Capitalizing on Tax Programs to Recover From Pandemic Losses

Speaker 1 The IRS management, you know, according to Forbes' article that came out not too long ago, they believe that about 70 to 80% of small and medium-sized businesses, the IRS management themselves believe 70 to 80% of small and medium-sized businesses should claim ERC for at least some portion of the program.

Speaker 1 And as of about a month ago, it was under 5% of those companies have actually filed. And unfortunately, at the end of the day,

Speaker 1 as great as your podcast is and as big as the reach is, as great as our marketing teams are and spreading the word, unfortunately, as great as your team and my team can do to spread the word about this, Tommy, there's going to be billions of dollars that just end up sitting in the treasury and never get claimed.

Speaker 2 Welcome to the Home Service Expert, where each week Tommy chats with world-class entrepreneurs and experts in various fields like marketing, sales, hiring, and leadership to find out what's really behind their success in business.

Speaker 2 Now, your host, the Home Service Millionaire, Tommy Mello.

Speaker 3 Welcome back to the Home Service Expert. I'm Tommy Mellow.

Speaker 1 Today is going to be an awesome podcast because there's a lot of rumors out there about ways to get some of the money back through the pandemic. And I got Tony Swantech here.

Speaker 1 He's an expert in leadership, business development, business management, and entrepreneurship. He's based out of Wichita, Kansas, and he's the chief operating officer at Jordans and Associates.

Speaker 1 Let's see here, composed of tax credit veterans with decades of industry experience serving clients of all sizes and in virtually all industries, Jordan ⁇ Associates specializes in helping employers obtain federal aid and state credits as well as disaster relief incentives.

Speaker 1 So first, I think what we should start with, Tony, is...

Speaker 1 You spoke at Vertical Track.

Speaker 1 It's important that people understand what you guys figured out and what your software does.

Speaker 1 Can you tell us just a little bit about your history, about you, where you've been and where you're going here? Sure, sure. Yeah.
I mean, I actually

Speaker 1 found out about the tax credits from our CPA. I was, I guess, right place, right time back in kindergarten.
That's how long I've known my CPA.

Speaker 1 He was not a CPA back then, but I think he was well on his way. But I've been an entrepreneur for over 20 years.
And we had built several different businesses.

Speaker 1 One was a restaurant delivery service, kind of like Uber Eats, DoorDash, Grubhub, familiar with those companies. It was called My Town to Go.
We were an Inc.

Speaker 1 500 company, so a pretty good sized company. And then we ended up merging with a company called Delivery.com back in 2018.
And so it's still a pretty large company.

Speaker 1 He's been our CPA for several years for that firm. We've got another company that does credit card processing, maybe $3 to $4 billion a year in credit card transactions.

Speaker 1 And he's our CPA there as well. And so when he contacted us a year and a half ago or so, he started educating us about this employee retention tax credit program.

Speaker 1 And the bottom line for us is we weren't familiar with it. And we try and keep our ear to the grindstone and figure out, you know, what's going on, what's available.

Speaker 1 Obviously, the PPP loan programs, I mean, there were several programs that were available, but the ERC was really under the radar for us.

Speaker 1 And as we learned more about it, it was one of those things where we looked at it as a value add, Tommy.

Speaker 1 you know we have thousands of restaurants we do delivery for uh we have thousands of customers we do credit card processing for and a lot of them were hit by the pandemic.

Speaker 1 And they had to, you know, make several changes in the way they operated, the way they did business.

Speaker 1 And so we realized that the employee retention tax credit program is something that could be extremely valuable to that client base. And the question was: can we scale it?

Speaker 1 You know, and I talked with Justin, his team of CPAs, 20-plus years of experience. We built a team of over 200 employees that pretty much work several hours.

Speaker 1 I think it's around the clock these days to assist our clients with the employee retention credit.

Speaker 1 So we've done right around 4,500 clients and we've written a little over $2.2 billion in NERC funding just in the last 12 months alone. This is crazy.
Let's just start at the beginning here.

Speaker 1 So a lot of people aren't familiar with the economic stimulus programs, some of the relief programs. Can you tell us a little bit about it and who qualifies for these programs? Sure.
Yeah.

Speaker 1 So, you know, to give people an idea, I think a lot of business owners, especially people that are plugging in to your podcast and the network that you have.

Speaker 1 And I was very honored to speak to, you know, a lot of the attendees there at the Vertical Track event in Scottsdale. And

Speaker 1 most of them took advantage of the PPP loan program. A lot of businesses are very familiar with PPP.
That program was created out of the CARES Act.

Speaker 1 Back in March of 2020, a $2.1 trillion stimulus package. There were a lot of programs that were created out of that CARES Act.

Speaker 1 And I think the main one that business owners are familiar with is going to be the PPP loan program. At the same time, that legislation created the Employee Retention Tax Credit Program.

Speaker 1 And so these programs were both created. At that time,

Speaker 1 you could not utilize both programs. You had to choose one or the other, and that was it.
Now, PPP was pretty easy. to apply for.

Speaker 1 I mean, banks were crawling over each other, trying to get you to apply for the loan through them.

Speaker 1 And maybe people don't realize this but the sba paid all those banks 2500 commissions for writing those loans so they got paid just to write the loan and then imagine you're a banker and you can loan you know a million dollars to a client and the government's going to come in behind them and pay the loan off and forgive it so you got a really good loan on your books and you got a commission for writing that loan so they made it really simple getting it forgiven you just needed to use it on your payroll you could use up to 40 on operating expenses as well and so that was a really easy path to one of these programs that was created by the CARES Act.

Speaker 1 The employee retention tax credit program was a lot more difficult of a path. You had to, one, figure out, do I qualify? Two, figure out the calculations, how much do I actually get?

Speaker 1 And then three, if I figure that all out, I've got to file for it, which means I have to amend my quarterly payroll tax returns. None of those three things are really simple to do.

Speaker 1 And so if you had to choose an easy road to free money or a difficult road to free money, every business owner chose the easy road.

Speaker 1 I i mean they just didn't even know about the erc didn't even care about it and a lot of people took advantage of that now in december of 20 the consolidated appropriations act passed and it changed the law it basically at that point it said if you did a ppp loan and got forgiven you're now able to also take advantage of erc

Speaker 1 the problem with that legislation passing for business owners is nobody knew it like business owners are busy building their businesses and so that consolidated appropriations act is 2700 pages long so business owners don't have a lot of time to read through legislation let alone the senators that voted on it the representatives that voted on it didn't read it yeah i saw an article where they got that bill at 11 30 at night and the vote was at 7 a.m the next morning so there's no human being i know that could read 2700 pages of legislation overnight and have it all down you know and so obviously they were relying on cliff notes and their team members and all that stuff so there's several government programs r d credits i mean there's a lot of programs that that are available.

Speaker 1 And I think, you know, as with any government program for the most part, it almost seems like they make it as difficult as possible, just typical bureaucracy.

Speaker 1 So I think it discourages a lot of business owners and even CPAs from digging in and going through these programs.

Speaker 1 We have five CPA firms that we are filing or have already filed their ERC credits for them. because we're so highly specialized.

Speaker 1 And they just said, listen, we don't want to take resources away from our audits, from our tax filings to delve into this.

Speaker 1 So my thought process is if a CPA firm is using a specialist, what's HVAC guy supposed to do? What's a garage door guy? Like, what are you guys supposed to do?

Speaker 1 Your accountants are busy doing your payroll, doing your tax filings, getting audits done.

Speaker 1 And bottom line, it's one of those things where I think a lot of these programs, the way you have to go about. applying for them really discourages a lot of businesses, which is unfortunate.

Speaker 1 But that's where, you know, a company like Jordan's can come in and do all the heavy lifting

Speaker 1 you know there's two things there's tax deductions and there's tax credits can you speak a little bit about the difference of the two sure yeah i mean you know when you deal with the employee retention tax credit i i'd almost create a third category and i'll explain why in a sec but tax deduction it is basically deducting from your income So if I have a million dollars in income and I have a $100,000 tax deduction, now I only have to pay tax on $900,000 worth of income.

Speaker 1 I get to subtract that from my income and that's not taxable any longer, which is a good thing. Tax deductions are really good.
Tax credits are better because it's dollar for dollar.

Speaker 1 If I get a tax credit, so $100,000 in tax deduction, there's a percentage of that that basically comes off. So I don't have to pay taxes on.
A tax credit of $100,000 means it's dollar for dollar.

Speaker 1 I get a full tax credit. So if I owed $200,000 in taxes, now I only owe $100,000 if I got that $100,000 tax credit.

Speaker 1 When you look at the employee retention tax credit, the legislation that created that labeled that as what's called a full refund.

Speaker 1 And for most lay people, people that are not into the IRS code, that doesn't mean a lot. You know, it's a refund.
But in IRS code, it's a term of art, meaning it's a legal term.

Speaker 1 And so what that means is a full refund, instead of just getting a tax credit, meaning, oh, I owe a million dollars in taxes, but I got 100,000 tax credit, so I only owe 900,000. That's a tax credit.

