Lots of businesses have claimed the Employee Retention Credit who don’t actually qualify for it — and in many cases it’s going to be up to their accountants to set them right. Randy Crabtree of Tri-Merit Tax Specialty Tax Professionals and the Unique CPA podcast dives into how you can know if a client qualifies, as well as the intricacies of some other major tax credits.
Transcription:
Dan Hood (00:02):
Welcome to On the Air with Accounting Today, I’m Editor-in-Chief Dan Hood. You’ve probably heard the dodgy sounding ads on the radio and social media promising to get your business huge payouts from the Employee Retention Credit. There’ve been so many bogus claims for the ERC that the IRS has actually put a moratorium on processing new ones. And while it’s the bogus ERC mills that are causing the problem, the issue seems likely to land, at least in part, in the laps of accountants and tax pros, certainly as we come into next tax season, so it’s one worth examining and talking about. And here to do just that is Randy Crabtree. He’s the co-founder and partner at Tri-Merit Specialty Tax Professionals. He’s also, I should say, the host of the Unique CPA podcast and a general all around good man and an expert in the field. Randy, thanks for joining us,
Randy Crabtree (00:41):
Dan. Thanks for having me. I’ve been looking forward to this since we set it up, whenever it was last week or so.
Dan Hood (00:46):
Yeah. Well, and this is a big topic, right? And I know you paid a lot of attention to it. I mean, a lot of the times when I’m thinking about it, it’s because you’ve reached out and said, Hey, this is going on here. People need to be paying attention to this. I think just to sort of level set, maybe we can start with a quick recap, just real quick, what the ERC is and sort of what the basic criteria are for qualifying. That seems to be a thing a lot of people are confused about.
Randy Crabtree (01:09):
Yeah, that’s a ton of confusion on that and it really shouldn’t be. I’ll get to that. But first, ERC, it was a covid related program. The employee retention credit got defined in the March of 2020 Act. Why am I forgetting the name of it? The Caress Act. There we go. Got defined in the Caress Act in the March. Wow. Three and a half years. I’m starting to forget my tax law legislation got defined there, but it went through a major change in the Consolidated Appropriation Act, which was the end of 2020, and that’s where everything started. And what that changed there was there was this mutually exclusive thing. If you did PPP, you couldn’t do ERC. And then they eliminated that and said, okay, you can do both. There’s just some requirements to calculate each one and not double depth. So it was there, you retained your employees and it wasn’t that you had to retain everybody.
(02:05)
It was okay, you kept 10 of your 15 employees. Well, you get a credit for the people that you kept assuming you made the qualification. And that’s the key because that’s where you’re hearing so much misinformation. And so lemme spend a minute or two on this because this Yeah, please. This is a lot more straightforward than a lot of people are telling you. You can qualify really two different ways. The first way is a drop in revenue and it’s straightforward. Look at any quarter in 2020, compare that to the same quarter in 2019. If there’s a 50% drop in revenue in that 2020 quarter over 19, that’s a safe harbor rule. You qualify straightforward. Same thing in 21, the first three quarters of 21. There’s a way to qualify in the fourth, but we’re not going to get into that right now. It’s mainly the first three quarters of 21, a 20% drop in revenue, again compared to that same quarter in 19 safe Harbor, no questions asked.
(03:07)
That’s how you qualify. And that’s honestly probably how most people will qualify is that drop in revenue. There is a second way which you can qualify and quite a few will, but it is this government mandate, and this is where information gets crazy, honestly, straightforward should be if you had a government mandate that directly affected you from an inability to continue to operate as normal, then you qualify. And the easiest example, and almost what you should use as the level set example of am I under a government mandate, is how restaurants were affected restaurants for a lot of locations, and this is not federal mandates we’re talking about. This is state and local mandates. We’re talking about restaurants. Most places were at least partially if not fully closed indoor dining. I’m in Illinois. We were closed indoor dining for six months. I don’t remember the dates now, but it was a long time. That’s a government mandate that affected a business directly, even though I could still deliver, even though I could still have curbside pickup, even though I could probably have outdoor dining, the indoor dining being closed, it was most cases enough. So that’s really what this was set out to cover. And when it goes further than that, you got to start questioning was I really under a mandate? And so honestly, it is a lot more easy and straightforward, at least from a qualification standpoint than you hear often.
