Archives for August 2021

Afghanistan’s Mineral Resources are Estimated to be Worth $1 Trillion to $3 Trillion

August 23, 2021 by Channelchek Leave a Comment

The Taliban Assumes Stewardship of Afghanistan’s Rich Strategic Mineral Resources

Besides leaving the Taliban billions of dollars of military equipment, including aircraft, grenades, firearms, and helicopters, the United States is exiting a country with a rich mineral endowment in terms of metals, minerals, and gemstones and providing an opening for other countries such as China and Russia to extend their influence in the region.

According to an article published by The Hill, the United States provided Afghan forces with 7,035 machine guns, 4,702 Humvees, 20,040 hand grenades, 2,520 bombs, and 1,394 grenade launchers from 2017 to 2019 based on a report from the Special Inspector General for Afghanistan Reconstruction (SIGAR). The Taliban has taken possession of U.S. military equipment following the recent fall of the Afghan government.

Afghanistan is Rich in Natural Resources

Like many countries in the world with long histories of political instability and corruption, Afghanistan has significant natural resources, including gold, silver, platinum, copper, iron, chromite, lithium, uranium, and rare earths. Additionally, the country is a rich source of gemstones, including, emeralds, lapis lazuli, rubies, sapphires, and turquoise. According to a 2007 preliminary assessment of non-fuel mineral resources by the United States Geological Survey (USGS) in cooperation with the Afghanistan Geological Survey, Afghanistan may hold 60 million metric tons of copper, 2.2 billion metric tons of iron ore, and 1.4 million metric tons of rare earth elements (REE). Based on the study, Afghanistan’s mineral deposits were estimated to be worth nearly $1 trillion. Some now believe the value could be upwards of $3 trillion.

A map of Afghanistan’s mineral wealth, sourced from the U.S. Geological Survey report is illustrated below.

Map of Mineralized Areas in Afghanistan

Source: Preliminary Assessment of Non-Fuel Mineral Resources of Afghanistan, 2007, U.S. Department of the Interior, U.S. Geological Survey, October 2007.

Responsible Mining May Hold the Key to Afghanistan’s Future

Many believe that if Afghanistan’s mineral resources were developed and extracted effectively, the country could improve its economic fortunes while lowering its dependence on foreign aid. Illegal mining, most often done irresponsibly, is common throughout Afghanistan to raise money for terrorists, armed militias, and insurgency groups. A stable government with sound policies could promote economic growth by fostering a healthy mining industry. However, with an undeveloped mining industry or infrastructure in place, it could take many years for Afghanistan to fully exploit its mineral wealth.

Who Will Partner with Afghanistan?

In late July, Chinese Foreign Minister Wang Yi met with a delegation led by Taliban leader Mullah Abdul Ghani Baradar in Tianjin, China. Shortly following the Taliban’s take-over of Afghanistan, China’s foreign ministry signaled that it was ready for friendly cooperation with Afghanistan. China dominates the rare earths market globally. Russia has been engaging with the Taliban for years and is expected to seek opportunities to extend its influence.

Take-Away

Many of the world’s richest mineral resources are found in countries characterized by widespread poverty, extreme wealth inequality, unstable political regimes, and corruption. It should not be surprising that for those that hold democratic elections, populist or left-leaning candidates promising greater wealth equality and social programs are gaining more traction in countries like Mexico and Peru. This may provide an opening for countries like China that have instituted global development programs, such as the Belt and Road initiative, that provide financing and aid in exchange for greater influence. The lesson in Afghanistan may be that economic and intellectual resources aimed at economic development may have a more durable impact than seeking purely military solutions. In the case of Afghanistan, it may be too late.

The Fundamentals of Smart Contracts

August 20, 2021 by Peter Spoleti / Vertex Markets Inc. Leave a Comment

Smart contracts are fundamentally automated agreements, stored on a blockchain, between the contract creator and the recipient. They run when predetermined conditions are met. They function to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without intermediary’s involvement or time loss.

Written in code, this agreement is baked into the blockchain, making it immutable as well as irreversible. Popularized by the world’s second most popular blockchain, Ethereum, now adapted by others. Smart contracts have led to the network’s array of decentralized applications (DApps) and other use cases. They can also automate a workflow, triggering the next action when conditions are met.

Key benefit of blockchain networks is the automation of tasks that traditionally require third-party intermediary. For example, instead of needing a bank to approve a fund transfer from client to freelancer, the process can happen automatically, thanks to a smart contract. All that’s required is for two parties to agree on one concept.

