Category Archives: COVID-19 Financial Relief

COVID-19 Financial Relief, Education, IRS, Tips

ERC Voluntary Disclosure Program: aka Last Chance To Keep 20% Of Your Unentitled Pandemic Tax Credit Funds

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The IRS is offering an amazing deal to those who either fraudulently or mistakenly claimed Employee Retention Credits (ERC) to which they weren’t entitled.

If a taxpayer claimed and received ERC funds, and for whatever reason now realizes that they may not actually have qualified (either for a particular period or for the whole thing) — they can return 80% of the money to the IRS and call it a day.

Considering that more than 3.6 million claims have been submitted, and the IRS refunds run up to $26,000 per employee… we’re talking about big dollars here. As of July 31, 2023, the IRS Criminal Investigation division had initiated 252 investigations involving over $2.8 billion of potentially fraudulent ERC claims.

We were extremely diligent in filing ERC claims for our clients — it took literally months of effort in research, software development, calculations, data collection, interviews and narrative-writing, not to mention preparing the actual tax forms and support. So initially I was extremely frustrated to find that people who filed claims without substantiation could return only 80% of the money and keep 20% for themselves. However, IRS Commissioner Werfel explained the rationale behind this decision, as reported by Journal of Accountancy:

“We could not stand idly by as small businesses were being taken advantage of by promoters trying to get hefty fees,” he said. He later described the 80% figure as “an important incentive to participate in the disclosure program. Participating businesses do not need to repay all 100% of the payment they receive.”

And this makes sense. Not just our clients, but our own firm (which decidedly does not qualify for ERC) was bombarded by calls and official-looking forms designed to lure us in to thinking that we were entitled to this “free money”. And they charged exorbitant fees in the 20-30% range, without providing any of the substantiation a taxpayer would need in case of audit. As a result, these scams topped the list of the IRS “Dirty Dozen” in 2023.

So it’s not surprising that, although the process to participate in the voluntary disclosure program is quite easy and simple — one of the requirements is that the applicant must provide names, addresses, and phone numbers of any advisers or tax preparers who helped with the claim, as well as details about the services provided. I’m hoping that this will cause some of these “mills” to get what they deserve for defrauding small businesses and our government.

Taxpayers wishing to participate in the ERC voluntary disclosure program must notify the IRS by completing and submitting Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program. Program participants will not be charged underpayment interest, and the IRS will not assert civil penalties against them for underpayment of employment tax attributable to the ERC. And those that cannot repay the required 80% might be considered for an installment agreement.

If you are among those who has submitted a claim that hasn’t been approved yet (or received your checks but have not yet cashed them), you can still withdraw your claim, following instructions on the IRS ERC FAQ (#5 under “Correcting an ERC Claim”). They even include a sample withdrawal form.

I’ve interviewed countless ERC claim companies and narrowed it down to only two with whom I have trusted my colleagues and their clients. (It’s truly stunning how many out there have no idea what they’re doing, even the ones that aren’t intentionally skirting the rules.) One of them, Tri-Merit, recently released an episode of Randy Crabtree’s Unique CPA Podcast that dives into the biggest ERC changes for 2024. The service of theirs I recommend the most often (for which I can offer a referral link) is their “ERC Verification” offering, where they take a look at what you’ve claimed and either verify that it was done correctly, or recommend changes and help process the amendments. They stress that it is never too late to fix a claim that has already been paid.

And for those of you who have filed accurate ERC claims and are still waiting for the IRS to end its moratorium — still no information on when processing will begin again. Keep your eye on the AICPA’s ERC Resource Center; or check in with my blog — I’ll be one of the first to joyfully report it when the time comes!

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

COVID-19 Financial Relief, Education, Tips

Final Restaurant Revitalization Fund (RRF) SBA Report Due April 30, 2023 — Here’s How to File

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In this YouTube video, I demonstrate how to use the AICPA RRF tracker tool for SBA reporting.

Only 60% of restaurants that applied actually received funding for the popular Restaurant Revitalization Fund program (RRF), due to a failure of Congress to replenish the kitty with leftover PPP money, as was envisioned. (A substitute Restaurant Revitalization Tax Credit bill is currently languishing.) After the SBA disbursed the last of the funds in November of 2022, you might think that all was said and done on the topic; but in fact, recipients of those funds still need to report to the SBA that the money was indeed used according to the program’s rules.

