• May 14, 2020

False Claims Act – How it Could Affect Your PPP Claim

When the CARES Act was announced, it ignited a glimmer of hope within the small business community. Many companies were either closed or saw their revenue drop drastically as a result of the novel coronavirus.

But hope quickly disappeared as major corporations found a way to access the money that was meant for America’s small businesses. The money within the Paycheck Protection Program (PPP) quickly disappeared. Just days after the program was put into action, it ran out of money.

The federal government replenished the funds when it realized large corporations like Shake Shack ($10 million) and Ruth’s Chris ($20 million) were receiving funds while small mom and pop shops missed out. Both Shake Shack and Ruth’s Chris have since said they will not accept the money, however, the move brought attention to a large loophole in the PPP legislation. The ability of large corporations to access PPP funds.

The False Claims Act

And that leads us to the False Claims Act.

The False Claims Act, according to Cornell Law School, is “Federal statute setting criminal and civil penalties for falsely billing the government, over-representing the amount of a delivered product, or under-stating an obligation to the government. The False Claims Act may be enforced either by the Justice Department or by private individuals…”

It’s a law, that if used, would allow the federal government to pursue criminal and civil penalties against any company that misuses the PPP.

Should a Small Business Owner Be Worried?

This week, headlines like “For PPP recipients: You may be the subject to whistleblower lawsuits under false claims law” showed up in publications like the Witchita Business Journal.

The article is at least in part “clickbait” since it’s designed to get you to pay for a subscription so you can read the article. However, the crux of the argument is founded in truth.

US Secretary of the Treasury Steven Mnuchin has made multiple comments about the loans issued through the PPP and has promised that people taking advantage of the PPP will face “severe consequences”. He’s also promised that loans of $2 million or more will be audited before the government decides if it will forgive the loan amount. Mnuchin has also tossed around the words “criminal liability”.

Of course, you should be worried if you knowingly and deliberately defrauded the federal government. However, most small business owners are probably too small in the eyes of the government to warrant prosecution.

The comments from Mnuchin and the False Claims Law itself were designed for large corporations and businesses taking advantage of the federal government. Odds are, the government will not be pursuing you if you managed to secure a $10,000 PPP loan.

What if I’m Still Worried?

If you’re still worried and you want to find out more, the IRS and Small Business Administration (SBA) are trying to keep you informed. The Treasury Department has issued an entire document of FAQs to address concerns of borrowers. You can read it here.

Don’t Be Afraid to Ask for Help

We here at the Tax Credit Group have spent hours upon hours looking at, analyzing, and evaluating the CARES Act as well as all the legislation and updates that have come from the IRS, the SBA, and other government agencies. We are keeping up with the headlines and the rules and regulations behind those headlines.

If you’re a small business owner and you find yourself in doubt, please don’t hesitate to reach out to us here and ask a few questions. We would be happy to answer them or at least research until we have an answer. There’s a lot of material out there right now and a lot of changes and we want to make sure our clients, our friends, and our family stay informed.

• May 14, 2020
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• WOTC Tax Credits

• May 5, 2020

Why It is Better to Hire a Tax Credit Specialist than Do It Yourself

When we talk to potential clients, sometimes they ask us why a tax credit specialist is something they need. It is a great question. After all, they are usually already paying for a CPA and this is just an added financial expense. What we tell them is that a tax credit specialist is something completely different.

How is a tax credit specialist different from a CPA?

We did a whole post about the difference between a tax credit specialist and a CPA and you can read it here. The short answer is that while a CPA has a broad understanding of the tax code and knows more than enough to file your taxes with the IRS, a tax credit specialist has a very specialized understanding of the tax code.

Tax credit specialists are focused on the sections of the tax code that deal with tax credits and they understand them word for word.

Why haven’t I heard of a tax credit specialist until now?

Odds are if you are reading this article, someone mentioned that you might benefit from a tax credit specialist and you Googled it to find out more.

The truth is that not every business qualifies for tax credits, but many businesses do and do not even realize it.

Does your business employ veterans, ex-felons, or persons with disabilities? Does your business conduct research? Does your business offer a health plan or retirement plan to your employees? These are all business expenses that can qualify for tax credits, but many businesses do not know that the credits are available. Usually, it requires a tax credit specialist to fill them in on what they are missing.

What is the benefit of hiring a tax credit specialist?

Most CPA’s will be able to tell you about small savings within your taxes. However, the tax code is immense. We’re talking thousands of pages, though exactly how many thousands is up for debate. No matter the answer, it is too much for any individual to know everything about. That is why there are specialists.

Specialists are people who focus on specific parts of the tax code and become experts in those specific parts. We just happen to be specialists in the tax credits part of the tax code. That means we know the ways you can and cannot save money through the use of tax credits. Through the years, we have figured out some tricks of the trade to make sure businesses are maximizing the benefits of those tax credits.

Our goal, first and foremost, is to discover as many ways as possible for you to earn credits that will directly offset the amount you owe on your taxes.

Why can’t I figure out the tax credits myself?

Figuring out which tax credits your business qualifies for and applying for them is certainly something you can do yourself. However, be warned that there are a lot of hoops the IRS wants a company to jump through to get a tax credit.

There are forms to be filled out, information to be gathered, and separate deadlines to meet. For something like the Electric Vehicle Tax Credit, the requirements to qualify are constantly changing and you have to be updated on those changes.

In other words, there is a lot of research and a lot of time that goes into applying for tax credits and there’s always the possibility that after all of that, the IRS will reject your claim. We have seen seasoned tax professionals struggle with learning about all the tax credits available and how to apply for those credits.

What if my company already operates at a loss?

Even if your company is losing money this year, it is still important to take tax credits if possible. There are a couple of reasons for this.

First, some tax credits are what is called refundable. That means if you have a credit and you owe zero dollars in taxes, the money left over will be refunded to you.

Second, some tax credits can be carried over from one year to the next. That means that even if you are operating at a loss this year, the tax credit could be used to offset any taxes your business owes next year.

If you still are not sure if you need a tax credit specialist, contact us here at Tax Credit Group. We will take a look at your situation and tell you if there is or is not savings that you can benefit from.

• May 5, 2020
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• WOTC Tax Credits