Another example could be a regulatory group and the citizens it represents debating a law. If these two parties come to an agreement in a blockchain-based system, the law would be put into place via a smart contract. Maybe users could read about the new law via a legal DApp or interact with it in another blockchain-based way.

History of smart contracts

Believe it or not, smart contracts long predate blockchain technology. While Ethereum, introduced in 2014, is the most popular implementation of the protocol, cryptographer Nick Szabo established the idea in the 1990s.

Back then, Szabo conceptualized a digital currency called Bit Gold. While the asset was never actually launched, this Bitcoin predecessor highlighted the smart contract use case — trustless transactions on the internet. If Web 1.0 was the internet itself and Web 2.0 the presence of centralized platforms, then Web 3.0 is the trustless, automated, user-powered version of the digital space.

Many, including the Ethereum website itself, compare smart contracts to a vending machine. Vending machines serve the purpose of a vendor providing the user with a product, without the need for an actual person to take the money and hand over the item. Smart contracts serve that same purpose but are much more versatile.

Smart contracts have advanced quite a bit over time. They started as simple if-then statements that a programmer creates and implements. However, those with programming knowledge are limited, centralizing these “trustless” contracts. Fortunately, those same developers are working to solve accessibility problems.

Since its inception, developers have made it so smart contracts can be made without coding knowledge. They’re increasing security with different programming languages, creating alternatives like secret contracts, and designing ways to automatically store smart contract history in a human-readable format — much easier than using the blockchain to read.

How do smart contracts work?

Think of these contracts as digital “if-then” statements between two (or more) parties. If one group’s needs are met, then the agreement can be honored, and the contract is considered complete. Let’s say a market asks a manufacturer for 100 units of cups. The former will lock funds into a smart contract that can then be approved when the latter delivers. When the manufacturer delivers their product, the funds will immediately be released. However, the contract is canceled, and funds are reversed to the client if the manufacturer misses their delivery date.

Of course, the above is a small use case. Smart contracts can be programmed to work for the masses, replacing governmental mandates and retail systems, among other benefits. Moreover, smart contracts would potentially remove the need for bringing certain disagreements into court, saving parties both time and money.

This security is largely due to the underlying smart contract code. On Ethereum, for instance, contracts are written in its Solidity programming language, which is Turing-complete. This means that the rules and limitations of smart contracts are built into the network’s code and no bad actor can manipulate such rules. Ideally, these limitations would mitigate scams or hidden contract alterations. A smart contract can only falll into place if all participants agree and sign on the matter. Then, it’s set for life.

In more technical terms, the idea of a smart contract can be broken down into a few steps. First, a smart contract needs an agreement between two or more parties. Once established, the two can agree on conditions in which the smart contract will be considered complete. The decision would be written into the smart contract, which is then encrypted and stored in the blockchain network.

Once the contract is complete, the transaction is recorded on the blockchain just as any other would. Then, all nodes will update their copy of the blockchain with this transaction, updating the new “state” of the network.

Now, you may be wondering if Bitcoin and other networks can utilize smart contracts. To a point, yes. Every Bitcoin (BTC) transaction is technically a simplified version of a smart contract, and layer-two solutions are in development to expand the network’s functionality. That said, Ethereum’s use of smart contracts is a special case.

Unlike most blockchain networks which are described as a distributed ledger, Ethereum is what’s considered a distributed state machine, containing what’s known as the Ethereum Virtual Machine (EVM). This machine state, which all Ethereum nodes agree to keep a copy of, stores smart contract code and the rules by which these contracts must abide. Since every node has the rules baked in via code, all Ethereum smart contracts have the same limitations.

Where do smart contracts apply?

Aside from the payments example mentioned above, there are various, potential implementations of smart contracts that can automate the world and make it an easier place to live. Here are some prominent examples of smart contract use cases.

Digital identity

Information is currency on the internet. Businesses profit from knowing everyone’s interests, and needs. That said people are usually not in control of how that data is collected, nor do they profit from it. With smart contracts, people are in control.

In a blockchain-based future, identities will be tokenized. Ideally, this would mean each person’s identity exists on a decentralized blockchain, safe and secure from any bad actors. Now, if a user wants to participate on social media or submit documents to a bank for loan purposes, they can profit from the harvesting of their data and control the transaction process.

For social media, no intermediary controls a network. Instead, users choose which information to make public and which to keep private. Should they want to participate in information exchange, like an endorsement, they can create a smart contract and choose which data is transacted, rather than simply collecting everything about the user. A third party isn’t there to take some of the funds or secretly store and sell that data — only the user profits.