Speaker 1 The ERC is a full refund tax credit. And the difference is if I get, let's say, $100,000 in ERC,

Speaker 1 instead of getting a credit for $100,000, I actually get a check from the Treasury for $100,000.

Speaker 1 So full refund is a lot better than just a typical tax credit that you and I, you know, and most of America would be familiar with.

Speaker 1 This is much more substantial, and it comes in the form of a check from the United States Treasury.

Speaker 1 And it's definitely different than the PPP loans where you had to ask for forgiveness on those, you had to use them towards payroll, or the, you know, you could use that percentage towards operating costs.

Speaker 1 This is free and clear. There are some taxable ramifications on it.
It's what's called a reduction in payroll expense, which we work with our clients and their CPAs to account for that.

Speaker 1 But at the end of the day, the funds are free and clear. The owner can use the ERC funds however they deem fit.
So, you know, I kind of look at tax deductions are good. Tax credits are better.

Speaker 1 Fully refunded tax credits are as good as it gets. Let me just understand this.

Speaker 1 You're amending historical tax payments, basically.

Speaker 1 What you declared, you're amending that, and then you get a check from the government. Now, of course, 99% of CPAs say you don't qualify.

Speaker 1 They all say you didn't shut down, you didn't go out of business. In fact, I kicked most home service businesses, were essential.
Everyone was staying at their homes.

Speaker 1 We all did pretty well for the most part.

Speaker 1 And

Speaker 1 the thing is, Chris Copeland just said, we were told if we didn't shut down, we would not qualify for the ERC. That's what everybody's saying.
What's the deal with that?

Speaker 1 Well, I can pull up the IRS guidance. I don't know if I have the ability to share anything.
I'll probably put some people to sleep if I pull up the IRS guidance.

Speaker 1 So, you know, up at the left, you'll see the IRS.gov address. It's IRS.gov.
This is what's called notice 21-20. There are several notices that kind of encompass the ERC program.

Speaker 1 I'm not going to get too in depth into this. There's a keyword called nominal effect.

Speaker 1 And you can have what's called a nominal effect on a nominal portion of the business. I mean, as you can see, this is just 102 pages here.
There's several other notices.

Speaker 1 I mean, you're talking about hundreds of pages of guidance that encompass what does it mean to really qualify? for this program.

Speaker 1 And to simplify this, and it's not easy to simplify hundreds of pages of IRS guidance, but there's three ways to qualify. There's three tests, and it's an either-or test.

Speaker 1 And here's the unfortunate thing for business owners and their CPAs and their CFOs. Almost everyone that's not a specialist looks at the very first test, and that's it.

Speaker 1 And the problem with that, it's almost like if you have three roads that get you home and one of the roads is under construction, your CFO is telling you, you got to go get a hotel, man.

Speaker 1 You can't get home. Uh, whereas Google Maps says, hey, man, there's a detour, there's two other roads.
I can pick one of the other ones, and either one of them will get me home.

Speaker 1 That's the way this either-or test was set up by the legislators.

Speaker 1 So, the first test is what's called a significant decline in gross receipts, and it's what it sounds like: you've got to have a big hit in revenue.

Speaker 1 They always look at 2019 as the baseline year, and they compare 2020 quarters to 2019 quarters, and then they compare 2021 quarters to 2019 quarters and if you had a 50 decline in 2020 versus 2019 you meet that gross receipts test and you'll qualify if you have a 20 or more decline in 2021 versus the same quarter in 2019 you meet the gross receipts test for 2021 and you could qualify now if you don't meet that test

Speaker 1 it's an either or test so you can qualify through either the gross receipts test or a full shutdown, which that's what it sounds like.

Speaker 1 And there's a lot of clients even that were deemed essential that they have non-essential parts of their business. I have a surgery center that, you know, they were obviously an essential business.

Speaker 1 They were performing surgeries, but the state of California would not allow them to do elective procedures.

Speaker 1 So if somebody said, hey, I got sunspots I want removed or whatever, they've got some like that. California was like, no, you don't.
You don't get those removed.

Speaker 1 You're not allowed to do those type of procedures, which hit their business.

Speaker 1 And so a lot of times there's non-essential parts of essential business which it talks about that in the guidelines here it talks about how you know maybe you were open and operating for sure no problem but a governmental order caused your suppliers to shut down you know and there's times where like i said non-essential businesses can qualify you know essential or non-essential businesses and you might have non-essential parts to your business so i don't want to get too in depth like i I said, into the IRS guidelines, but once we look at the three tests, it's like there's a full shutdown.

Speaker 1 If we don't qualify for gross receipts, we look at full shutdown. If we don't qualify through full shutdown, so I owned a gym and the mayor of my city said, hey, all gyms are shut down.

Speaker 1 That's a full shutdown. Where a lot of clients fall into guidance, Tommy, is partial shutdowns.

Speaker 1 And all that guidance I was sharing with you, nominal effect, the nominal portion, I'm going to simplify it for your watchers, your listeners on the podcast.

Speaker 1 There's three checkboxes that we want to check off. The first two are intertwined.
They're kind of interrelated. Number one, was there more than nominal effect?

Speaker 1 To number two, a more than nominal portion of the business. And that's what I pulled up kind of in the guidance.
You can see where it talked about nominal effects and how that is defined by the IRS.

Speaker 1 A nominal portion of your operation is 10% or more of the overall gross receipts in each quarter in 2019 that you're looking to qualify.

Speaker 1 So if I'm trying to qualify quarter three of 2021, I got to go back to quarter three of 2019. And if I'm HVAC, maybe I break out commercial and residential.

Speaker 1 You know, garage door, if I'm commercial, residential, maybe I'm dealing with repairs versus installation. You know, I look at different pieces of the business, different segments of the business.

Speaker 1 Were there segments that were affected more than others? Did I generate a bunch of business from trade shows?

Speaker 1 that could potentially be what we consider an indirect partial shutdown.

Speaker 1 So partial shutdown, a direct partial shutdown, something like a capacity restriction, you know, restriction on large group gatherings, restrictions on being able to keep people in the office at a certain timeframe or having curfews, that would be a direct partial shutdown.

Speaker 1 An indirect might deal with your supply chain. Maybe your business has no limitations whatsoever, but one of the products that you market, you can't get it.

Speaker 1 And so maybe you pivoted, maybe you marketed a different product.

Speaker 1 I had a manufacturing firm that was way up in revenue because they started manufacturing hand sanitizer when no one could get their hands on it.

Speaker 1 No pun intended, but literally hand sanitizer, they couldn't make it fast enough. It was flying out of their facility and they were selling it at a premium.
And I mean, it was gone.

Speaker 1 Governments were buying it. Cities, hospitals were buying it.

Speaker 1 They just couldn't make it fast enough, but they could still qualify because their portion of their business from 2019, hand sanitizer didn't even exist.

Speaker 1 So in 2019, they were manufacturing aluminum aluminum siding. They were doing things that literally their suppliers were shut down.

Speaker 1 So they couldn't get those raw materials to make the siding and they couldn't sell any of it. So either A, go out of business, which is not an option for them, or B, pivot, which they did.

Speaker 1 But the government doesn't punish you for pivoting. So if I check that first box, I've got a more than nominal portion of the business.
You know, maybe it's the aluminum siding business.

Speaker 1 Maybe it's my roofing. Maybe it's my remodels.
And I go, okay, all of those are more than 10%. So I check the box.
Then the second box I check, were they more than nominally affected?

Speaker 1 Are those sectors down 10% or more? Now, if I check off those first two boxes, again, that doesn't mean I'm going to qualify, but that's important that I checked off the two boxes.

Speaker 1 The third box is, are there state, local, or federal governmental orders that led to that decline? And again, it could be direct. or it could be indirect.
And that's what our team digs into.

Speaker 1 And at the end of the day, we create a qualification report. We'll send that report over to the client, to the CPAs, to the client's tax attorneys, and we'll go through it with them.

Speaker 1 And at the end of the day, they know their operation better than we do.

Speaker 1 So, you know, if I'm sending you a qualification report, Tommy, on, you know, A1 garage doors, and we're going through some of the sectors that you took hits in, and we're showing you governmental orders that we feel like affected you or could have affected you because the good news for us is the IRS guidance states any lawful governmental order is deemed fully enforced.

Speaker 1 Even if I ignored it, even if I didn't know it existed, if it affected me and I can point to it and show where my business took a hit in a certain sector, then according to the guidelines, we qualify.

Speaker 1 And again, we don't make the rules, we play by the rules. There's certainly companies in the contracting business, construction business that we go through everything and we kick them back.

Speaker 1 And we just say, you know what? Sorry, Bob, you don't qualify. We went through everything.
You know, we looked at your data and there's just nothing that tells us that you fall into the guidelines.

Speaker 1 Majority of clients, 95, 96, 97%,

Speaker 1 we find areas where it's like, man, you did take a hit. And here's where and here's why.
And we go through it and we end up moving forward on a filing.