Dan Hood (04:52):
But also, I don’t want to say stringent isn’t really, because that’s not that stringent, but while it’s clear, it’s also, it’s clearly what it isn’t about. It’s clearly it’s not about, oh, I had a little bit of trouble with the supply chain so I qualify. Or it’s really straight up government mandate or as you say, drop in revenue of 50 or 20% depending on the year in the quarter we’re talking about.
Randy Crabtree (05:13):
Yeah, let me expand on that because that’s a great point. If I’m hearing all kinds of things. Oh, I was told we chose to work at home and because of that we qualify. No, that’s not a mandate. We had to put plexiglass up. So obviously we’re under a mandate that affected our business. No, that is not a mandate that affected your business. Oh, we couldn’t find people to hire. So obviously there’s a mandate that no, no, that doesn’t qualify you. Even the ports, people look to the ports and say, well, we were having trouble getting supplies from a port, and so obviously we qualify. That is extremely, extremely difficult to prove that and to show that that was a mandate that affected you directly. And IRS came directly and a couple months ago now and said for the most part, this supply chain issue that everybody’s saying, oh, everybody used supply chain because everybody’s going to say, yes, I was affected by supply chain issues during covid and therefore I qualify. No, that was not, almost none of those supply chains were due to government mandates and that would have to be due to a government mandate for you to qualify. So those are the things that you hear, all the stuff that people are telling you, you’re going to qualify, man, am I getting cynical here or what?
Dan Hood (06:29):
It’s hard not to though.
Randy Crabtree (06:30):
Yeah,
Dan Hood (06:31):
It’s the problem.
Randy Crabtree (06:32):
So though, yeah, there’s so much misinformation that that’s why I just try to say it’s straightforward. Drop in revenue, direct mandate that is going to at least fully indoor dining, fully closed or partially indoor dining, 50% capacity. Those are really the ways you can qualify. There’s a little bit deeper into it that people change the rules to fit the requirement, which it’s odd,
Dan Hood (06:57):
But that’s the thing. You really should be approaching it from the perspective of there’s, I won’t want to say a hugely high bar, but there’s a bar you really got to pay attention to before you can get it. And the thing is, it was a useful program at the time. It made some sense. Oh yeah. But it’s sort of gone from being like the PPP, it’s a Covid life reserver and people valued it and it was a good program and they got the money out very quickly and it was very handy. It’s gone to, I don’t want to call it a scandal, but I mean when the IR Rs says, no, no, no, no, we’re not accepting it anymore, we’re not processing anymore these right now because they’re so dodgy. I’m going to say that’s approaching scandal. That’s scandal adjacent.
Randy Crabtree (07:37):
I think we’ve got to the scandal standpoint, at least in my mind,
Dan Hood (07:43):
How did that happen? I mean, there were some issues around the PPP, but it hasn’t didn’t approach this level of sort of, whoa, this is dodgy.
Randy Crabtree (07:49):
I think that became a scandal. So you know what? There’s money involved. And so that’s a big part, and there’s easy money from a standpoint that there has been, I think this might change, but there has been no in depth documentation requirement for sending in your qualification. You basically send in a 9 41 X and say, Hey, I qualified for E or C this quarter, send me my money. And so it was so easy and from that standpoint, and people could, I’m trying not to get cynical. It was easy to set up a business and get people excited about free money. That was so easy. And anytime there’s something out there like that, somebody’s going to take advantage of it. And unfortunately, especially the last six months or so, people really, really have come out of the woodwork to take advantage of this. I heard somebody call it, oh, I think it was in the Wall Street Journal. I saw it somewhere. Yes, it’s the new Gold Rush. And this was a provider. I said, you just put a target on your back with the IRS with that statement.
