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Opinion: Employee Retention Credit Provides Much Needed Stability for Small Businesses

We know that small businesses are the backbone of America, producing 44% of the nation’s economy. But in the wake of the COVID-19 pandemic, I fear for their viability. As a successful franchisee, I have made it my mission to mentor fellow entrepreneurs and grow startups and small businesses across Missouri. I know the challenges they face firsthand, exacerbated by the pandemic, which have caused employee layoffs, bankruptcy, and closures.

I am grateful, that despite the lockdown orders and slow business in 2020, many of my mentees’ businesses could stay open thanks to credits like the Employee Retention Credit (ERC). Many small business owners remain unaware of the legitimacy and opportunity presented by the ERC or don’t have the resources to pursue it. According to the U.S. Chamber of Commerce, 45% of small businesses saw their revenue cut in half due to COVID-19. The ERC program specifically serves as a lifeline to the 6 million small businesses throughout our nation. Our economy would be stronger if more small businesses utilized this excellent resource, but the Internal Revenue Service (IRS) is threatening this development.

In September, the IRS announced a moratorium on processing ERC claims for the remainder of the year, eliminating the timely review and payment of ERC claim payments that thousands of small businesses are due for standing by their employees. Moreover, despite having a staff larger than the entire Department of Defense, the IRS was could neither inform nor implement the ERC in a timely and proper manner. Forcing small businesses, to endure costly delays in processing and much-delayed payments. Small businesses and startups with thin margins should not be forced to choose between navigating DC bureaucracy or have their doors closed. To make matters worse, the IRS was anemic at best in its communications to the business community both large and small on the basics of the ERC including how to accurately determine eligibility, claim submission process, and/or avoid scams in the process. We’re starting to see the results of this – businesses are closing, and employees are losing their jobs – all at the whim of the poor decision-making at the IRS.

It is for this reason that I ask congress to continue supporting the ERC, particularly for small businesses that are only now getting to evaluate and claim the credit they are entitled to. We must hold the IRS accountable for their negligence at best and administrative malpractice at worst. Small businesses should not be required to have robust internal legal and accounting advisors to claim these credits. The IRS should immediately reinstate the processing of ERC claims as intended by Congress and supported by members from both sides of the aisle. Additionally, the IRS should extend the 2020 and 2021 claims sunset dates of the program to compensate for the confusion and delay they have imposed on filers. If not immediately addressed, the misguided IRS will be solely responsible for more small businesses closing their doors at a time when inflation is already pushing owners and workers to the brink.

I call on Congress and the members of our delegation to Washington D.C. to safeguard the ERC, get answers from the IRS, and protect small businesses and jobs in our district