Speaker 1 You know, we had a lot of things changed. Number one, we sent all the CSRs home with their computers to work.
We shut down our training center several times.

Speaker 1 We couldn't train guys because we had an outbreak or whatever.

Speaker 1 Couldn't go to a lot of customers' houses because they literally declared on the phone they had COVID.

Speaker 1 So we're going through this process and you guys have some software and you guys have been able to get pretty much more than any other

Speaker 1 from what I hear. And, you know, I got referred to you from Jim and very, very trustworthy, good buddy of mine.
Somehow you're able to get more than all these other companies.

Speaker 1 What's the secret sauce of that? Well, it's expensive secret sauce. So we developed proprietary software.

Speaker 1 There's different rules when you deal in governmental programs, especially in a program as in-depth as ERC.

Speaker 1 And one of the main rules is if you did the PPP loan and got forgiveness, you're not allowed to use the same wages for PPP loan and ERC calculation.

Speaker 1 Now,

Speaker 1 there's a couple ways to ensure that you're not what's called double dipping, meaning you're not using the same wages for both programs. This program is worth up to $26,000 per W-2 employee.

Speaker 1 So again, it's substantial, even with 10 employees, if I get a 20,000.

Speaker 1 This is 2019 to 2020. Correct.
We're looking at wages that were paid from pretty much March 13th of 2020 all the way through September 30th of 2021.

Speaker 1 And 2019 is going to be our base year where we kind of look at the qualification piece, but the wages are pretty much March 13th of 20 through September 30th of 21.

Speaker 1 There are some recovery startup businesses. There's other rules where maybe you could get the fourth quarter of 2021.
There's legislation trying to add that quarter back into the program.

Speaker 1 So there could be up to $33,000 per employee for certain clients or in the future for potentially all clients.

Speaker 1 But at the end of the day, the rules with utilizing the PPP wages to the maximum and the ERC wages to the maximum, the guidance allows you to do that.

Speaker 1 Now, to ensure that you're not crossing over wages, you can do a breakout method, which the entire industry does other than us. The breakout method is basically going, okay,

Speaker 1 here's the dates that I used wages towards PPP loans.

Speaker 1 And from the next day on, I'm gonna start calculating ERC. Now, there's nothing wrong with that.
That is within the guidance. You are certainly allowed to use the breakout method.

Speaker 1 And that's what pretty much our largest competitors use and the smaller competitors use.

Speaker 1 They even take a little more of a shortcut and they eliminate what's called the covered period for most of their clients because it's easy to do.

Speaker 1 Now, the problem with both of those breakout methods that I just kind of quickly discussed is they both leave wages on the table that are available for ERC, but you're not calculating them.

Speaker 1 You're not using them.

Speaker 1 And there's rules that are involved where if I'm an owner of a business, I can use up to $20,833

Speaker 1 towards PPP forgiveness. If I'm a high wage earner, you know, I make well over $100,000 a year or $100,000 or more, I can use $46,154 towards PPP PPP forgiveness.

Speaker 1 I can also, if I have health programs and you've got, you know, some kind of qualified healthcare plan, I can use more of that than the $46,154. I could add maybe $10,000 in healthcare expenses.

Speaker 1 Now I can use $56,000 in change towards PPP forgiveness. Now in ERC, I can only use 10,000 per employee.
That's the most in ERC wage I can use in 2020 for the year.

Speaker 1 And in 2021, I can use 10,000 per quarter for the first three quarters. Now, not to bore everybody with math, but here's my thought.

Speaker 1 If I'm an owner, let's say Tommy owns his company, which he does, I'm not allowed to use the owner's wage.

Speaker 1 If he owns more than 50%, you know, if he's 50-50 with somebody, I can use his wage, but let's say he owns 100% of his company. I can't use his wage for ERC calculation.

Speaker 1 But what I can do is I can use up to $20,833 towards PPP.

Speaker 1 And so what our software will do is it'll grab every penny it's allowed to from Tommy and use it towards PPP forgiveness.

Speaker 1 All the high wage earners, it'll grab anything they earned above 10,000 and use that towards PPP.

Speaker 1 And it'll take as much as it can that it's allowed to according to the guidelines and exhaust PPP as fast as possible.

Speaker 1 It'll take a 401k match and that's not eligible for ERC calculation, but it is eligible for PPP forgiveness.

Speaker 1 So our software grabs everything it possibly can to use towards PPP so it doesn't dig into somebody's ERC potential wages.

Speaker 1 And at the end of the day, we have done side-by-side comparisons and we come in on average at about 20%

Speaker 1 more in ERC calculation. And what that does, we charge a contingency fee.
And it's funny, but we just had a client that we got them 33% more and they were over a million dollars.

Speaker 1 So we got them an extra $350,000. in ERC.
Now, what's funny is our contingency fee at 20%. We were joking with the owner, but he told us, he's like, you know, I did the math.

Speaker 1 He's like, the other company that had run my data he goes if they filed for me for free

Speaker 1 i would still make more money in erc paying you guys 20 to do the calculation and file for me which is the point that's why you want to maximize the program the bottom line is the irs is not going to care if you leave $333,000 on the table that you should have claimed and didn't.

Speaker 1 They're not going to track you down and say, hey, Tommy, you forgot about this other 300 grand. They're just going to give you what you filed for as long as you're within the rules.

Speaker 1 And if you're within the rules and you could get an extra 333,000, they'll send that to you as well. So that's what our software allows people to do is maximize those wages.

Speaker 1 So I completely follow what you're saying. So I think a lot of the listeners out there are going, wait a minute, something doesn't smell right.
I got PPP money. I got almost $2 million.

Speaker 1 I had a financial responsibility to take down and grow the company and take care of employees.

Speaker 1 Probably looking, looking i mean somewhere six seven eight million dollars adam is still working with you guys on getting you the information this isn't like you say hey i sent my call center home use that go get me the money this is there's a lot of stuff i mean it's not easy when you're going through this program you can't just receive this money you got to qualify and

Speaker 1 we've made lots more revenue every year. Every single year, we've grown in revenue and profit.

Speaker 1 and we still qualify and i think that's what a lot of people are saying this can't be true well the ppp couldn't be true this was an economical relief can you just talk us through that because i i know there's a lot of questions in fact cody johnson just said

Speaker 1 you know does it matter if revenue is increased so you know the bottom line is that'll prevent you from qualifying through the revenue test right the significant incline of gross receipts test you won't pass that test but that doesn't disqualify you from the full shutdown test it doesn't qualify you from the partial shutdown test part of of the partial shutdown test, you could look at hours potentially.

Speaker 1 You don't even have to have revenue down. The guidance will tell you if your hours were affected by more than 10%, that'll qualify you for that particular quarter.

Speaker 1 And so some manufacturing firms we've worked with, they had deep cleaning guidelines that their mayors and their county health department put in in place, and they had to shut down production lines for more than 10% of their run hours.

Speaker 1 So normally if they were up for 20 hours throughout the day on a line and they had to do a deep clean for three hours, hour and and a half during the afternoon shift an hour and a half during the evening shift and they ended up losing three hours out of their 20 that's a more than 10 decline on hours which you know irrelevant of what the revenue is i had a client in the ammunitions business and i'll tell this story real quick because i didn't think they'd qualify it's one of our clients in the credit card processing side and he knew i owned an accounting firm and he said you know tony he said um Let me have you guys look into our ERC.

Speaker 1 And I said, yeah, we'll take a look, Chris. And I said, I got to be honest, man, I don't think you're going to qualify.
Like ammunition was really good in the pandemic. And we did their credit cards.

Speaker 1 I don't know what their cash sales were, but I found out. You know, he sent the numbers in and he said, you know, here's our data.
And I sent it into the team.

Speaker 1 They went from $9 million in revenue in 2019. That was their baseline year.
2020, they did 67 million. 2021, they did 127 million in revenue.
That's a big growth, right?

Speaker 1 Like you don't go from 9 million to 67 million to 127 million without massive growth. And you'd think all over the board.
However, they had a sector of their business.

Speaker 1 It was their aluminum casings sector. And it was non-existent in quarter one of 2021.

Speaker 1 So my team of tax attorneys and the compliance specialist, there's actually the forensics accounting team that sees this data. And they start going, what happened here?

Speaker 1 Like there's a pretty big segment of their business in 2019. Like 30, 35% of their overall business was aluminum casings in 2019.
And it was 0% in Q1 to 21.

Speaker 1 And so they reach out to the client and they're going, Chris, what happened here? And he goes, yeah, we couldn't source it. None of the suppliers were available.

Speaker 1 And so then we find out, who are your suppliers? Are there alternative suppliers?

Speaker 1 And we find out pretty much all the suppliers we can get our hands on for this particular aluminum casing that they sold. And we found three of the suppliers.

Speaker 1 And all of them were affected by governmental orders and shut down. And so that portion of their business was decimated.
Now, just because they pivoted, again, that's not a disqualifying factor.