Dan Hood (09:02):
I do hope that they saw it because it’s just crazy. I mean, I’m going to go ahead and obey a little cynical. I mean, I think you could easily say that the PPP was a little bit of a gold rush, much more so than the ERC. As you say. The ERC has some set rules. I mean, if you were breathing and employed some people, you could get PPP money, but as you say, the ERC has some fairly stringent, at least particularly compared to the PPP. So it’s got to be, it’s become, let’s agree that it’s become a little scandalous and it’s enough to make you a little cynical. And here’s where the reason why we’re not here just to smack a bunch of ER C emails around or to express our cynicism. We’re here because there’s some serious ramifications for accountants, and I think we can safely say it’s not because the accountants are the problem, but because they’re going to have to in some cases, either clear up the mess or at least explain that there’s a mess to clients who are going to be probably very unhappy about it.
(10:02)
So maybe we can talk about that, because I think what you’ve expressed this, we’ve talked about this in different times and other people I’ve talked to, a lot of insurance providers particularly who are saying, we’re really, this is the issue we’re paying attention to for next tax season, is clients come in and you look at their returns and go, well, this is garbage. You don’t qualify at all. Someone’s sent you down the garden path kind of thing. But the clients are going to look to the accountants and say, well, why didn’t you tell me? Why didn’t you tell me I didn’t qualify for this? Or why didn’t you tell me what I would qualify for? And it’s all your fault. So a lot of this is going to land on accountants. So maybe we could start by saying, and I think you’ve given some indications of the kind of things that might be clues to this, but if you see an ERC claim from a client that someone else has prepared, whoever, let’s not name names, somebody else has provided it. Are there easy signs to tell if it’s bogus or that you should really be looking into this in more in depth for your clients so that you can tell ’em whether it’s good or bad?
Randy Crabtree (10:58):
Yeah, I mean, honestly, dropping the revenue, okay, let it go safe harbor. So we we’re automatically accept a big portion. Now that being said, there are control group issues and one company doesn’t stand alone. So I’m trying to make it sound simpler than it is. But if you have a control group, you have to make sure you look at that as a group. But that being said, if you’ve done all that drop in revenue, okay, let’s move on to the next step. So if you have a government mandate and it is something like a restaurant, we’re good. Even a doctor’s office almost, there was mandates that say you could not do elective procedures, you can only do emergency work. That’s good. That portion of their businesses being affected, that’s a partial shutdown. I think from an industry standpoint, that’s where it gets easier. If I’m the IRS, if I have a distribution company, I have a manufacturer, I have a construction company, I have anybody that’s like that that claimed an EC and it wasn’t a revenue drop. I don’t see how they qualify mean, and I’m doing a blanket statement there. But without the drop in revenue, I don’t think we’ve qualified any of those in that industry. So from an industry standpoint, if you weren’t in an industry where people had to come into your retail place, medical office, and that’s where the business was conducted and that was under a mandate, then you have to look at it manufacturer, they may argue that, well, people come in and we have sales meetings. Well not, sorry, that’s not going to qualify you.
Dan Hood (12:43):
That’s not a serious disruption. Probably everyone was better off for not having had those sales. I may have skipped a step here. Should we just assume that any accountant that gets, who has a client that claims an ERC credit that wasn’t prepared by the accountant, should they just assume that they should investigate it, that they should look into it? Obviously as you say, some industries are more, require maybe more due diligence than others, but is it a thing that accountant should be just automatically double checking on their client’s behalf?
Randy Crabtree (13:12):
I think they should. If it’s not, again, the drop in revenue, do the math. Great. If it’s not the drop in revenue, I think you need to go further. And the reason you alluded to it, the reason is you as the tax preparer, you’ve been charged with verifying this for the most part, because if it’s an inaccurate claim and you believe it’s inaccurate, you are being told that you cannot file that income tax return. And so that’s where insurance company is going to mad. A I CPA is going to tell you this, IRS is going to tell you this. They’re going to say, you can’t file that income tax return, so you have to do your due diligence. You unfortunately, we’re an industry that’s very busy. We may not have all the people we want in the profession right now, but this is just an extra step we’re going to have to do. Whether it was last filing season, this filing season, or it was last and it is this and it is next filing season that we are going to have to, because otherwise we can put ourselves in jeopardy as the tax preparer. So yeah, we almost have to question ’em all.
Dan Hood (14:16):
Makes sense. Makes sense. And now assuming you look at it and you go, this is garbage. I don’t even know why you thought you qualified for this. This is crazy. Obviously you wouldn’t say any of those things to a client, but what can you do if they’ve already gotten the claim, they’ve already gotten the money, I think, is there anything you can do? I mean, other than tell them and tell them that they’ve got to go back and refile or whatever. Not not a word, but you know what I mean. What can you do and what can they do?