There were three SBA reporting dates: December 31, 2021; December 31, 2022; and a final report date of April 30, 2023 — which is fast approaching. The RRF eligible expense period, however, allows costs from the very beginning of the pandemic, February 15, 2020, clear through to March 11, 2023. The two year-end reporting dates were intended as just a progress report of what the recipients had spent so far in eligible costs.

The great news for most businesses was that if all the RRF funds were allocated to eligible costs before the first reporting date, no additional reporting was required. If not, then the business needed to come back the following year and report a second time. At this point, most restaurants have (hopefully) already submitted their final report.

However, for those who missed the first two reporting dates; or somehow didn’t expend all the funds before the end of 2022; or simply did not understand how to report properly; or didn’t realize what a wide date range of eligible expenses they could use… there is one shot left at a final report to the SBA, or they risk having to pay back the funds.

This blog post (with a 20-min video walking you through the process) is our suggestion of how to translate the info you already have in your bookkeeping software into a format that will easily conform to the Restaurant Revitalization Award Portal requirements.

Sample email from SBA regarding the initial RRF year-end reporting

Spoiler alert: the process takes more than 5 minutes. It can easily take an hour or more. The actual entering of data into the SBA RRF portal is the part that only takes 5 or so minutes.

Our recommendation is to download the free Restaurant Revitalization Fund Tracker from the American Institute of CPAs (AICPA) website (as with their PPP Forgiveness Calculator, you do have to register for an account, but there’s no charge). However, instead of entering each individual transaction on the form (as it’s designed for you to do), our suggested shortcut is to take the information you already have in your bookkeeping file and enter each category as one line — then subtract all the non-RRF grants and assistance received, so that you’re not double-dipping.

As mentioned earlier, the RRF period runs from February 15, 2020 — the very beginning of the pandemic — to March 11, 2023. So we suggest you run a Profit & Loss for your company for the period of February 15, 2020 all the way through March 11, 2023 (or February 28, 2023 if you’re doing this before March 2023 is reconciled), and use those numbers to report what has been spent so far. Then enter the non-RRF grant funds as negative numbers on the same Expense Tracker tab, so that they net against each other. The result will be the data you submit to the SBA at restaurants.sba.gov once you log in to your portal.

I recorded a video illustrating the whole process back in December 2021 — the one big difference is simply the ending date of the report you’ll run.

Here are the steps:

Step 1 – download the AICPA RRF Tracking Tool
Step 2 – enter the name of your company in the Summary tab, cell A9
Step 3 – enter the RRF amount in the Expense Tracker tab, cell C6
Step 4 – run your Profit & Loss from 2/15/2020-2/28/2023 (or 3/11/23 if you’re doing this in April 2023)
Step 5 – export to Excel and save to your RRF file folder
Step 6 – on the Expense Tracker tab, enter summary amounts from the Profit & Loss for Payroll, Rent, Utilities, Food & Beverage, Maintenance, Supplies, Covered Supplier Costs, and Business Operations Expenses

Tip: skip Mortgage Payments, Debt Service, Outdoor Seating Construction, and Depreciation, or ask your accountant for help with these, as they are usually on the Balance Sheet or in the Non-Operating Expense section of the Profit & Loss, and are therefore harder to DIY.

Tip: Business Operations Expenses are all operating expenses that are not already accounted for in one of the other categories.

Step 7 – IMPORTANT: enter all the non-RRF grants and financial assistance as negative amounts on the Expense Tracker tab — this is to prevent any double-dipping
Step 8 – go to restaurants.sba.gov and log in
Step 9 – enter your name, address, EIN, phone, and email (if this information is not already there)
Step 10 – enter the amounts from the Summary tab — Note: you cannot enter more than the total RRF grant, so you may need to reduce one or more of the categories so that you don’t exceed the total.
Step 11 – if you have allocated all the RRF funds, certify as such — you will not be required to repeat this progress report next year; if you have not allocated all the RRF funds, you will be able to “Save” but not “Submit”.

You have until March 11, 2023 to allocate all the funds (aka spend them on eligible expenses), and until April 30, 2023 for final reporting. If it turns out you didn’t have enough eligible expenses from 2/15/20-3/11/23 using Profit & Loss Operating Expenses, then take some time to work with your accountant to determine if you have debt service, mortgage payments, capital expenses for outdoor seating, or depreciation that counts toward allowable costs.