Speaker 1 It's an employee retention credit. The legislation's there, so you kept your employees retained.

Speaker 1 It could have been easy for them to take anybody that was part of that casing sector and just lay them off, but they didn't. And so the spirit of legislation is, listen, you dealt with the pandemic.

Speaker 1 You had areas that were affected. Some maybe more than others, and you still kept these people on wage.

Speaker 1 That's That's what this credit's designed to reward: that behavior.

Speaker 1 I mean, you know, we're blue-collar guys, and I think a lot of people listening are just saying, look, this doesn't make sense, but this shit happens all day, every day.

Speaker 1 These R D credits, I just did a cost segregation study on two buildings. There's this thing called the Augusta tax law that allows you to write off.

Speaker 1 your house for two weeks at the same price of a resort nearby. This is real.
Okay.

Speaker 1 So look,

Speaker 1 Chris Copeland is saying have plumbing companies qualified look my supplier is all shut down they literally like it took six months to get a garage room everybody qualifies if you run through the process you guys got a pretty big a low turndown rate because you're gonna get your you're gonna figure stuff out sure we'll look in we'll dig in you know i mean that's that's all

Speaker 1 is dig in if somebody already applied for it

Speaker 1 Can you check the calculations and redo it? Or is it?

Speaker 1 It's potentially.

Speaker 1 Yeah, we've done that for clients there are clients where we won't do it for depending on how they filed what happened if they got a denial or something like that and why because we offer full audit assistance if we know that they made major errors in the filing which unfortunately some people do again this is highly specialized you know we have accounting firms that we're filing for one of our clients his two accountants told him to use us And the client called us and he said, I asked these guys, why wouldn't you guys just do this?

Speaker 1 And the one CPA, he said, is the guy's name is Brian.

Speaker 1 He said, Brian, he goes, if I'm your family physician and you need brain surgery, he's like, I'm going to give you a pill for the headache, but I'm going to refer you to a neurosurgeon to take care of the surgery.

Speaker 1 Now, the problem with a program like this is you get the family physician that'll do the brain surgery and mess it up pretty bad.

Speaker 1 And what that means is you got a CPA or a CFO that's like, ah, let me see if I can just go through the guidance and just kind of whip this thing out.

Speaker 1 It can be a problem. And if somebody makes errors that we're not comfortable with refiling for them, we'll just kick them back.

Speaker 1 We'll just tell them, listen, we're not comfortable moving forward because we know our audit assistant is going to kick in here. Like, and we're not looking to assist you with audit.

Speaker 1 You know, we will, we prepare every filing like it's going into audit. But if we see massive errors that we know are going to flag, we'll tell the client that we're sorry.

Speaker 1 But, you know, they might have got denied. It might have cost them hundreds of thousands or millions of dollars.
And it's a tough phone call to make.

Speaker 1 But I've had to make it a few times where we just said, listen, these are massive errors.

Speaker 1 Now, there are times where, you know, we have a client that filed, they didn't take advantage of all the wages that were available. And we'll take a look at it.

Speaker 1 You know, we'll take a look at it and we can refile and help them get additional wages like we did for this one client.

Speaker 1 You know, we helped them get an extra $333,000 in ERC funding and that's a big plus for them. And so it's something we're happy to look into.

Speaker 1 As far as deadlines, you know, the PPP had an expiration date.

Speaker 1 And, you know, I got a couple of questions, but let's start with deadlines so yeah this program's based on applying for it which means you amend your quarterly payroll tax returns that's how you claim your erc

Speaker 1 and it's called a 941x that's the form now if you utilize a peo if you have a peo relationship or a third-party agent that files then they file what's called a 941 aggregate x and they file what's called a schedule r that's specific to your company.

Speaker 1 Now, we assist all PEOs with their filings. PEOs don't file for this.
They don't do the math. They don't do the qualification reports.
They do none of that.

Speaker 1 So we do everything pretty much up until the filing for a PEO relationship. And then we send the PEO the calculations, the qualifications, all the data.

Speaker 1 Usually they'll kick it back and say, hey, this is the format we need the data to be in.

Speaker 1 And then our Excel certified professionals will take our data, put it into their format, and then fire it back to them.

Speaker 1 If it's ADP or Paychecks or Minutemen or one of the bigger ones, we already have their format. So we just put it in there initially.
But if it's a smaller PEO, we can do it that way.

Speaker 1 But at the end of the day, you're amending your quarterly payroll tax return. You have up to three years to amend those returns, and they aggregate them on an annual basis as far as the due dates.

Speaker 1 So the last day we'll file for 2020's ERC will be April 15th of 2024. And the last day we'll postmark a filing for the 2021 ERC will be April 15th of 2025.

Speaker 1 Now, that being said, legislation could change and change this program between now and 2025 for sure.

Speaker 1 The infrastructure bill that signed into law on in November of 21 removed the fourth quarter from this program, which was $7,000 per employee was available in the fourth quarter for all businesses that were not what's called a recovery startup business.

Speaker 1 A recovery startup means you started your company after February 15th of 2020. So if you started before that date, then quarter four was gone.

Speaker 1 Now, right now, the Senate and the House both have what's called the ERC Reinstatement Act that's on the floor.

Speaker 1 It hasn't been brought to vote, but there's over 11 senators that have co-sponsored the bill in the Senate, and there's over 95 or 96 representatives that have co-sponsored the bill.

Speaker 1 And if that passes, it will add this fourth quarter back into the program. So it's possible that down the road, there's more money than 26,000.
It'll go to 33,000 that's available.

Speaker 1 But at the same time, it's possible that the government could say, hey, we're going to take away the third quarter.

Speaker 1 So I always tell people, if they did something like that, it's possible that they let you keep it if you already filed for it.

Speaker 1 So anytime the government's involved and they're offering a program like this where it's pretty much free money, I always recommend doing it quickly.

Speaker 1 before Uncle Sam changes his mind, which he's definitely, he can. To change this program takes legislation.

Speaker 1 I mean, it would literally take the Senate, the House, and the President to sign off on it, but that certainly happens.

Speaker 1 So I wouldn't dally if I were you and I thought I might qualify for this, or maybe I should just let these experts see if I qualify.

Speaker 1 And at the end of the day, it's almost always worth letting specialists take a look at your firm and seeing what happens. So you guys charge your fee.

Speaker 1 What happens if they did overturn and said, hey, we want money back? How would that work?

Speaker 1 Yeah, so at the end of the day, if we charge a client, we haven't qualified for six quarters and the IRS says, hey, we only think you qualify for four. And we say, no, no, that's not true.

Speaker 1 We qualify for these other two. And it goes to court.
And the court, let's say the judge says, you know what? The IRS is right here. These two quarters don't qualify.

Speaker 1 At the end of the day, they're going to charge penalties. They're going to charge interest.

Speaker 1 You can never guarantee anything, but for the most part, penalties will get waived because you relied on a third party to file for you. But worst case scenario, it's like, hey, you know what?

Speaker 1 they're still going to charge interest. That'll never get waived unless legislation changes the program, then they could waive interest.

Speaker 1 but but let's say they don't waive the interest 3.2 3.3 percent annualized that'll be there our fee comes back whatever the fee was for those two quarters we return it to the client our fee is a contingency fee it's based on you getting and keeping the erc and so if the irs takes away a portion or all of it whatever they take away our fee comes back to you so at the end of the day you know i looked at one of the banks we filed for i know with you if we get you 7 million you'll probably five or 10x that that over the next 24 36 months and so if three years down the road the irs comes back and wants their money back you probably use their money to turn seven million into 27 million which you know that's

Speaker 1 the irs really i mean i don't even think that's really plausible they're going to come back and say hey we screwed up i yeah i mean listen we file by the book you know the guidance is what it is the rules are what they are If we want to move forward,

Speaker 1 we're prepared to defend our position. And that's the bottom line.
And we feel like if they do scrutinize our position, we're going to win at the end of the day.

Speaker 1 And they might not even take it to court. They're going to look at the guidance.
They're going to look at the qualification reports. And that's really what they're doing.

Speaker 1 They're just gathering more information, taking a look, hey, did you really qualify? Did you cross over any of your PPP loan wages? I can tell you a point of emphasis is going to be aggregation.

Speaker 1 So, you know, if you're watching this podcast or listening to this podcast, and you're sitting here going, well, I have 20 different companies and I have 4,000 employees.

Speaker 1 And there's an employee threshold. If you go over 100, the rules change in 2020.
If you go over 500 and it's full-time employees only and it's the 2019 count that matters.

Speaker 1 So if you've got, you know, you're sitting there going, I've got 20 companies, I've got 4,800 employees. I love Tommy's information, but can I get this?

Speaker 1 The answer is yes, but your rules are way different.

Speaker 1 You have to only file for furloughed employees or employees that maybe you cut their hours, but still paid them full-time wages.

Speaker 1 Maybe you furloughed them and instead of paying wages, you kept them on healthcare programs. Those particular employees may be eligible for ERC calculation.