Randy Crabtree (14:41):
Yeah. Well, so there’s a couple of answers to that actually, because IRS just came out with some guidance, I think it was last week, and what they say in this guidance, it hasn’t gone as far as I’m hoping. Yet in this guidance, they’ve given some clients the opportunity to return the money and they basically list three areas. One, you receive the checks, you don’t believe you should have got ’em, you can return the checks or basically it’s fax in a well, if you get the checks, I think you have to do another step. But if you have, I might be getting this a little wrong. Bottom line is if you haven’t cashed the checks, you can return ’em and you can ask that, no penalties, no interest.
(15:23)
We’re withdrawing our claim. If you haven’t received the checks, same thing. You can go and then you can fax and say, I’m going to withdraw my claim. And then that’s a done deal. If you’re in an audit and your claim is being audited, you can just say, alright, nevermind. I don’t want this. And just say, it’s not my claim now, I don’t think you can receive the checks yet, or cash the checks for sure in the audit has to be audit situation where you haven’t had that yet. What they haven’t done is said, what about these companies that got the money, cashed it, and then after the fact decided, I don’t think I deserve this. I didn’t qualify. I want to give the money back. That’s the step I want to see go further because I want it to make it easy for taxpayers, because most taxpayers took other people’s advice and got this. I want them to have the ability to say, yeah, it wasn’t accurate. I’m going to write a check for the amount I received, plus the interest I received. I’m going to return it to the IRS and probably with another 9 41 x and say, Hey, we didn’t, at least we’ve done this for some clients and this is how we’ve done it. Not claims that we made claims that people
Dan Hood (16:37):
Came to us.
Randy Crabtree (16:38):
Yeah, I want to make a point. In fact, we’ve made this a service. We’re actually doing this for companies now. We get calls all the time from tax repairs. My client got this credit, I don’t think it’s legit. Can you look at it for me? So we’ve actually turned that into a service now that we can help them return the money. So that’s the step. I sidetracked there for a second. That’s the step that I want to see happen where you can voluntarily give the money back, even if you’ve cashed it, no questions asked, no penalties, no interest. I think that’ll make it so easy for the IRS to get this money back if people know they’re not going to get in trouble for it. And that’s where I’d like to see,
Dan Hood (17:17):
Well, as you say, I mean I thought it’s not a safe harbor, but that sort of process they’d offered for if you hadn’t cashed the check or if your thing was still being processed, I thought that was very unusual for them to go that far. So maybe there’s some hope that they’ve come this far. Maybe they’ll come a little further because it is, as you say, these people don’t know what the complexities of this kind of thing. As simple as you make it sound, and it is to people who deal with tax credits and tax deductions and all this sort of stuff. It is, yes, it’s relatively simple. If you’re not someone who deals with that and some expert comes, some expert, no one can see me making air quotes on a podcast, but I’m making air quotes around expert double air quotes around expert.
(17:55)
Some expert comes to you and says, absolutely you can get this. You qualify. Most people are going to go for that without any intent of fraud or trying to get money out of the government. This wasn’t, they didn’t know it was what it was, so well, let’s hope that they do that. But otherwise, really that’s about it. You can either, if you haven’t cashed the checks, you’ve got an easy process of just sending the checks back, checks back, or sort of calling back the unprocessed return. If you have, then as you say, you can do what you’re saying, which is refile and send in the checks and say sorry, and then hope that they’re nice to you in the end. But it was interesting. I thought it was interesting that you mentioned when you’re talking with clients and sending it back, you’re having them send back the amount and interest.
Randy Crabtree (18:46):
Well, we’re not calculating the interest for the time they had it when they received the check, they received interest too, because when you receive a refund, so we’re sending back the refund of the payroll taxes and we’re sending back the interest that they received, the taxpayer received on that refund. So the whole check was what we’re sending back.
