If you’re not sure where to start with the Employee Retention Tax Credit, you’re not alone. As camp leaders, you need to be great at many things, but most of you are not expected to be experts in US Tax Code. You likely have accountants to guide you through the tax process, which is sufficient in typical years.
We don’t have to tell you that this is not a typical year.
There are new acronyms, acts, and credits swirling around, and it can be difficult to understand which ones your camp is eligible for. One example is the Employee Retention Tax Credit (ERTC), which is a payroll tax credit for qualified wages and health care costs. In the simplest terms, the ERTC allows you to reduce your payroll tax withholdings.
Josh Kaplan works for TCC, a firm that specializes in guiding businesses through the process of securing tax credits. His experience has made clear two truths: the ERTC can make a big difference for camps, and the myths surrounding it are preventing those eligible from applying. The top five assumptions they see most frequently are:
1. My camp is not eligible for the ERTC
2. There’s not a significant amount of money available
3. Getting the necessary information to secure the credit is too hard
4. My CPA or payroll company will handle everything for me
5. It’s not worth the audit risk
These ideas are widespread, and they’re causing businesses, including camps, to leave a lot of money on the table. That’s why Josh is on a mission to clarify the confusion.
Myth #1: My camp is not eligible
Camps were among the businesses hit hardest by the pandemic, and are part of the large swath of businesses that are eligible for the Employee Retention Tax Credit. Even if your camp received a PPP loan, you can still be eligible.
Josh points out that companies with fewer than 500 full-time employees are in a sweet spot, which syncs closely with typical camp staff numbers. If your camp is eligible for the ERTC, you don’t have to sift through your entire paid staff to determine individual qualified wages. Simply put, for camps that have fewer than 500 employees, everyone qualifies.
Josh’s final point about eligibility is a reminder that the ERTC is a payroll tax credit, so it doesn’t matter if your camp is losing money, or if you’re profitable.
Myth #2: There’s not much money available via the Employee Retention Tax Credit
The TCC team has heard from many businesses that their reluctance to apply for the ERTC is due to the assumption that there’s not a lot of money available.
For camps, according to Josh, it can easily be a six-figure credit.
The maximum available credit is $33,000 per employee, and while every company may not reach that threshold, it is what the law allows for.
Myth #3: The relevant information is too difficult to obtain
Like most government programs, the information about the ERTC is, how can we put this, super confusing. To put this in perspective, the team at TCC includes a staffer whose sole responsibility is to interpret eligibility guidelines, based on the original government orders issued at state, county and municipal levels.
Doing the hard work for camps is precisely what TCC does, and at a minimum all you need to know is that the intent of the law is to infuse cash now.
Myth #4: My payroll company is already on top of this
Josh has heard from many companies that they believe their accountants or payroll professionals are on top of understanding and applying for the Employee Retention Tax Credit. Just take one look at the IRS FAQ page on this credit, and you’ll see why this is likely not the case.
Even if your expert knows the payroll codes, Josh says that’s not enough. This isn’t a knock against traditional payroll advisors, simply an acknowledgement that there’s complexity beyond taxes in an ordinary year.
It’s why Josh and the team at TCC are dedicated to working with companies—including camps like yours—to clear up the confusion, and focus on getting them funds as soon as possible. Applying now means your camp could reduce your payroll tax withholdings as soon as the next quarter.
Myth #5: The risk of audit is too high
Some of the hesitation among companies regarding the ERTC is the fear of being audited. This is certainly a possibility, but this is true for all companies in any year.
One way that TCC can help is by keeping the credit-capture process and deliverables in compliance. If and when the IRS does find time to dig deeper, you’ll be prepared with all the documentation you need to alleviate any audit-related stress.
The ultimate truth that Josh and his colleagues at TCC want to communicate to camps is that there is urgency to take advantage of the ERTC as soon as possible.
By now, you understand that it’s a payroll tax credit that’s for qualified wages and health care costs, and it allows you to pay less immediately. The intent of the ERTC is just as important to grasp. The goal is to keep good people employed, with uninterrupted health benefits, during a pandemic. This is the most basic way to understand what is admittedly a complex law.
TCC is working with all types of businesses to help them apply for the Employee Retention Tax Credit, and be prepared with audit-ready documentation. They want to support camps in this same way. They know how hard the past year has been on our industry, and they’ve seen firsthand how much this credit can help. As experts, they see their role as pretty simple: to clear the confusion, bust the myths, and get businesses the support they need to attract, retain and engage top talent.