Speaker 1 But if you're a company that goes, well, I got 4,000 employees, but I'm just going to file for these five companies because they combined have 400, the IRS is going to catch that.

Speaker 1 I'm just telling you, they're going to catch.

Speaker 1 And if you were supposed to be aggregated and you were supposed to be looked at like one big happy company and you had that over 500 threshold and you tried to kind of sidestep it and just file for X amount of companies, there's an emphasis on that.

Speaker 1 They'll find that our team will probably find it, you know, and they'll kick you back and they'll ask for only employees that were furloughed and things along those lines.

Speaker 1 But at the end of the day, if your data is clean, if you're doing things the right way, you're not going to have anything to worry about. You know, you're doing things the right way.

Speaker 1 We're going to be able to defend our position because the guidance is pretty black and white.

Speaker 1 Either you had a more than nominal effect to a more than nominal portion due to a governmental order, whether it was direct or indirect, or you had a revenue decline, or you had a full shutdown.

Speaker 1 And if one of those three things happened, that'll move you into qualification for that particular quarter. And we've got to look at each quarter and kind of look at it separately.

Speaker 3 Hey, I hope you're enjoying this conversation. I just want to take a five-second break to let you know that the tickets for my next Vertical Track event are now on sale.

Speaker 3 Just go to verticaltrack.com to learn more and get a guaranteed seat before the prices go up. Now, back to our interview.

Speaker 1 Let's go into some fast questions. Um,

Speaker 1 IRS audit. Does this highly increase the chances of an audit? I mean, everybody got PPP, but it seems like everybody's going to take advantage of this to just late to the party.

Speaker 1 So what is your take on that? According to the IRS, it's not going to increase your audit chances on your regular taxes or anything like that.

Speaker 1 The ERC filing itself definitely has what's called substantiative consideration. And all that means is the IRS is looking at this a little more in depth.

Speaker 1 Even prior to sending your checks out and stuff like that, like we've had some clients get a quarter kick back just the other day.

Speaker 1 It's funny, but it's not because the IRS kicked back a client's third quarter 2021 filing and they said that you don't qualify because you're not classified as a recovery startup.

Speaker 1 Now, I told the client, I got on the phone with him. He sent us the notice and I said, well, here's good news for you.
And her name was Mary.

Speaker 1 I said, good news, Mary, is you did well during the pandemic, but you qualify. for this quarter.
You do. The bad news is the IRS made an error here.

Speaker 1 You only have to be a recovery startup to qualify for the fourth quarter. Recovery startups still qualify for the third quarter, but also regular businesses qualify for the third quarter.

Speaker 1 So the IRS looked into that filing. They made an assessment that, hey, this company doesn't qualify for the third quarter.
Now, we responded. We replied.
We followed the guidance.

Speaker 1 We actually got it fixed and they got their third quarter. But what that should tell you is they're not just rubber stamping these.
They're looking at them. They're checking the filings.

Speaker 1 They're making sure everything's done the right way initially.

Speaker 1 Then if there's an audit down the road, and we believe that there'll be two to three times more audits on ERC filings than regular tax returns, so maybe you've got a 1% chance of an audit on a regular tax return, you're going to have a two or three percent chance on something like ERC.

Speaker 1 And listen, if you're a bigger client, some of our bigger clients get 10, 15, 20 million in ERC, you're going to be looked at even more.

Speaker 1 Like there's algorithms the IRS has, but it's not triggering an audit on your overall tax returns. It's just saying, let's look at ERC.
And we offer full audit assistance.

Speaker 1 So if there's any questions on that, we'll take care of it. So, not many people know that they can apply for loan forgiveness under the paycheck protection program.
Can you tell us more about this?

Speaker 1 Who's eligible to apply? And when's the best time to apply for loan forgiveness? I mean, for the PPP loan, you should apply for that as soon as your bank or the SBA opens up the portal for you.

Speaker 1 where you can you're allowed to apply for that forgiveness. We can assist with that as well for clients if you haven't already done so.
You have it until the maturity date.

Speaker 1 So until the loan is fully paid off, you have that timeframe to file. But if you don't file by then for forgiveness, you won't get it.

Speaker 1 So,

Speaker 1 this money I can take and I can go by a boat. I got to pay taxes on it, though.
This is not like the PPP that's six months out, probably. The government's not in a rush for this.
Sure, sure.

Speaker 1 So, go over the timetable. How does it get taxed versus PPP?

Speaker 1 And how long does it take? How do the taxes work? And what can I spend it on? Client comes on board. They sign our engagement agreement.
They pay our $2,600 fully refundable deposit.

Speaker 1 Onboarding specialist is assigned to their account. They've got a point of contact basically at Jorn's, a live person that's going to guide them from A to Z through the process.

Speaker 1 They're gathering their docs, making sure everything's in the formats that the IRS really requires it in and we required it to be in to file.

Speaker 1 That might take two to three hours for our client to get all the documents together, maybe five to 10 on big companies that have docs spread out amongst entities.

Speaker 1 Our team, it'll take three to five weeks to go through everything. There's just a lot of teas to cross eyes to dot, no shortcuts when you're dealing with a government program.

Speaker 1 So we're going to do everything by the book. After that three to five weeks, if we say, hey, everything looks good, we think you qualify, we send it over for you to review.

Speaker 1 You say, hey, we agree with your assessment. That is exactly what happened to our business.
That's the areas that took a hit. The data is accurate.
We haven't reconciled any data changes.

Speaker 1 Then we file.

Speaker 1 So we have you sign off on the 941x our cpa is the final signature on the 941x whichever cpas work in your file we have a lot of them and all of the filings are done by cpas on our firm we have no paid preparers that are non-cpas everyone the last signature on your your 941x is going to be a certified public account and then they're going to mail that in certified to the irs at that point it's a big window three to seven months is what we're seeing.

Speaker 1 The newer filings have been quicker, to be honest. We have some filings that are coming out from march that are getting their checks now

Speaker 1 and i'm going to get taxed on this so this is not income but it's what's called a reduction in payroll expense so let's say my payroll was 10 million dollars and i get a million dollars in erc in 2021 i've got to amend my 2021 income taxes and i have to subtract a million dollars from my payroll i paid 10 million in payroll i got a million dollars in erc I wrote off 10 million in payroll, not anymore.

Speaker 1 I got to go back and I can only write off 9 million in payroll. I reduced my payroll expense by the amount of ERC.

Speaker 1 And at the end of the day, if I had, you know, if I had carryover, if I had other write-offs and maybe I took a loss that year, maybe I still took a loss. Maybe there aren't any tax ramifications.

Speaker 1 But if I had a profit and now I've added basically my deduction of a million dollars was pulled out.

Speaker 1 So I've got, let's say, in essence, a million dollars in extra income that I'm not able to write off. Now that's taxable.

Speaker 1 Now that passes through if I'm an LLC or if I'm part of the audit regime, maybe I do an administrative adjustment. I handle it at the entity level.

Speaker 1 We assist our client CPAs with the taxable ramifications. But at the end of the day, it's not earmarked funds.

Speaker 1 So if it passes through to me as an owner and it says, man, as an owner, I owe $100,000 and more in taxes than I did.

Speaker 1 The company can just send me $100,000 to pay my tax bill from the ERC funds because it's not earmarked. We can use it however we want.

Speaker 1 So one of the things with the PPP money that I remember specifically is private equity was not allowed to use the money.

Speaker 1 I don't know how exactly that worked, but if you were involved with a PE company, is there any type of blockages, C-Corp, S-Corp, LLC, any type of PE money? Is there any blockages that you know of?

Speaker 1 The only entities that we are not allowed to file for if they qualify would be government. And it's U.S.
government, meaning your cities, your counties, obviously your state governments.

Speaker 1 They are off limits for this. The city police department would be off limits.
Anything that's completely controlled. Now, what's funny is public schools are available.

Speaker 1 Like you could do public schools. You can do charter schools.
You can do junior colleges, universities. Tribal governments are up for grabs.
Like, yeah, you can do those.

Speaker 1 PE doesn't matter. PE is good on this one.
Anything. PE is fine.
You know, hedge funds could file. How they would qualify would be interesting.
You know, it just depends on how they affect it.

Speaker 1 You know, was there, did they have live offices, things like that, where their people couldn't come in, couldn't go to market, things like that. That could be a potential qualifying factor.

Speaker 1 So Adam said, we had supply chain challenges, of course, but that didn't cause any product or service lines for us to decline in revenue year over year.

Speaker 1 Might we still qualify from the supply chain perspective? Let me just say one thing here, Tony.

Speaker 1 You guys are going to go through a thousand different ways, left, right, down the middle, each and every way.

Speaker 1 And you're going to exhaust so many things, so many things we're not even talking about. It doesn't need to be supply chain.

Speaker 1 It doesn't need to be, well, from my perspective, you've got 200 professionals that know exactly what they're asking and what they're doing to make this happen. Sure.

Speaker 1 If this were me and I'm thinking about doing this from a home service perspective, I would have racked my brain talking to people. Like you said, I wouldn't talk to my general doctor about this.

