internal Revenue Service highlighting the severity of losses in interest due to late processing and lack of staffing.

The backlog has prompted the NRA to transcribe a letter detailing the concessions that they are requesting from the government to prevent an overpayment by business owners in regards to required deposits in conjunction with ERTC 2022.

Some of the following demands are detailed within the letter, which is representative of the Covid relief measures previously experienced by the industry according to VP of Public Affairs, Sean Kennedy:

  • Halting automatic levies or tax liens
  • Delaying collection effort until abatement requests are received
  • Clearer communications regarding ERTC processing dates
  • A streamlined approach to penalty abatement

If successful, the move would halt the collections efforts against 83 percent of restaurateurs who have been affected by the issues within the governments return processing system. Currently, one such restaurant is facing a liability in excess of $1 million dollars due to unresolved funds.

How Does a Business Qualify for Advanced Employee Retention Credit?

The Infrastructure Investment and Jobs Act of 2020 created a pathway for businesses to obtain Advanced Employee Retention Credits (ERC) provided that they met qualifying conditions. As a result these businesses are eligible to receive up to 50% of qualifying wages for 2020 as well as 70% of qualifying wages paid in 2021 in the form of an advanced payment.

These payments are subsequently measured against annual deposits according to reported payroll amounts for the preceding year with overestimates to be repaid via reduced tax credits or increased deposits.

Our tax experts specialize in assisting businesses owners in acquiring Advanced Employee Retention Tax Credits that will keep you functioning throughout the year while balancing employee turnaround year to year.

employee retention tax credit

How a Tax Credit Company Can Help with Cash Flow Issues

In a typical year the average business owner loses approximately 18% of their employee workforce with the national rate being 57%, totaling a record 6.2 million individuals stepping away from their positions in the third quarter of 2021 alone.

Industries such as food services, recreation and hospitality are prone to a wider range of turnover, with the largest increases surpassing the national average by several percentage points. These losses have been proven to cause major disruptions in daily operations as well as the ability for companies to retain cash flow or meet projected earnings in slower business quarters.

Employee turnover statistics by industry
Employee turnover statistics by industry percentage
Image Credit: Employee Turnover Chart Zippia.com

At ERTCFiling.com, we can utilize a bevy of tax regulations and years of expertise in order to evaluate your business needs to employ the best strategy for your business cash flow problems.

Companies who are approved for the Advanced Employee Retention Tax Credit will experience the following benefits upon being funded by the IRS

  • Up to 50% of eligible wages per qualifying employee in 2020
  • Up to 70% of eligible wages per qualifying employee in 2021
  • Penalty reduction of possible overpayments in certain situations
  • Ability to retain advanced payment without restrictions if annual receipts did not exceed $1 million dollars(recovery businesses)

How Should My Business Handle Advanced Tax Credit Delays?

Advanced Tax Credit delays can occur for an assortment of reasons, however many business owners have experienced them due to backlogs resulting from the pandemic. As companies continue to encounter a temporary cash flow crisis, while keeping employees onboard in anticipation of the current season, the potential losses continue to mount.

The experts at ERTCFiling.com understand the pressures of meeting business expenses while straddling the line of profits versus being underwater when dealing with complicated tax issues. Our highly skilled tax professionals have helped customers navigate numerous problems while awaiting return processing, error checking,and refund delays.

Conclusion

The restaurant industry continues the struggle to rebuild to pre-pandemic numbers as the country enters another phase of recovery. If your business is facing shortages or grappling with the lack of ability to maintain payroll due to processing delays, please speak with one of our qualified tax specialists at ERTCFiling.com today.