The same applies when it comes to dealing with banks and other financial institutions. Communication only involves sending required documents and vital information to a desired party. There’s no risk of a loan group storing your email address and selling it to other credit companies. That info is entirely under the user’s control.

Real estate

In the current world, real estate brokers are a necessary evil. Considering the act of selling a house is nothing convoluted process. Owners hire a broker to manage the tedious and time-consuming components for them, such as the sifting through buyers, delivering only those qualified, showing the house and preliminary negotiations. While that sounds like a great deal for the seller, keep in mind brokers take what many consider a significant fee of the house’s sell price.

A smart contract can take the place of a broker, streamlining the house-transfer process while ensuring it’s just as secure as with an intermediary. This is where the “trustless” moniker comes into play.

Imagine the deed to your house is tokenized on the Ethereum blockchain. If you’re ready to sell it, you’d create a smart contract with the buyer. That contract would hold the deed in escrow until the buyer’s funds are properly submitted. Then, and only then, will it be released.

Everyone wins. The seller saves money as they don’t have to pay an intermediary and the buyer gets the house much sooner than they would have otherwise.

Insurance

Insurance policies could easily benefit from smart contracts. Essentially, signing up for a policy would enter the user into a smart contract with a provider. All policy requirements would be written into the smart contract which the user would read and sign if they agree.

That contract would sit open until the liable party needs it. Then, they’d simply upload the required forms that prove their need for insurance payment and the funds would be released. This type of contract removes the need for communicating with insurance companies and brokers. While the user would still need paperwork to prove their requirements, the subsequent submission and funding process will be close to instant.

In the identity aspect of things, it’s worth keeping in mind that all drivers will have a record of their accident reports and other important insurance information as well. This accessibility could factor into lower rates for good drivers with no dings on their driving history.

Supply chain

Arguably, one of the most popular implementations of blockchain technology and smart contracts is within a supply chain.

Grocery stores, office buildings, farmers and more all have their specific place in the supply chain. But, with the increasing complexity of these networks, companies are finding it increasingly harder to track product custody and follow payments, among other things. Smart contracts can automate and incentivize all parts of the supply chain to increase their accountability.

For example, say a grocery store is waiting on an apple delivery from another continent. It paid for a specific number of cartons of apples and expects that exact number or volume upon delivery. However, human error can come into effect. Somewhere along the way, workers could have misplaced some apples, they maybe stolen off the line, or simply lied about them all making it to the desired destination. One broken link in the chain messes up the rest of the chain, and by the time a grocery store receives their shipment, who knows where it went wrong.

With smart contracts, the grocery store could set up an automated check-in at each step of the process. While those check-ins already exist in a normal supply chain, they must be fulfilled manually. A person may have to count the cartons and submit what has arrived. They could lie and take some of the product, claiming some were lost along the way. Supply chain theft is a huge problem, costing Americans $35 billion a year.

What’s different with smart contracts is the trustless aspect. The store could set control of payment isn’t released until all apple cartons are accounted for. There’s no way to mislead this system, so parties will be much more attentive when it comes to supply. Plus, payment will be released instantly to the receiving party which is a great incentive.

Also, the store could trace which smart contracts aren’t being fulfilled and choose not to deal with those parties in the future. Eventually, there could be a whole rating network of clients best to work with and those who aren’t, saving everyone time and money in the long run.

Benefits of smart contracts

Speed, efficiency and accuracy

Once a condition is met, the contract is executed immediately. Because smart contracts are digital and automated, there’s no paperwork to process and no time spent reconciling errors that often result from manually filling in documents.

Trust and transparency

Because there’s no third party involved, and because encrypted records of transactions are shared across participants, there’s no need to question whether information has been altered for personal benefit.

Security

Blockchain transaction records are encrypted, which makes them very hard to hack. Moreover, because each record is connected to the previous and subsequent records on a distributed ledger, hackers would have to alter the entire chain to change a single record.

Savings

Smart contracts remove the need for intermediaries to handle transactions and, by extension, their associated time delays and fees.

Downsides of smart contracts

While smart contracts are great in concept, they’re certainly not perfect. For one, it’s worth remembering that smart contracts and blockchain networks are programmed by hand. Human error is always possible, and that error could lead to exploits. This is exactly what happened with the attack on Ethereum’s Decentralized Autonomous Organization (DAO) in 2016. Hackers exploited a vulnerability in the DAO’s fundraising smart contract and used it to secrete funds from the project.