In all cases: make sure to subtract all other grant income from expenses so you are not double-dipping!

23-minute video walking you through the whole process in Dec 2021

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

Cooperatives, COVID-19 Financial Relief, Education, IRS, Tips

NSAC Offers Employee Retention Credit (ERC) Webinar Aug 23

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Employee Retention Credits (ERC) (nsacoop.org)

My colleagues at the National Society of Accountants for Cooperatives are offering a 75-minute webinar on Tuesday, August 23 to discuss the requirements and pitfalls in claiming Employee Retention Credits (ERC). The cost is free to members and $56 to non-members.

The ERC has been in the news quite a bit lately due to aggressive tactics by non-CPA firms claiming to be able to apply for these credits on behalf of business owners. (We’ll have an upcoming blog covering that topic.) However, the rules regarding whether or not a business qualifies are complex, and best performed by a knowledgeable professional.

During this webinar, the panelists will provide an overview of the Employee Retention Credit (ERC) and how to qualify for ERC including:

• Partial and full shutdowns as they apply to the ERC
• What constitutes “gross receipts”
• Safe Harbors
• Rules for Large Employers
• Unsettled matters and how the IRS is examining ERC claims

Participants are encouraged to submit questions in advance at info@nsacoop.org and during the session.

If you are an accountant or bookkeeper calculating these credits for your clients, or a business owner considering a DIY approach, please make sure you are thorough about obtaining education and resources before submitting anything to the IRS. You can expect their enforcement division to ramp up audits in the next few years.

Employee Retention Credits (ERC) (nsacoop.org)

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

COVID-19 Financial Relief, Tips

EIDL Rapid Portal Closes May 16 – Download Your Loan Docs NOW

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We learned this week that the EIDL is permanently closing their Rapid Portal on May 16th. What does this mean for you?

If you haven’t already, download a copy of your EIDL loan agreement documents, and snap a screenshot of your loan number and save it to PDF for easy reference.

Your bookkeeper and accountant will thank you for this — and you’ll thank them for insisting you do it!

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

COVID-19 Financial Relief, IRS, Tips

IRS Service Issues – What Is Being Done? How Can You Help?

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On last week’s AICPA Town Hall they discussed the IRS service issues I posted about recently, as well as the advocacy efforts by the newly-formed Tax Professionals United for Taxpayer Relief Coalition — including the AICPA, NATP, and many other organizations. (Check out their recent media briefing here.)

They were effective in getting a bi-partisan group of nearly 200 members of Congress to send a letter to the US Treasury Secretary requesting the IRS implement the following:

  • Halt automated collections from now until at least 90 days after April 18, 2022;
  • Delay the collection process for filers until any active and pending penalty abatement requests have been processed;
  • Streamline the reasonable cause penalty abatement process for taxpayers impacted by the COVID-19 pandemic without the need for written correspondence;
  • Provide targeted tax penalty relief for taxpayers who paid at least 70 percent of the tax due for the 2020 and 2021 tax year; and
  • Expedite processing of amended returns and provide TAS and congressional caseworkers with timely responses.”

Shortly afterwards, the IRS announced they are suspending a small portion of automated notices — which they clarified on February 9 as “notices of unfiled returns and unpaid balances generally, including a final notice of an outstanding balance and intent to levy”.

The IRS identified the suspended letters and notices as:

  • CP80, notice of an unfiled tax return. The IRS sends this when it has credited payments or other credits to the taxpayer’s account but has not received a tax return for the tax period.
  • CP59, unfiled tax return, first notice. The IRS sends this when it has no record of a prior-year return’s having been filed. The Spanish-language version, CP759, is included.
  • CP516, unfiled tax return, second notice. This is a request for information on a delinquent return for which there is no record of filing. The Spanish-language version, CP616, is included.
  • CP518, final notice — return delinquency. The Spanish-language version, CP618, is included.
  • CP501, balance due, first notice. This letter is a reminder of an outstanding balance on the taxpayer’s accounts.
  • CP503, balance due, second notice.
  • CP504 balance due, third and final notice. This also is a notice of intent to levy.
  • 2802C, withholding compliance letter. This letter notifies taxpayers whom the IRS has identified as having underwithheld taxes from their wages, with instructions on correcting their withholding amount.
  • CP259, business return delinquency. The IRS has no record of a prior-year return’s having been filed. The Spanish-language version, CP959, is included.
  • CP518, final notice of a business return delinquency. The Spanish-language version, CP618, is included.