Dan Hood (19:06):
Gotcha. Okay. Making sure, I wasn’t sure if you were calculating the interest of, because they’d had, because some of these people will have had the money for some time. I mean a long enough time that the IRS would’ve started calculating things. We want some interest back. Okay. But that’s good to know at this point. But as you say, the hope is that at some point they will maybe take things a little further and get that extra step because you say, I think that will make people a lot more comfortable owning up to the mistake. And it’s going to be an awkward question for accountants, as we say throughout tax season to say, this is garbage. You didn’t get this. I hope you didn’t spend that money.
Randy Crabtree (19:40):
The only problem with that for the taxpayer, and it’s unfortunately a problem they’re going to have to deal with. They paid a provider, that money is gone. I mean, boy is their ability to get that back. I got a feeling they’re going to have a hard time getting that back. So when they send the money back to the IRS, unfortunately they’re still out that provider portion of it, which is unfortunate, but I’d rather not. Payroll taxes, no taxes, none of the taxes out there are something you want to deal with from a point of, I did not get this. I don’t want to deal with tax fraud or tax abatement or anything, or tax penalties. So if we can at least give it back, unfortunately we’re out that money, but we should sleep better at night
Dan Hood (20:27):
And it’s value. You’re paying a lot of money for a very valuable lesson
(20:32)
And who to trust when it comes to your tax issues. It’s a great example of why you should always call your accountant first. Alright, so that is a lot and we can talk a lot more about it. As you say, there’s a lot more nuances, but I think you’ve got a great sense of where it is and how accountants should be looking at it and how they can help, or as far as they can help their clients with it. There are a bunch of other tax credits out there that we could talk about and I would like to get into a couple of them, but we’re going to take a quick break first.
(20:59)
Alright, and we’re back and we’re talking with Randy Crabtree of Trier Specialty Tax. And we’ve talked about the ERC at great length because it’s a big issue and as we said, it’s going to be one of the big issues of tax season and as accountants get together with their clients, but it isn’t the only tax credit that’s out there or the only tax credit that’s making some news or making some waves. What are some other ones that I know there’s a couple you’re keeping your eye on in particular. Maybe we can talk about all those.
Randy Crabtree (21:21):
Yeah, there’s some things out there that I get very excited about. And the first one, there’s actually some information that just came out on, actually, I’m going to go on a sidetrack here for a second. Sure. Tangent alert here. The 1 74 r and D expense capitalization. We just got some proposed guidance on that. So that’s something that tax preparers that people listening should be aware of that IRS finally came out with some proposed guidance on how to capitalize r and d expenses, which is something we’re hoping we won’t have to do still, but we’re two years into capitalization of r and d expenses, who knows what’s going to happen. So that guidance came out. I just wanted to highlight that people can look at it. IRS is asking for people to respond with what they think of it and that. So I would go take a look at that. One of these is boy, one of these is due the end of this month, which is probably after the show airs. So
Dan Hood (22:19):
There you go. But
Randy Crabtree (22:19):
I think this one is due the end of November. So that came out. And then as long as we’re in that area, before I go to this other credit, the r and d tax credit, which is a huge opportunity, and anybody that’s doing anything from a technical nature should take a look at it. We just got the proposed form 67 65, which is the form that you calculate the r and d tax credit on that just came out for this coming year. And on there, and I knew this was coming or I assume this was coming, but on, there was two new sections that basically say that we have to now, when we’re filing for the RD tax credit, give them all of our documentation. I mean, it’s what is every single business component, the credit’s based on what is the uncertainty that was trying to be overcome on each business component and business component is newer, improved product process technique, formula, invention, their software, each of those who was working on each of those, and then what were the expenditures associated with each business component.
(23:27)
And so that is something they started a couple of years ago on amended tax returns. And that’s why I figured it was coming. Now they’re proposing it, which in my mind it’s set in stone, but they’re proposing it for this new tax year. And then in addition, you had to dig into how much the owner’s salary was going or officer’s salaries were going into the credit and if there’s control group. So there’s a lot more information that they want with the return. So just everybody needs to be aware of that because we’re getting very close to 23 filing season or 24 season for filing 23 returns. So those are just some new things that are out the last couple weeks. So be aware of that. But r and d tax credit’s great.
Dan Hood (24:11):
I know. Well, and we’d heard a lot of people talking about those increased filing requirements and the extra information that people had to put it in. It’s something of a burden, but as you say, it’s a great opportunity for people who could take that credit. It may be worth the effort.