Plus, one must always question the lack of regulatory clarity when it comes to these autonomous agreements. While the idea of a secure, streamlined money transfer process sounds great on paper, there’s still taxation and other government involvement to consider. Users may want to have full control over their data, but how do governmental parties get what they need?

Also, smart contracts can’t pull information outside of the network in which they exist. At least not in their current state. In other words, you can’t upload data from an existing website to a smart contract on Ethereum. That said, there is a workaround in oracles — off-chain nodes that pull information from the internet and make it compatible with blockchain networks. Eventually, as databases move to the blockchain, oracles could potentially step in to play a role in making that happen.

Additionally, there is a long-standing scalability issue. Since inception, blockchain networks tend to struggle at scale, meaning transactions could take minutes — if not hours — based on activity. While this could be a problem at first, it’s something that projects such as Ethereum 2.0 are looking to solve. Plus, a transaction taking a few hours is still much faster than the days it takes to move traditional funds.

Sources: Ethereum.org, Cointelegraph.com

Suggested Reading:

Decentralized apps (“Dapps”) Using Blockchain to Change the Internet

DeFi, Why Should You Care about it? What is it? And More Importantly, How Will it Effect You?

Post Pandemic Challenges & How to Accelerate Post-Pandemic Business Growth

August 20, 2021 by Peter Spoleti / Vertex Markets Inc. Leave a Comment

Accelerating business growth is by far one of the biggest challenges for businesses still recovering from the disruption of the Covid epidemic. For your business to prosper, you need to adopt a pro-growth, increased efficiency mindset and jump into the trenches.

Create a Recovery Strategy

Writing a recovery strategy is a challenging, complex task. It varies from business to business, but there are some general guidelines to get things going:

discuss your needs and budget with your suppliers
readjust your business goals for this year
talk to your HR department, so your workers have proper support
do extensive research on the post-pandemic market
Sit down with your department heads and create a recovery strategy.

Embrace and implement Pandemic-Proof Practices

New pandemic-proof practices will help you stay in business despite growing uncertainty. Since it’s so hard to tell how events will unfold with the pandemic, adopting new practices will have a drastic impact on reducing risks. New practices can also create new revenue opportunities. Personally, I don’t think the residual effects of this pandemic are going away anytime soon. If your business is going to last it needs to figure out how to adjust on how to survive and prosper within it.

Step up Your Digital & Content Marketing Game

When it comes to growing your business, content marketing is one of the best ways to make that happen. Content marketing is an effective method of reaching new customers and growing your business. Using insightful content that your target audience will engage with will help cultivate growth. As you serve amazing, informative educational content, your expert reputation will prosper as well.

Offering educational and insightful content gives you a chance to showcase your expertise. Becoming a high-profile respected name in your industry is a treasure-trove for new lead generation and growth and you can thank your content marketing efforts for that. Studies have shown, content plays a critical role in a B2B buy decision.

If you want to secure business opportunities and create lead generation while reaching decision-makers, you should have quality, educational, insightful content. Don’t neglect the importance of content marketing and start developing a content strategy to kickstart your business growth during the pandemic recovery and beyond.

Use This Opportunity to Optimize Your Processes

The pandemic has accelerated trends that were already on the rise before the outbreak of Covid, i.e., Ecommerce is hitting record breaking numbers and with all indications it will continue to have dramatic growth, employees and employers are recognizing the benefits of full remote or at a minimum a hybrid remote work model. Take this opportunity to optimize the processes of your business.

Implementing new technologies that will improve your processes will play a vital role in the post-pandemic business growth of your company and address some of the challenges businesses will face as we continue to through this pandemic recovery.

Current labor shortages and other circumstances are forcing businesses try a different approach and make urgent improvements to the workflow of their business. Welcome this opportunity, to embrace technology to digitize more of your sales, marketing & workflow. The initial investment can be finance, but the return on that investment maybe well worth the investment. Consult your financial consultants to exam your options. Additionally, new solutions potentially will eliminate expensive fixed costs and habits that are no longer needed and will make your business more efficient in the post-pandemic period. The post-pandemic era has taught teams to rely on cloud solutions which are much cheaper tools than traditional assets businesses needed before the pandemic. Many companies are installing A.I. and robotics to reduce or replace an unavailable labor force. These solutions are brilliant for trimming overheads that might otherwise, restrict growth and/or stress the company budget, during good and bad times.

Don’t procrastinate or over think the opportunity to use new technology and solutions to optimize your business processes to increase efficiencies and cut down costs, that can stunt your growth and reduce your profits, because your competitors are implementing these changes.