Per the Journal of Accountancy: “How long the letters and notices will be suspended or at what point the backlog can be considered sufficiently cleared to resume them remains unclear. The news release Feb. 9 said the IRS “will continue to assess the inventory of prior year returns to determine the appropriate time” to start sending them again. And there has been no mention of relieving taxpayers from their obligation to file returns or pay taxes that are the subject of the letters and notices, if those returns and taxes are indeed unfiled and unpaid.”

While this is a welcome step, it falls seriously short of what is needed.

In a recent Op Ed, former National Taxpayer Advocate Nina Olson outlined her suggestions to “fix the IRS”, and the AICPA Journal of Accountancy podcast elaborates on the following four recommendations:

  1. Discontinue automated compliance actions until the IRS is prepared to devote the necessary resources for a timely resolution
  2. Align requests for account holds with the time it takes the IRS to process any penalty abatement requests
  3. Offer a reasonable cause penalty waiver, similar to the procedures of first-time abatement administrative waiver
  4. Provide taxpayers with targeted relief from the underpayment and the late payment penalty for the 2020 and 2021 tax year

The podcast (highly-recommended short listen!) walks through these one-by-one and explains why each is crucial — in a very straightforward manner, providing examples of what kind of struggles real-life taxpayers and their advisors are going through.

A key takeaway: “What we’re trying to do with these recommendations is to lessen the need to reach out to the IRS. In theory, if we’re having to call the IRS less then the IRS will be able to get to people who have other types of problems and get those problems resolved.”

The Washington Post shared an article today highlighting the severity of the IRS backlog and what it means for this tax season.

In testimony before the House Ways and Means Committee on Tuesday, National Taxpayer Advocate Erin Collins noted that as of late December, the IRS had a backlog of 6 million unprocessed individual returns and 2.3 million unprocessed amended individual returns. In addition, more than 2 million Forms 941, Employer’s Quarterly Federal Tax Return, and its amended version remained unprocessed. Many of the latter included claims of the employer retention credit emergency pandemic relief provision.

But all this isn’t enough — they need to hear actual stories from real taxpayers about what you’ve gone through. If you had a challenge with the IRS in the past couple years, and especially if you have an ongoing issue, please contact your Senators and Representatives to tell your personal story. This generally moves them to action, and what we need now is continued and increased pressure on the IRS to make short-term immediate changes that will affect the here-and-now of this tax season.

RESOURCES:
Find your rep: https://www.house.gov/representatives/find-your-representative
Members of Congress Twitter handles: https://twitter.com/i/lists/34179516/members
IRS Social Media: @IRS

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

COVID-19 Financial Relief, Education, Illinois, Tips

Chicago “Joint Readiness Summit” This Fri 2/4 – Small Biz Funding Opportunities

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From Chicago Business Affairs & Consumer Protection —

JOINT READINESS SUMMIT: This Friday, February 4 from 9:00AM to 4:00PM

Join the City of Chicago, Cook County, and State of Illinois leaders as well as other experts to learn about what it takes to be “ready” to apply for grants and contracts funded by American Rescue Plan Act (ARPA) and other economic recovery funding streams.

This event will take place via Zoom and will be simultaneously streamed on YouTube. Meeting information will be sent via email prior to the event. ASL interpretation and closed captioning will be provided.

Learn about the Chicago Recovery Plan — the City’s plan to amplify once-in-a-generation federal funding to create an equity-based investment strategy to catalyze a sustainable economic recovery from the COVID-19 pandemic. The funding under the Chicago Recovery Plan, which includes funding from the American Rescue Plan Act and over $600 million in local bond funds, is allocated alongside all other available resources in the City budget to maximize this opportunity over the next 3-5 year funding period. The initiatives and strategic priorities that make up the Chicago Recovery Plan were a result of several stages of community engagement and input during the 2022 budget development process.  The list of current funding opportunities can be found here:
Funding Opportunities (chicago.gov)

Register by visiting the Joint Readiness Summit Registration Webpage.