Speaker 1 I'd at least call you. Sure.
Run through some real life questions because you're still going to qualify if you just know 80 different ways.

Speaker 1 If you meet the qualification guidelines, however you meet it, you meet it.

Speaker 1 And I even had a conversation with my tax account because we had an aggregated company, meaning they had like 10 entities, nine of them in Florida, one in California.

Speaker 1 And the aggregation rules meant that the California restrictions qualified the Florida locations.

Speaker 1 And I'm talking to our tax attorney, one of them, we have several, and he goes, Tony, he goes, we don't make the rules, we play by them. And it's like, it seems kind of crazy, but that's the rules.

Speaker 1 And so, as Tommy said, it's probably almost always

Speaker 1 worth having a specialist and our team of specialists dig in and let us take a look. And the more data you can provide us, the better.

Speaker 1 And listen, at the end of the day, yeah, there's three, four, 5% of our clients where we go through everything and we just kick it back.

Speaker 1 We just say, you know what, your CPA was right or your CFO was right. You do not qualify.
But man, the upside on this.

Speaker 1 If you've got 100 employees and you're looking at $2.6 million or $2 million or $1 million, or you got 10 employees and you're looking at 100,000 or 200,000, it's almost always worth taking a shot.

Speaker 1 Let our team do all the heavy lifting. Maybe you spend two hours getting us the data.
We spend three to five weeks telling you, you're right, you don't qualify.

Speaker 1 It's my team that really put in all the heavy lifting and the legwork and ended up technically working for free for you. They didn't work for free for us.
We still pay them.

Speaker 1 Unfortunately, we still have to pay them. So you guys charge a fee up front, though.
There is a fee to get going. So we have a fully refundable deposit of $2,600

Speaker 1 for two reasons. One, we initially did it for for free and it was really tough getting documents from people.
It seemed like if they didn't have anything invested,

Speaker 1 they just took their time, which slowed us down. We want to file all of you within four hours, you know, get us all as quick as we possibly can.

Speaker 1 But at the end of the day, you know, we can only move as fast as the client's documents and data is coming in. So the 2,600 really, I think it invested the client in the process.

Speaker 1 And then the cash flow, you know, bottom line, we board 200 plus clients a week. You know, our payrolls, millions of dollars a month that we send out.
CPAs, tax attorneys are not cheap.

Speaker 1 We pay above market. Our average CPA makes $100 to $200 an hour.
The average CPA in the marketplace makes 50 to 60 an hour. Our high-end CPAs make $300 to $400 an hour.

Speaker 1 And the bottom line is the reason we pay the rates we pay. for the high-level folks is we're never going to lose them.

Speaker 1 Like there's no one, the biggest accounting firms on the planet are never going to outpay us. They're just not.
These people are extremely valuable for us.

Speaker 1 So that 2,600 definitely helps us with cash flow management and keeping these high-level folks on board, which I think at the end of the day, the clients are going to appreciate that we're crossing the T's, we're dotting the I's.

Speaker 1 We have extremely high-level specialized professionals that are working on their accounts from start to finish.

Speaker 1 So Cody had a great question. So we are currently in the process with you at Jordan's.

Speaker 1 If we answer something the wrong way, will y'all try to flag that for us? This is some pretty technical stuff. Sure.

Speaker 1 Listen, the questionnaire is kind of, hey, this is giving our team an idea of where to dig in.

Speaker 1 But at the end of the day, when it gets into the qualification piece, Cody, our team's going to be working with you directly.

Speaker 1 If our team has questions, if they're not sure about something, they're going to ask you. Because at the end of the day, you know your operation better than us, better than the IRS.

Speaker 1 All we can do is take your data, take the orders that were in play.

Speaker 1 There's over 12,000 governmental orders that are documented by our firm uh you tell me the zip code i'll tell you how you were affected what city ordinances were in play what county commissions health commissions what governors orders were in play what the the federal travel restrictions potentially hit you on and so we'll dig in but if you do something off

Speaker 1 I can almost guarantee you my team will catch it.

Speaker 1 Like if there's something wrong with your payroll, if there's non-taxable reimbursements that were listed in your payroll, but they weren't broken out. So we didn't know that they were non-taxable.

Speaker 1 We'll see it. That's what you pay us to do.
You just send us the data. If something's not adding up, we'll come back to you and say, this doesn't add up.
This doesn't look right.

Speaker 1 Can you dig in a little bit more and explain this to us? And so that's really what you're relying on our team to do. And we'll do our job.

Speaker 1 So I had a question here from Spencer. What if you started your company in 2021? So no 2019 records.
Does it still make sense to give you a call? Sure. Yeah.

Speaker 1 That's what's called the recovery startup business. Yeah.

Speaker 1 recovery startup businesses now there's there's different rules you know the most you could qualify for as a recovery startup would be 50 000 in quarter three of 2021 for erc and 50 000 in quarter four of 2021 for erc and that's it if all you qualified for was as a recovery startup that's a hundred thousand in erc potential on the table now if your wages are way lower than that we have recovery startups that get 20 000 but at the end of the day you could still get money uh you could still get funds and it's possible depending on the state you were in you could potentially qualify as a regular company and a recovery startup.

Speaker 1 If you started right at the start of 2021, I mean, it's possible that in Q2 of 2021, there was an hourly restriction that hit you in New York or in Illinois or in Washington or in California, some of the more restricted states that could qualify you.

Speaker 1 And then you can flip from a regular business to a recovery startup for the next two quarters. And so we have clients that do that.
It's certainly worth having us take a look.

Speaker 1 So we're going to have Nolan, I guess.

Speaker 1 Is that who contact Nolan on this? I believe so. Yeah, I think so.
So,

Speaker 1 get your ERCRefund.com.

Speaker 1 So, guys, if I were you right now, I'd be texting Nolan. I think, so, so, Jim, Jim is kind of working this stuff with you and just trying to collect all the documents, but Jim's my buddy.

Speaker 1 So, this whole thing is just like the PPP. If you got money in the PPP,

Speaker 1 what are you finding as far as PPP? So are you finding that if it, let's just say you got a million back from the PPP, what is that usually?

Speaker 1 And I know this is not an exact correlation, but what is that usually? Is it usually

Speaker 1 if somebody qualifies through the whole program, six quarters, you'll see them get more in ERC than they got in PPP.

Speaker 1 And that number is as far as double or triple sometimes. Sometimes, yeah, quite a bit more.
And again, the bottom line is every client's different.

Speaker 1 Every client is somebody we have to look at as an individual. But at the end of the day, if you play the numbers and the averages, this is substantial.
Like it is substantial.

Speaker 1 There's a lot of funding here. And if you don't go get it and you qualify and you should have, but you don't claim it, Uncle Sam will find some way to spend that money.

Speaker 1 And it's probably not going to be as positive for you, your family, your community, your business, your employees as if you got your hands on it.

Speaker 1 And so, you know, it's something that we're passionate about educating business owners about this program because it's so underutilized.

Speaker 1 The IRS management, you know, according to Forbes article that came out not too long ago, they believe that about 70 to 80 percent of small and medium-sized businesses, the IRS management themselves believe 70 to 80 percent of small and medium sized businesses should claim ERC for at least some portion of the program.

Speaker 1 And as of about a month ago, it was under 5% of those companies have actually filed.

Speaker 1 And unfortunately, at the end of the day, you know, as great as your podcast is and as big as the reach is, as great as our marketing teams are and spreading the word, unfortunately, as great as your team and my team can do to spread the word about this, Tommy, there's going to be billions of dollars that just end up sitting in the treasury and never get claimed.

Speaker 1 And that's just how it worked, unfortunately. Well, I just, you know, a lot of people are skeptical, and that's fine.
I don't really care. I'm out there.
I believe this is real.

Speaker 1 I think you answered a lot of difficult questions, and it's on the website. The word is nominal effect, and you guys help spell that out.

Speaker 1 You've worked with a lot of clients, you're taking 200 on a week. So, Nolan's phone number is is 480-269-4692.
480-269-4692.

Speaker 1 It's a text message or call him.

Speaker 1 And then you've got the get your ERC refund.com.

Speaker 1 So this is only W-2 full-time employees. It can be part-time, full-time.

Speaker 1 Can it be

Speaker 1 1099, though? It cannot be 1099. It's got to be W-2.

Speaker 1 And so our targets usually 10 employees to 500 for the regular rules. Anything above above 500, the rules change, but we can talk to them and see if they have some employees that qualify.

Speaker 1 And that employee count is full-time only in 2019. I just had a farm that we qualified, 279 full-time employees, 3,200 and change part-time.
The way the calculation works.

Speaker 1 In the IRS, we have a sheet that shows you how to calculate your full-time count for 2019.

Speaker 1 But at the end of the day, if I work for you for one hour and then quit and you're qualified during that period that you paid me that one hour, then that one hour I can calculate towards the RC for you.