Re-Engage Leads with Personalized marketing and Personal outreach

Former prospects and customers are also ramping up their businesses during this post pandemic era. Reaching out to former customers can result in a major building block of your company’s post-pandemic growth plan. Re-engaging old leads is either low hanging fruit for some or a hard challenge for others, but lucky for you, they’re interested in re-engaging with contacts also. You know your clients and prospects best, decided which ones will take a cold call from you and those which may require to be softened up with an email or limited content marketing outreach prior to that call. Though make a plan to for that reengagement and move forward to get the job done.

When you reach out to re-engage a lead or client you’re creating an opportunity for them to hear how your product or service can assist in their post pandemic growth strategy. If your business provides a solution that goes hand-in-hand with the newfound post pandemic environment, you’re already starting off by providing a solution they need.

When devising your outreach program, it’s critical to have a well-thought-out protocol in place to capitalize on the brief moment of attention prospects have given you. If not this initial outreach may not provide the result you desire.

Conclusion

We are in uncertain times with unique challenges. Many businesses are still shellshocked from the effects of the global pandemic. Thankfully, there are opportunities for many companies, to take these uncertainties and turn them into opportunities to make your business more efficient and profitable. All it takes is to adopt new technology, tactics to cultivate growth and long term efficiencies, even in these unclear times.

Employee Retention Tax Credit (ERTC)

August 20, 2021 by Michels & Hanley CPAs LLP Leave a Comment

Employee Retention Tax Credit (ERTC)

Coordination with Paycheck Protection Program

The ERC was initially created when the CARES Act was signed into law March 27, 2020. However, pursuant to the original CARES Act legislation, employers that received Paycheck Protection Program (PPP) loans were not eligible to claim ERC benefits. Thus, many employers that received PPP loans largely ignored eligibility requirements for the ERC.

The Consolidated Appropriations Act, 2021, retroactively repealed the restriction that prevented PPP borrowers from claiming ERC benefits. Thus, PPP borrowers that are otherwise eligible to claim ERC credits can retroactively claim these credits on qualified wages paid after March 12, 2020, by filing Form 941-X to amend the originally filed Form 941 for the appropriate quarter.

The legislation also prevents employers from using the same wages to calculate ERC credits and count towards PPP loan forgiveness. A careful analysis will be required to maximize ERC credits and achieve full PPP loan forgiveness. Payroll costs are often the easiest costs to identify when preparing and submitting PPP loan forgiveness applications. PPP borrowers that are also eligible for ERC credits may need to spend time identifying non-payroll costs to apply to PPP loan forgiveness in an effort reduce the amount of payroll costs needed for full forgiveness.

ERC: 2020 v. 2021
It is important to distinguish between the two different ERC time periods established by the Consolidated Appropriations Act, 2021. (We will refer to credits claimed from March 12, 2020, through Dec. 31, 2020, as 2020 ERC credits, and credits claimed from Jan. 1, 2021, through June 30, 2021, as 2021 ERC credits.) The new legislation retroactively allows PPP borrowers to claim ERC credits back to March 12, 2020, but it does not change the computational rules applicable to the 2020 ERC. The new legislation also allows PPP borrowers to claim the 2021 ERC, but it also makes significant changes to the computational rules applicable to the eligibility and calculation of 2021 ERC credits.

ERC Eligibility
Eligibility for ERC credits are determined on a quarter-by-quarter basis. The quarter becomes an eligible quarter for employers that pass either the business suspension condition or the gross receipts condition.

Business Suspension Condition
An employer satisfies the business suspension condition for any period during which business operations were fully or partially suspended due to orders from an appropriate governmental authority relating to COVID-19. It is generally clear when business operations have been fully or partially suspended due to a government order. However, there can be uncertainty in determining instances where a partial suspension may qualify.

The IRS has provided guidance on their website via 94 FAQs. While the FAQs do not yet take into account the new legislation, many of the basic principles, including the business suspension condition, were not changed by the new legislation. Furthermore, the FAQs may not be relied upon as legal authority. Nonetheless, the FAQs contains 10 questions and answers that provide insight into the IRS’s current view of many key issues. For example, the FAQs provide the following basic principles with respect to the business suspension condition:

A partial suspension of business operations might include a restaurant that is required to
close in-door dining services or a health care provider that is required to suspend certain
elective procedures even though other aspects of their business operations continued such
as carry-out service or emergency procedures.
An essential business that is allowed to remain open must have a “more than nominal portion” of its overall business operations impacted by a government order in order to constitute a partial suspension of business operations.
An essential business may have a partial suspension if their business operations are impacted by suppliers that are impacted by a government order.