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

COVID-19 Financial Relief, Education, Tips

Tips & Tricks for Restaurant Revitalization Fund (RRF) Year-End Reporting

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With one week left before year-end, it’s possible that you are among the folks who received an email (below) back in October but hasn’t yet reported to the SBA on the eligible expenses incurred so far. This blog post (with a 20-min video walking you through the whole process) is our suggestion of how to translate the info you already have in QuickBooks into a format that will easily conform to the Restaurant Revitalization Award Portal requirements.

Sample email from SBA regarding RRF year-end reporting.

Spoiler alert: the process takes more than 5 minutes. It can easily take an hour or more. The actual entering of data into the SBA RRF portal is the part that only takes 5 or so minutes.

Our recommendation is to download the free Restaurant Revitalization Fund Tracker from the American Institute of CPAs (AICPA) website (like their PPP Forgiveness Calculator, you do have to register for an account, but there’s no charge). However, instead of entering each individual transaction on the form (as it’s designed for you to do), our suggested shortcut is to take the information you already have in your QuickBooks file and enter each category as one line — then subtract all the non-RRF grants and assistance received, so that you’re not double-dipping.

The RRF period runs from February 15, 2020 — the very beginning of the pandemic — to March 11, 2023. The year-end reporting is just a progress report of what you’ve spent so far that is eligible for RRF program fund allocation. So we suggest you run a Profit & Loss for your company for the period of February 15, 2020 all the way through November 30, 2021 (or whatever your most recently reconciled month-end is), and use those numbers to report what has been spent so far. Then enter the non-RRF grant funds as negative numbers on the same Expense Tracker tab, so that they net against each other. The result will be the data you submit to the SBA at restaurants.sba.gov once you log in to your portal.

I’ve recorded a video illustrating the whole process — but in case you want a follow-along checklist, here it is:

Step 1 – download the AICPA RRF Tracking Tool
Step 2 – enter the name of your company in the Summary tab, cell A9
Step 3 – enter the RRF amount in the Expense Tracker tab, cell C6
Step 4 – run your Profit & Loss from 2/15/2020-11/20/2021
Step 5 – export to Excel and save to your RRF file folder
Step 6 – on the Expense Tracker tab, enter summary amounts from the Profit & Loss for Payroll, Rent, Utilities, Food & Beverage, Maintenance, Supplies, Covered Supplier Costs, and Business Operations Expenses

Tip: for now, skip Mortgage Payments, Debt Service, Outdoor Seating Construction, and Depreciation, or ask your accountant for help with these, as they are usually on the Balance Sheet or in the Non-Operating Expense section of the Profit & Loss, and are therefore harder to DIY.

Tip: Business Operations Expenses are all operating expenses that are not already accounted for in one of the other categories.

Step 7 – IMPORTANT: enter all the non-RRF grants and financial assistance as negative amounts on the Expense Tracker tab — this is to prevent any double-dipping
Step 8 – go to restaurants.sba.gov and log in
Step 9 – enter your name, address, EIN, phone, and email (if this information is not already there)
Step 10 – enter the amounts from the Summary tab — Note: you cannot enter more than the total RRF grant, so you may need to reduce one or more of the categories so that you don’t exceed the total.
Step 11 – if you have allocated all the RRF funds, certify as such — you will not be required to repeat this progress report next year; if you have not allocated all the RRF funds, you will be able to “Save” but not “Submit”.

If you have not allocated all the funds yet, then follow this same process next year by December 31, 2022 — you can run the Profit & Loss from 12/1/2021-11/30/2022 at that point and follow the same approach. Most folks will have sufficient eligible expenses from 2/15/2020-11/30/2021 to “use up” the whole RRF grant, but after subtracting other grant income from expenses, may find that they still have a balance left over that they can allocate costs to when reporting at the end of 2022.

You have until March 11, 2023 to allocate all the funds (aka spend them on operating expenses, and until April 30, 2023 for final reporting. If it turns out you didn’t have enough eligible expenses from 2/15/20-11/30/21 using Profit & Loss Operating Expenses, then take some time to work with your accountant to determine if you have debt service, mortgage payments, capital expenses for outdoor seating, or depreciation that counts. You can report these in next year’s RRF Program Post-Award Report, along with next year’s Profit & Loss Operating Expenses. In all cases: make sure to subtract all other grant income from expenses so you are not double-dipping!