Randy Crabtree (24:25):
Yeah. One of the things IRS is asking for feedback is, should there be, and they don’t call it this, but should there be a de minimis rule? Should there be a taxpayer under a certain revenue or under a certain credit, a dollar amount where maybe these requirements won’t be necessary for, because it really hurts the smaller taxpayer because it’s a lot more documentation burden put on them,
Dan Hood (24:51):
And they don’t have the systems that are automatically generating that kind of stuff. The larger you are, the more resources you have to throw against this,
Randy Crabtree (24:57):
Right? For sure. So those are some updates, but again, love the RD tax credit. It’s a huge opportunity and especially when I should put that in quotes when I’m hoping the RD expense capitalization goes away. We’re still hoping that’s going to happen. We retroactively to the beginning of 22, but we will see what comes out this year yet.
Dan Hood (25:22):
We’ll keep our fingers crossed. In the meantime. Any other tax credits? I know there were a ridiculous number of renewable energy tax credits coming out of the IRA for instance, or any of those you’re paying attention to or anything in that area.
Randy Crabtree (25:33):
So the renewables are, when I just said the RD tax score’s a huge opportunity that’s projected a hundred billion dollars tax opportunity for the next 10 years. Congress calls it expense, we call it as tax prepares and tax opportunity, a hundred billion renewable energy is now being projected as over a trillion dollars of opportunity over the next 10 years. And so yeah, this is an exciting one. There’s a lot of ’em. There’s a lot. And let me just highlight one and then we’ll see. If you give me the cut sign and we’re running out of time code section 48. This is probably going to be the most common. We see as tax advisors code section 48 is a credit available for anybody that’s using renewable energy. And so you are putting solar panels on your warehouse and you’re running your warehouse with the solar, with the sun generated power. There’s a potential credit there. The credit starts, this is the exciting part. It starts at 6%, which it doesn’t get you all that excited. It’s fairly easy to get to a 30% credit. There’s three different ways to do it. And then there’s a bunch of bonus credits where you can get to as high as 70%.
Dan Hood (26:56):
Holy cow. Okay.
Randy Crabtree (26:57):
Yeah. And if you’re using domestic materials, if you’re in a brownfield area or you’re an area that was relied on coal energy at some point, or you’re in a community, they designate as somewhere they want renewable energy, you can get as high as 70. And so the cost, the investment of putting this in dear facility has come down so far because I mean, not everybody’s going to get 70% credit. I mean, 30 is reasonable, but now you’re going to have reduced energy costs. You’re going to see that break even point drop quite a bit. And they made it extremely user-friendly from a standpoint that a nonprofit which doesn’t pay tax can actually now get a tax credit. They file a nine 90 T probably is the tax return they’re going to file. They show that they have a tax payment in there, and then when they file that tax return, it becomes a refundable credit. So
(27:58)
You could have your local public school put solar panel on, and now all of a sudden they have a refundable credit. If you’re a for-profit business, it’s a specified credit, which means it can offset AMT. So there’s no AMT issues. Most credits get affected by AMT, this won’t. And it carries back three years and keeps its character as a specified credit where you can offset AMT and then if you haven’t used it there, it carries forward 20 years. But if you don’t see that you’re going to use it in the next year or two, it’s a sellable credit. So now, oh, okay, I didn’t know. Yeah, you can sell it to somebody who is paying tax and I’m going to make up the percentages, but it’s probably not uncommon. I’m going to sell it for 90 cents on the dollar. I’m getting 90% of that savings.
(28:46)
This taxpayer who did nothing but buy this from me is getting 10% of the tax savings from it. And so they put all these incentives to make sure that it’s usable today, that people will invest in it today. And what I see is I really think this is going to be like a hockey stick growth. We’re going to see this gradual growth of next year or two and then just shoot through the roof and we’ll see a lot of people adopting it. So that’s the most common one that most of your clients potentially could take advantage of.
