Small-business owners in the Southeast are demanding funding to rebuild from this fall’s devastating hurricane season. They have been waiting for much-delayed epidemic relief. According to the federal government, more of it will soon reach them.
The IRS said on Thursday that around 400,000 claims totaling $10 billion are being handled for qualified company owners who requested tax refunds under the Covid-era Employee Retention Credit (ERC) program.
The government stated on Thursday that it is speeding up work on those claims and that it projected this summer that at least 1.4 million applications remained in the queue, but it did not provide a specific date or geographic information about the applicants.
As an IRS spokesman Mike Martinez told NBC News, “our top priority is to quickly help taxpayers affected by the devastation of Hurricane Helene and Hurricane Milton.” Additionally, he emphasized the newly announced tax assistance for people and companies in impacted regions, which includes filing and payment extensions. “We recognize that small businesses urgently require financial assistance from the federal government.”
Martinez asked small-business owners in impacted areas to monitor the progress of their applications by calling the IRS Disaster Hotline, as their ERC claims are still being reviewed.
The U.S. Postal Service will hold checks at the closest distribution hubs until business resumes for taxpayers with completely completed ERC claims whose postal routes have been affected, according to the agency.
Businesses can deduct up to $26,000 from payroll expenses for each employee under the tax scheme. Redressing a flood of bogus claims and firms operating scams offering to assist employers in applying for financing under the program have been the main causes of many of the delays.
The spouses and co-owners of Herbiary, an apothecary in Asheville, North Carolina, Maia Toll and Andrew Celwyn, said that the approximately $115,000 in unpaid ERC money would be a lifeline for their company at this time.
They submitted an application for the tax credit last summer in an attempt to repay the $100,250 Small Business Administration loan they took out after the epidemic destroyed their store’s earnings by a third. The tax credit was introduced as part of the CARES Act in March 2020.
The Herbiary’s business had somewhat stabilized with sales increasing up in the following months with Toll, a writer and writing teacher, published around one book year. However, the six Asheville employees—some of whom are still dispersed after having evacuated—cannot use the restroom or wash their hands in order to handle the organic herbs and teas the company sells safely because the historic Pack Square area where the business is located is still without water as a result of Hurricane Helene’s passage through western North Carolina two weeks ago.
Before Wednesday, the business didn’t have internet, which hurt sales to customers who didn’t have cash or the Cash App. Additionally, according to Toll, the store’s “symbiotic” link with its Philadelphia location—where the couples transport inventory—was affected just as package carrier routes in the ravaged Asheville area were. The store is now only open from 12 to 4 p.m.
The pair thought that the firm had lost $12,000. After Helene threw a tree into their house in the forested Riceville area, home insurance will pay for the required roof repairs, but they are still getting quotes to take down the other eleven fallen trees.
“The ERC credit has the potential to be transformative,” Toll stated, “particularly considering that we will be facing the same challenges going forward: retaining our workforce and keeping them as healthy and functional as possible in the absence of income.”
We live a mushy existence, she continued.
Early this month, Toll got in touch with Sen. Thom Tillis’s (R-N.C.) office and asked for assistance in getting the money from their application. In response to his office’s request that she complete out IRS privacy and claim papers, she said in an email that was viewed by NBC News, “Getting ERTC payments into our hands is one of the best things you can do for small biz in WNC.”
Comments were not answered by Tillis’s office. He co-authored a measure last month that will end the program and stop accepting claims submitted after January 20, 25.
In a statement at the time, he stated, “Repealing the ERTC is a critical step towards addressing America’s debt crisis.” “It’s time to end this fraudulent policy from the pandemic era so we can focus on organizing our finances.”
The government’s initial estimate for the tax package was $55 billion. However, by the fall of last year, that estimate had skyrocketed to $230 billion due to what IRS investigators called widespread fraud aided by third-party companies that entice business owners to apply with questionable guarantees of optimizing their credits.
The IRS has attributed the delays in refunds to labor-intensive tasks related to eliminating fraudulent claims. Applications would no longer be processed for several months, and procedures allowing applicants to retract inaccurate submissions without incurring fees or penalties were established.
After contacting a third-party company in May to file their ERC application, Toll and her husband are now questioning the terms of the contract, which obliged them to pay the company 18% of their anticipated return upfront or 25% after funds were delivered. In order to keep Herbiary’s operating margins stable, they obtained a $30,000 loan with an interest rate of 12.5% from Intuit.
The couple currently pays around $2,300 a month to cover the amounts between that loan and the SBA loan.
With regard to their desired ERC reimbursement, Toll stated, “It would almost put us back at clean slate.” “I understand that larger businesses frequently operate on debt, but as a small business, that just doesn’t make sense for us.”