23-minute video walking you through the whole process — Merry Christmas!

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

COVID-19 Financial Relief, Education, Illinois, Tips

Year-End IDES Unemployment Rate Notices for Employers – How To Update In Gusto Payroll

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IDES taking steps to address unprecedented volume of unemployment claims | News | metropolisplanet.com

Most states, including Illinois, send out a letter at the end of each year to employers, informing them of their new “Contribution Rate Determination”. As I’m receiving lots of questions about them this year, I figured I’d take a moment to explain what these are and how to update your Gusto payroll account with this info.

This year, IDES is distributing the letter electronically for all who have opted in, with an email stating:

You have received new electronic correspondence from the Illinois Department of Employment Security (IDES). Please log into MyTax Illinois to view your correspondence as some may require a timely response. Below is a list of the new correspondence you have received.

  • Contribution Rate Determination (Mail Date: 11/30/2021)

If the notice you received has appeals rights, you must file your appeal according to the instructions stated on the notice. If you have questions, please call the IDES Employer Services Hotline: 800-247-4984.

For those who haven’t received a letter in the mail, you’ll want to log into MyTax Illinois to get your letter (or if you did get your letter in the mail, but want to download a pdf of it for your files).

Once you log into your company’s MyTax Illinois account (the same place you log into to make sales tax and corporate estimated tax payments), you’ll see a number next to the “Action Center”. Click on that and then click on the “View Letters” link.

Then click on the “View Letters” link.

And then click on the “Contribution Rate Determination” link to get your letter.

The letter will say “Rate Determination” at the top-left.

The new rate is listed at the end of the first row on the page, under where it says “Contribution Rate (New)”.

This rate is also known as your “experience rating” because it’s in part based on how many of your employees claimed unemployment over the past two years, compared with the total payroll for that same time period. (For 2020 and most of 2021 they paused this type of increase, because everyone was claiming unemployment due to the pandemic.) For 2021, the percentage will be between 0.200% and 7.625%.

You can see a list of the historical rates by year here: Annual Employer Contribution Tax Rates (illinois.gov)

If for some reason the wages, unemployment benefit claims, and rate don’t seem right, the next page in the letter allows you to contest it by sharing how your company records are different. The following page in the letter explains how the formula works, in case you’re not sure whether or not it deserves contesting.

Contesting a rate is rarely needed for small business owners, because we all have the option to contest individual claims when they happen. If a staff member quits/resigns, or if they are fired for dangerous behavior, then they don’t qualify to claim unemployment benefits — a notice for each claim is sent to the business owner and they have a short period in which they can dispute the claim. It’s important to do this to keep the IDES contribution rate down. Keep in mind that just this past year, they have stopped mailing claim letters, and business owners should check their MyTax Illinois account each month for these notices — see my blog post here for more: Illinois – No More Snail Mail for Unemployment Claim Notifications | The Dancing Accountant

In November, IDES sent out another round of reminders about this:

And on the final page they included an option to request a snail-mailed paper notification of claims:

So you’ve got your new rate — what does it mean and what should you do with it?

The rate will be multiplied against the first $12,960 of each employee’s wages (this increases slightly each year) and the resulting total will be paid as unemployment tax by the employer. That’s why you want as low a rate as possible. But if you don’t have a lot of employees, then even a high rate does not end up being a lot of money. Pretty amazing deal for how much our society depends on the unemployment safety net.

Provide the notice to your payroll provider to get the rate entered into your payroll system, or if you use Gusto, just update the rate yourself — it’s very easy, and this way you know it gets done! Log into Gusto and:

  1. Click the Taxes & compliance section and select Tax setup.
  2. Click Manage Taxes under the applicable State Tax section.
  3. Scroll to “State Tax Settings” and click edit next to SUI Rate.

The effective date for the new rate is the upcoming January 1st.

If you don’t update your payroll records asap, then you could end up paying in unemployment at a higher or lower rate than required. If it’s too low, you may end up owing penalties, and if it’s too high, then you have to file for a refund, which a lot of folks forget to do, leaving their money on the table in perpetuity.

One more reminder: anyone who received unemployment benefits in 2021 will be getting a 1099-G in January noting those amounts for tax purposes — see my blog post about this from last year here: Illinois IDES 1099-G Form For 2020 Unemployment: What You Need To Know | The Dancing Accountant

If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.