Speaker 1 Yep. So if you guys want to learn about this website, homeservicexpert.com forward slash

Speaker 1 T is in Tony and then Swantech, S-W-A-N-T-E-K.

Speaker 1 I did put the phone number and I put all this stuff into this thread on the Facebook group so you guys have it. This will be live.
We're going to get this one kind of jumped up.

Speaker 1 So I'm a big fan of this. I'm a big fan of you.
I love when you spoke at the event. I got a pretty good bullshit meter and you just, this is real.
I mean, it's on the irs.gov.

Speaker 1 I think a partial shutdown, you said there's 12,000 ordinances that affected and caused a partial shutdown. I mean,

Speaker 1 most people say if it's too good to be true, it is. I mean, I had a client about a week ago.
He said, this sounds too good to be true. His name is Mike.

Speaker 1 I said, Mike, I said, did you do the PVP loan program? He's like, yeah. I said, how much did you get? And he ended up getting like 2.3 million or something.
He's a big company.

Speaker 1 And I said, did you get forgiveness? He goes, yeah, they forgave every cent. I goes, was that too good to be true? He said, yeah.
And I go, well, the government is doing it again.

Speaker 1 You know, the CARES Act created PPP loan. It created ERC.
Now, again, that doesn't mean you're going to qualify. You might be skeptical.
You might say, I don't think we're going to qualify.

Speaker 1 And you could go through it and we could tell you, yeah, you know what? You don't. But at the end of the day,

Speaker 1 if your CPA says you don't qualify and your CFO says you don't qualify and they're wrong, and and I'm just telling you, they're usually wrong.

Speaker 1 And even for half a quarter, we realize, man, this is by the book, black and white, you qualify, here's why, for these four weeks or for these seven weeks.

Speaker 1 And that creates, you know, $72,000 in ERC just for your company. That's $72,000 you didn't have before.

Speaker 1 Is it worth taking two or three hours of your team to dig in and see if you could make an extra 70,000 or extra 10,000 or extra 700,000 or an extra 7 million, whatever the number is.

Speaker 1 I can promise you, it's almost always worth having a specialist, whether it's us or another firm. There's only a couple really good ones that are out there.

Speaker 1 None of them have the proprietary software to get that funding maximized like we do.

Speaker 1 And we've gone head to head with those other companies and we've gone head to head with their calculations and come out ahead every single time.

Speaker 1 But at the end of the day, it's worth having a specialist look into you. It's worth having our team of experts figure out: is there an area where you fall under the guidance?

Speaker 1 And if the answer is no, it's no, and we give you back your deposit, there's no risk financially. But if the answer is yes, the upside's massive.

Speaker 1 So, you said it's the IRS. What was the code if someone wanted to do some just regarding the read it themselves?

Speaker 1 It's boring, but then you know, if you go to the IRS website, and I'll share my screen one last time, I guess I didn't plan on doing this, but like, if you go to the IRS website, it says the page is not current, you know, and it does that.

Speaker 1 And it says, okay, so I've got to look at new laws extend. And there's all kinds of information that you can go through and you can find out, you know, what's going on.

Speaker 1 And there's unlimited rabbit holes that you can go through for more information. So here's the page that you're really going to look for.
It's the irs.gov slash newsroom slash COVID-19-19.

Speaker 1 It's a long deal, but you're looking for the COVID-19. This page is not current.
All of the pages are going to tell you it's not current.

Speaker 1 Now, at the very top, find current guidance on the employee retention credit for qualified wages paid during these dates here.

Speaker 1 So if I'm looking to qualify somebody after March 12, 2020, before January 1 of 21,

Speaker 1 after September 30th, 21, before January 1 of 2022. So I can look at notice 21-65 and it's going to bring up 10 pages of guidance.
This is accurate guidance for that timeframe.

Speaker 1 If I want to look at the original guidance, which holds a lot, like a lot of this guidance from notice 21-20 will carry over into 2149 and 2165. So 21-20 is your 102 pages.
Again,

Speaker 1 you can read through this, but it's not just 20 pages or 102 pages. Sorry, because if you look at non-essential businesses, if you look at a nominal effect, so if I just type in nominal effect,

Speaker 1 there's 13 times that's mentioned. So that's discussing areas of your business that maybe your overall revenue is up, but you had more than a nominal effect on your business operation.

Speaker 1 It gives you examples on how that can qualify you.

Speaker 1 A governmental order that results in a reduction in employer's ability to provide goods or services in the nominal course of the employer's business of not less than 10%

Speaker 1 will be deemed to have more than a nominal effect. So that's telling me if I'm down 10% or more,

Speaker 1 I took a hit. I took a more than nominal hit.
Now, again, that doesn't mean you qualify.

Speaker 1 There's more check boxes according to this guidance that we've got to still check off, but that's where our team can dig in. And that's where we can look at, you know, did you have those effects?

Speaker 1 And at the end of the day,

Speaker 1 it's not just this guidance. So if I look at, you know, an IRS code, sections 41, 45A, 45P, 51, 1396 of the code.

Speaker 1 So, the reason CPA firms tell us to do this is because you can't just read these 102 pages.

Speaker 1 You've got to go, okay, I've got to go look at section 3111A of the IRS code to deal with some of these rules here. I've got to look at the ficker wages.
I've got to look at railroad retirement.

Speaker 1 I've got to look at all these footers, which might lead me to aggregation rules. That's section 52 of A of the IRS code.

Speaker 1 So if you don't know aggregation rules and you're not certain, even though it mentions it here, you better go open section 52A and B of the IRS code or section 414M or O of the IRS code, and you better understand it if you have multiple entities.

Speaker 1 And so this is why CPA firms, and I'm going to stop sharing because, like I said, I could go down a rabbit hole and I could do 20 hours of this.

Speaker 1 I'm not going to do that for you guys because it'll bore the hell out of everybody. But at the end of the day, it's not just hundreds of pages of guidance you're reading through.

Speaker 1 You've got to go through the IRS code itself when it references the code. And the good news for our clients is we've done it.
We've done it.

Speaker 1 We've read all 2,700 pages of the infrastructure bill, of the Consolidated Appropriations Act, of the CARES Act, the thousands thousands of pages of legislation. We've all read it.

Speaker 1 Like our teams have read it. Our teams have gone through all of the guidance, all of the IRS codes that deal with the guidance.
So you don't have to.

Speaker 1 So, does a check just show up in the mail, or once you submit it to the IRS? Yeah, the checks will come in the mail. You'll get a notice first,

Speaker 1 hopefully. About 90%,

Speaker 1 all of clients are supposed to get a notice from the IRS first. About 90% of them do.

Speaker 1 About 5% of them, the check beats the notice.

Speaker 1 And about 5% of them, the notice never shows up and just the check shows up. And so you get a check.
It is three to seven months out from the time we mail the filing in certified to the IRS.

Speaker 1 If you qualify for four quarters, you'll get four different checks. Not only will you get the check for the amount of the employee retention credit we file for, you will get interest on top.

Speaker 1 The IRS classifies this program as an overpayment, meaning you paid too much and they give you interest on what you paid too much on.

Speaker 1 So if you qualify for a million, you know, and let's say you had five checks that were going to be 200,000 each, each of those five checks might be $201,318. Then another check's $201,897.

Speaker 1 There's going to be interest on top. Now, we don't charge a fee on the interest.
Our contingency fee is based only on the amounts we file for you, but you will get a check from the treasury.

Speaker 1 They will not allow you to direct deposit. They won't allow us to e-file these filings.
They have to be be mailed in and they have to be sent to you via check.

Speaker 1 That's the government for you. That's the way the program works.
That's the only way we can do it. And as far as your fee, I wait to get the checks and then I owe you that money.
Is that how?

Speaker 1 Yeah, you don't owe us our fee until you get the checks from the treasury. Technically, you know, each check as it comes, we can invoice you, but we normally won't.

Speaker 1 The first check, when it comes, for the most part, within three or four weeks, all the checks will arrive. So a lot of times we'll just invoice you and say, hey, when all the checks come, pay us.

Speaker 1 If there's there's a check that's delayed or something, we'll say, you know, just pay us on these four and we'll wait on the fifth check and do that.

Speaker 1 But our money is not due to us until you receive your check from the treasury. And we're going to credit your deposit on the back end.

Speaker 1 So, whatever you owe us, we'll subtract the $2,600 from that amount. So, that goes towards your contingency fee at the end of the day.
I mean,

Speaker 1 if you guys don't take your cell phones out right now, 480-269-4692, Spend the three hours it takes to get this information over to Tony's team. He's got a couple hundred people to digest it.

Speaker 1 You go through Nolan, I guess. So I just think this is mind-blowing.

Speaker 1 I've seen a lot of people just, they listen to their CPA, but the CPA really, I'd have your guys watch this and just see what Jordans comes up with.

Speaker 1 Because once it's done and you see the real reasons. just look at what they give you and then take that to your cpa rather than take it

Speaker 1 I just think a lot of people are just saying, no way, no way, no way. My CPA said no.
I talked to a lawyer. This is complicated.
You're a specialist.