Dan Hood (29:16):
Well, as I said, there are a ton of them, and we could go through a lot more of them. Unfortunately, we don’t have a ton of time. But I wanted to ask a quick question because, and we know that one does, and it seems like some others, they come with a lot of those sort of add-on things that T, you call ’em whatever tax multipliers or credit multipliers, as you say, if you’re in specific locations or if the sourcing of your materials is from within the United States versus outside the United States or from a qualified country supplier. There’s a phrase for it. I’ve forgotten what it is, but how many of those sort of multipliers or restrictions, whatever they are, apply to all of these credits? And how many of them are specific to one or two or just a few?
Randy Crabtree (29:51):
Yeah, I think 48 and 45 are the two that get these bonuses. I was talking about where you can go from 30 to 70. I’m almost certain that’s the case. We are still digging deep into this. There is a multiplier. I say this starts at 6%. There is three different ways to get to 30%. One if you’re using less than one megawatt of power per year or something like that. And what it is is a good example, and don’t hold me to the math here, but about a hundred thousand square foot rooftop with solar panels is going to, should, I’m not going to say it will, but should meet the requirements to get to the 30% bonus. It’s iffy. Eight, maybe 70,000 square foot roof. You probably will a hundred. You should. Above that, you’re going to have to just dig deeper. So the megawatt usage is one requirement. The other is if you started the construction of this project before January 29th, and it’s more than five of 23 and it’s more than 5% complete automatic bump to 30% just because we didn’t have guidance until January 29th. And then the other requirement or way to get to 30 is if you meet this prevailing wage and apprenticeship rules, which you’ve people heard about, there’s a specific website where you can go into it. I’m not going to dig deep, but the bottom line is, are you paying the people that are doing the construction a fair wage? And if that’s the case, boom, you get to the 30% as well.
Dan Hood (31:25):
Gotcha. That’s the thing. There are, I have read about the prevailing wage things at a number of different articles. I thought I understood it every time I read it, I thought I understood it, and then I read about it again and say, I didn’t understand this. But because there’s some complexity there, and obviously we’ll do a disclaimer and say, none of this constitutes professional advice, even though Randy is, Randy does professionally give advice, but not in his capacity as a podcast guest. Only in his capacity as a professional at Tri Merit. So you need to contact him separately. But it’s all great stuff for everyone to be thinking about, at least to point you in the right direction. Even if the direction is just calling Randy and we can put on a different hat and say, yes, now I’m a professional offering professional advice because it is, there’s a lot of complexities and a lot of different opportunities there, and you want to make sure you get it right for your clients, which is one of the reasons why we trust accountants and don trust people like ERC mills. Right. That’s one of the big differences. Randy, like I said, we could talk a lot more about this. I know you certainly could, and I could listen, but unfortunately we’re running short on time, so I’m going to say any quick final thoughts you want people to take away in terms of all these credits, the ERC or some of the other credits that are out there, or just what people should be ready for tax season coming up, anything like that?
Randy Crabtree (32:37):
Yeah, it’s more just don’t ignore something. If they think there’s a little bit of opportunity, especially with renewable energy, if you see one, if I see a renewable energy opportunity with a client, there’s probably two or three other ones because r and d tax credits will often come in because some of these credits are tied to manufacturers cost segregations opportunity. They did construction to put solar panels 1 78 D, energy efficient commercial building deductions and opportunity. So almost always, if you see renewable energy, it’s not one tech saving opportunity for your client. There’s multiple ones. So just look into it, call us, call whoever you deal with and just ask the question, what do you think about this? Because hey, as an advisor, and that’s listening to your show, I assume, and not the taxpayer, but the advisor. As an advisor, you’re going to look like a hero when you bring all these tax saving opportunities to them. That’s why I get so excited with this. It’s saving money.
Dan Hood (33:32):
Well, and as you say, a trillion dollars, that’s real money. We’re talking about real money. Yeah. So good stuff. Alright, Randy Crabtree of Tri Merit, thank you so much for joining us.
Randy Crabtree (33:42):
Thank you. It’s always a pleasure and I had a lot of fun. Thank you.
Dan Hood (33:46):
Yeah. Excellent. Alright, thank you. And thank you all for listening. This episode of On the Air was produced by Accounting Today with audio production by Kevin Parise. Rate or review us on your favorite podcast platform and see the rest of our content on accountingtoday.com. Thanks again to our guest and thank you all for listening.
Credit: Source link