A government order requiring businesses to reduce their normal operating hours can constitute a partial suspension of business operations.
Businesses generally will not qualify due solely to a loss of customers.
Businesses generally will not qualify if they are able to continue comparable operations by requiring their employees to telework.

It is important for businesses to examine any potential disruption in their business operations to
determine if such disruption has a “more than nominal” impact and whether such disruption can
be tied back to mandatory obligations imposed by a government order.

Gross Receipts Condition
The other eligibility condition is the gross receipts condition. This is a mechanical test that compares the current quarter’s gross receipts with the gross receipts from the same quarter in 2019. The gross receipts condition was also changed by the new legislation, for 2021 only, to allow for more employers to be eligible. Thus, the gross receipts test is different based on whether the quarter being tested is a quarter in 2020 versus a quarter in 2021. The gross receipts condition is satisfied as follows:

2020 ERC:
Gross receipts for a quarter declined by more than 50% as compared to gross
receipts during the same quarter in 2019.
Employers remain eligible until the end of a quarter whereby gross receipts exceed
80% of gross receipts during the same quarter in 2019.
2021 ERC:
Gross receipts for a quarter declined by more than 20% as compared to gross receipts during the same quarter in 2019.
Employers can elect to use the prior quarter in order to qualify the quarter of 2021 being tested. For example, for Q1 2021 an employer can either test Q4 2020 against Q4 2019 or Q1 2021 against Q1 2019.

Example
• Gross Receipts decreased by 50% (2020) or 20% (2021) using 2019 as baseline.

1st Qtr. 2021 – 1st Qtr. 2021 vs. 1st Qtr. 2019
OR

4th Qtr. 2020 vs. 4th Qtr. 2019
2nd Qtr. 2021 – 2nd Qtr. 2021 vs. 2nd Qtr. 2019
3rd Qtr. 2021 – 3rd Qtr. 2021 vs. 3rd Qtr. 2019
4th Qtr. 2021 – 4th Qtr. 2021 vs. 4th Qtr. 2019
If less than 500 employees – All wages for quarter qualify

Credit Amount
An employer that can establish an eligible quarter and determine the amount of qualified wages
will be entitled to a credit equal to a percentage of such qualified wages. The new legislation has
increased this percentage and expanded the definition of qualified wages for 2021. The credit amount for the two time periods is:

2020 ERC:
50% of qualified wages.
Qualified wages are limited to $10,000 per employee per year.
Maximum credit amount is $5,000 per employee for 2020.

2021 ERC:
70% of qualified wages.
Qualified wages are limited to $10,000 per employee per quarter.
Maximum credit amount is $7,000 per employee per quarter of 2021.

The additional value of the expanded credit amount for 2021 can be significant. ($28,000 per employee.

How to claim

• 2020 – Form 941x
• 2021 – Form 941x for payroll tax returns already filed (1st and 2nd quarter).
• For 3rd and 4th quarter 2021 (payroll tax return not filed yet), complete Form 7200 (Advance
Payment of Employer Credits Due to COVID-19) or reduce payroll tax deposits

Example for quarter in 2021

• 5 employees
• Each employee earns $3,000 / month in wages
• = $15,000 / month for 5 employees
• = $45,000 / quarter
• 70% = $31,500 ERTC
• X 4 quarters = $126,000 / year

Other Considerations

• No Double Dipping – 2020 ERC: As discussed above, wages used to claim an ERC credit cannot count towards PPP loan forgiveness. Similarly, wages used to claim paid leave credits pursuant to the Families First Coronavirus Response Act or Section 45S Family and Medical Leave Act (FMLA) credits are excluded from the ERC calculation. Furthermore, no wages paid to an employee for which a work opportunity credit is allowed can count towards the ERC credit.

• No Double Dipping – 2021 ERC: The limitations related to PPP coordination, paid leave credits, and FMLA credits are the same, but for 2021, only the wages taken into account in determining the work opportunity credit are excluded from the ERC. Furthermore, wages taken into account in determining research credits are excluded from the ERC.

• Aggregation Rules: The applicable aggregation rules must be considered whenever there are businesses with common ownership. The aggregation rules can apply to parent subsidiary relationships, brother-sister relationships, and affiliate service groups. Aggregating businesses together will impact determination of the business suspension condition, calculation of the gross receipts condition, and full-time employee counts.