Employee Retention Credit

The employee retention credit was created to encourage businesses to retain workers on their payroll. The tax credit results in a refund of up to 40% of up to $10,000 in wages paid by a qualifying employer who has had its business impacted by the COVID-19 pandemic. The only businesses exempted from this credit are local and state governments as well as small businesses that receive small business loans. 

Qualifying employers must have their business fully or partially suspended by the government as a result of the pandemic and the employer’s gross receipts must be 50% below the comparable quarter in 2019. Employers who can retain staff during the pandemic should not hesitate to utilize this credit.

The Paid Sick Leave Credit

The paid sick leave credit was created to allow businesses to obtain a credit for a worker who cannot work as a result of either COVID-19 isolation or self-quarantine. These workers are qualified to receive paid sick leave of up to 10 days at a maximum of 80 hours at the worker’s regular rate of up to $511 a day and $5,110 in total. Employers can immediately be reimbursed for this credit by reducing the required amount of payroll taxes owed. 

The Family Leave Credit

Employers can also receive a credit for workers who cannot work because the worker is caring for a family member with COVID-19 or because a child’s school or place of care is closed. Workers who fall under this category are entitled to receive paid sick leave of up to two weeks at a maximum of 80 hours at two-thirds of their regular pay rate with a cap-off at $200 a day or $2,000 in total. Qualifying employers can immediately redeem this credit, as well. 

Credits are Optional

Remember, payroll tax credits are optional. As a result, eligible employers need not feel required to claim the credits. If employers do claim the credits, however, it is critical to include the amount of credits by the employer in its gross income when federal income taxes are reported. One of the best ways to decide whether these credits are worth claiming is to speak with your corporate lawyer.

Speak with a Knowledgeable Business Law Attorney

Planning for your business’s continued success is more important now than it ever was. One of the best ways to make sure that you take tax laws into full consideration is to obtain the help of an experienced business lawyer. Contact Resnick Law today to schedule a free case evaluation.  

There are many consumers who look forward to getting substantial tax refunds each year. These funds may be used as savings, to pay for various expenses, or to pay off existing debt. Consumers who have made plans to spend their tax refunds may be concerned about the ability of existing creditors to garnish those tax refunds.

Generally, private creditors – creditors who are not government creditors – cannot garnish a person’s federal tax refund. Federal tax refund garnishment is usually restricted to garnishment by government agencies that are owed money by the taxpayer. In Michigan, however, a private creditor can have a state tax refund garnished by first petitioning a court for a judgement.

With a judgement in hand, the private creditor can seek a writ of garnishment from the Michigan Department of Treasury to intercept a debtor’s tax refund. The writ can apply to garnish or intercept a debtor’s refund once to settle a debt owed to the judgment creditor. There is a fee for garnishment, and the creditor can make one payment when filing for several garnishments.

When a creditor has initiated a garnishment with the Michigan Department of Treasury, the debtor who owes the debt, and the court that permitted the garnishment, are notified of the impending garnishment. If the debtor does not wish to have his or her tax refund intercepted, he can make arrangements to pay the debt in advance and avoid the garnishment.

The debtor may try to avoid losing the tax refund by negotiating with the creditor to set up a payment plan to pay off the debt gradually instead of all at once. Once the creditor has already received a final judgment on the debt, and has taken steps to start garnishment, the creditor may not be willing to negotiate with the debtor. If the debtor has not been successful in keeping to a payment plan in the past, he is not likely to keep up with a plan unless the debtor’s financial circumstances have changed. The creditor has to consider issues such as how much of a refund a particular debtor may receive in deciding whether or not to allow the debtor to pay off the debt in installments.

In addition to seeking to garnish a debtor’s tax refund, a creditor can seek garnishment of a person’s wages as well as lottery winnings. Creditors can also choose to sell a debt that is considered uncollectible to a collections agency or firm, often for pennies on the dollar. If the debtor has filed for bankruptcy before the creditor has been fully repaid, the creditor may still have an opportunity to collect on the debt if the debt is recorded and secured.

Contact an Experienced Creditor’s Attorney

For more information on how you can best collect a debt with minimal costs to your organization and how to deal with debtor bankruptcy, you need to consult an experienced creditor’s rights attorney. Contact us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan to schedule a consultation.

(image courtesy of Sharon McCutcheon)

Photo courtesy of seniorliving.org

That April 15^th (or this year, April 18^th) deadline looms large over many of us, causing us to put all sorts of items on our financial and business plan to-do list on hold, held in a stasis until our filing is complete.

But now the taxes are hopefully behind you (expect for you extension filers). It’s a great time of year to do some reflection and consider what you have been putting off for far too long:

• Updating and/or creating your estate plans. Estate plans are not a one-shot document. Life changes occur. New children, grandchildren, marriages, even illnesses or debilitating events may have an impact as to how your finances are organized. Now is a good time to review your documents and discuss them with your attorney to make sure they are current and reflect what you want.
• Tax planning far in advance to alleviate the sting of April 15, 2017. May and June are great times to discuss with your tax attorney and your accountant what steps you can take advantage of to lessen your future tax burden. Not only will these professionals now have the time to meet with you to have such a conversation, they will be thrilled to be on the planning end of things and not just the filing end. Thinking through the course of the year, are there capital investments including equipment purchases that you should make by December 2016? Are there bonuses or payments that should occur in 2016 or should they occur in 2017? What hiring decisions do you anticipate making in the next year? Are they any timing consequences to these decisions?
• Review significant business documents. If you own your own business, you may be wallowing in documents of all types. But there are few key ones that need regular review and even tweaking. These include but are not limited to employee handbooks, operations manuals, finance and payroll documents, and even emergency procedures.
• Compare health care plans. You are likely to have a yearly re-enrollment date for your health care plan. Regardless of the date, take time to compare what’s out there and be sure the plan you are selecting is working well for your family financially and in terms of care. Now that the taxes are done, you may also have an aggregate amount of unreimbursed health care costs. Are you taking out enough from a health savings account or are you taking out too much and leaving that money on the table? If you or your spouse will be phasing into Medicare within the next year, do the research now on which supplemental insurance you want to purchase.

Conduct your own legal spring cleaning right now, locating relevant documents, consulting with expert advice and moving from putting out fires to moving forward in a planful, comprehensive manner.