Speaker 1 Take it to them after you qualify before you submit it. And they'll show you exactly why.

Speaker 1 If you're a bigger firm, if you've got, you know, 50 or more employees and you want to put us on with your CPA right away.

Speaker 1 We'll set up a call and we'll talk with your CPA. No problem.
I've had several CPAs that were absolutely certain their client wouldn't qualify.

Speaker 1 We literally did a Zoom, shared the guidance with them, shared them where they might qualify, and the CPA apologized to their client and told them to move forward with us.

Speaker 1 Because, I mean, it was a $1.2 million mistake if they wouldn't have filed. And so, you know, we're happy to chat with tax attorneys.

Speaker 1 I mean, some of our larger clients, like I said, are getting $15 to $20 million in ERC. We talk with a lot of tax attorneys.
We talk with a lot of CPAs internal.

Speaker 1 We talk with their outside CPA counsel as well. And bottom line is, we're right.

Speaker 1 We're right. This is all we do.
We've written $2.2 billion in this program. You know, the biggest accounting firms on the planet won't write 20 million in this program for their clients.

Speaker 1 And so it's the difference between the general practitioner and the neurosurgeon. Like, if you need brain surgery, you do not want your family physician digging in with a scalpel.

Speaker 1 Like, you better get a specialist to know exactly what they're doing. And with the amount of money that's on the line here, I highly recommend you get a specialist to take a look.

Speaker 1 And your CPA might be right, your tax attorney might be right. But if my doctor says I need brain surgery, I'm probably still going to a second doctor and going, Do I really need brain surgery?

Speaker 1 You know, like if you've got millions of dollars on the line or hundreds of thousands on the line and your CPA says no, you might want to get a second opinion and have somebody that this is all they focus on to really tell you yes or no at the end of the day.

Speaker 1 This is one of those things, Tony, that

Speaker 1 you know, it was interesting because I talked to Bill Hillisted about it, and he's he's like, my nephew does hair in Scottsdale and he's going to qualify. Like, this is the one podcast.

Speaker 1 I enjoy my podcast. And, you know, we get a lot of listeners and I appreciate every one of you.
Last month, I think we set a record around 40,000 downloads. Do me a favor.

Speaker 1 And if there's someone out there, listen, you could get your CPA on the phone with this, guys. This is something you should share.
Okay. I'm just saying

Speaker 1 the government, this is something they deemed. And I think it's a, you got a responsibility.

Speaker 1 If you got employees and you're going to put it back into the business to use this money, I can't stress it enough. So share this.

Speaker 1 I don't ask you guys to share the podcast, but if you could, I really think Tony's the real deal. I think get him on the phone.
I think line up an appointment.

Speaker 1 And I'm telling you guys right now, it's going to be freaking nuts. This is real money in your bank account.
You guys could grow your businesses. This is monster.
This is life-changing for some of us.

Speaker 1 So one of the questions I always ask, is there a book that you really stood out in your life that

Speaker 1 go back to just the normal podcaster. Is there a book that really helped you kind of start all your businesses and be successful in life? Sure.

Speaker 1 Rich Dad, Poor Dad, Robert Kiyosaki, one of the first books. A family friend of ours that owned one of the largest cattle auctions or the largest cattle auction in the United States.

Speaker 1 And so they owned that auction. very successful.
Referred that book to my mom, said, hey, you need to have Tony and and Jennifer, that's my sister. You need to have your kids read it.

Speaker 1 And it changed the way I

Speaker 1 thought about

Speaker 1 earning income and profits versus wages, being a business owner versus an employee, being a big business owner versus a small business owner.

Speaker 1 It was philosophies that unfortunately I think should be shared in school with us, but there never are. Our parents, you know, my dad was a railroader.

Speaker 1 My mom was a substitute teacher, you know, not entrepreneurial minded, not, you know not some big business owner or big mogul or anything like that we did all right you know railroading and and substitute teaching but that book just gave me a different outlook on profits versus wages on on creating income and creating leverage in my life and so i i always highly recommend you know people check out rich dad poor dad if they haven't had the chance to do so

Speaker 1 well you know a couple billion 400 200 million i think you've done pretty well for yourself tony Obviously, you've got a lot of bills. I get that.
That's not all.

Speaker 1 So, the last thing I do on the podcast as we close out, and I'd like you to just, we hit on a lot of stuff, but what's the final message to the listeners?

Speaker 1 Obviously, take action, but any other thoughts on this that we didn't hit? Yeah, I mean, listen, I think you put it great, Tommy.

Speaker 1 It's one of those things where I do look at this like it's our duty as a firm to educate business owners about the program.

Speaker 1 We really truly have a philosophy that there's a lot of government programs, I believe, that are out out there where a lot of the funds don't get to the intended recipients.

Speaker 1 If you guys can, you know, understand

Speaker 1 where I'm going there.

Speaker 1 You know, like they just somehow the funds end up in the DC Beltway, somehow the funds end up in Afghanistan, somehow the funds end up not helping the people that they were supposed to help.

Speaker 1 The PPP loan program, the ERC program are two of the governmental programs that I know of. The R D tax credit program, and there's a few of them, where the funds go where they need to go.

Speaker 1 And I feel like it's our duty as a firm to educate businesses about the program.

Speaker 1 Now, again, whether you move forward with us or not, that's up to you at the end of the day, but at least we can give you enough information to make an educated decision.

Speaker 1 And I think from your standpoint, as Tommy mentioned, as a business owner, you should see it as a fiduciary duty to your business, to your employees, to your community to take a look at this program.

Speaker 1 and if you do qualify our goal is to get these funds out of the treasury's account and into your business account where they truly belong so you can make that impact on your company on your employees and on your community with that funding and and really go out and build your business bigger than than maybe you were going to be able to prior to claiming the erc funding so i i think tommy you know really puts things in kind of a black and white perspective.

Speaker 1 And when he says, hey, this is something you should take advantage of, Tommy has so much success. He doesn't need to sit here and educate you guys on a program that he's already taking advantage of.

Speaker 1 He doesn't need to twist your arm.

Speaker 1 Whether you take advantage of ERC or not will have zero effect on Tommy's life, will have zero effect on Tommy's business and will have zero effect on Tommy's success.

Speaker 1 But here's one of the best things I can give is advice.

Speaker 1 Find people who are more successful than you.

Speaker 1 Figure out what they did. And if they're willing to share with you and teach you the things that got them to where they got to, match and model.
Do what they do. Eventually you can get what they got.

Speaker 1 Maybe you won't get it as big as Tommy, but if we screw it up sideways and you build a company that's a tenth of the size of Tommy's company, you're going to be a hell of a lot better than you are now when you're starting out.

Speaker 1 And if somebody that's as successful as Tommy Mellow is telling us, we should look into a program like this. I don't ask a lot of questions.

Speaker 1 You know, if Tom Brady tells me to run a fly route, I run a fly route.

Speaker 1 If I'm in the HVAC space if i'm in the garage door space if i'm an entrepreneur if i'm owning a business and tommy mellow who has the the largest garage door company on the planet he's got massive amounts of followers that use him as a mentor and a coach if he's giving me the play to run i don't ask a lot of questions i run the play and if you're listening to this podcast obviously you have a lot of respect for tommy and you're wanting to learn from someone that's done it And that's who you're listening to right now.

Speaker 1 So probably the best advice I can give any business owner is when you've got a mentor like Tommy that's willing to take time out of his evening to share information with you guys in a podcast, take it serious, take advantage of it, and utilize the knowledge that you're gaining tonight to help you grow your business tomorrow.

Speaker 1 I just have a few comments, and I really appreciate that. Right now, we are working with the military on a program that is ridiculously badass.
And I'm not there yet,

Speaker 1 but it will be a massive tax reduction. Great thing for our troops, the people that are fighting abroad for us.
An amazing way to grow the business, amazing way to help them cope with civilian life.

Speaker 1 There's things out there that I look, I've looked into grants for training people. In certain states, we qualify.
We get money for training people a new trade. These things are out there.

Speaker 1 There's a great book called The Clippership Strategy, and it explains when the government. It gives money in certain areas and you get to learn how to get that money.
It's the Clippership Strategy.

Speaker 1 In the 1860s, there happened to be this thing called the gold rush. And their clipperships could go from New York to California in three days.
And they could make what's called arbitrage.

Speaker 1 They bought it for a buck. They sold it for five bucks.
Whatever it was, shovels, clothes, boots, gloves. So this is this.
This is a program that the government is choosing.

Speaker 1 And luckily, we're getting the word out there. Guys, just please share this for me.
I got the number on here. Tony, you're amazing, man.
I got to tell you, you're very intelligent.

Speaker 1 you should have been a lawyer

Speaker 1 that was an insult i'm kidding no worries man but this was great i think you really great advice go get your erc money it's out there it's waiting for you tony's gonna get you hopefully 33 g's per w2

Speaker 1 trust me

Speaker 1 let's see if the senate and the house come through for us but that's the plan

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