By Romeo Chicco, CPA
Cannabis businesses rarely enjoy the many tax incentives and programs offered by the federal government, including those that were designed to help businesses survive the impact of COVID-19. It’s that pesky 280E that prohibited businesses from receiving funds under the Paycheck Protection Program (PPP), but there is still some hope. The key is that 280E does not apply to payroll tax credits, and the Employee Retention Tax Credit (ERTC) is just that.
The ERTC was part of the CARES Act, enacted in March 2020, and was to provide an incentive for businesses impacted by COVID-19 to help pay wages. It was similar to the PPP in that they both provided funds into the business, but the ERTC came in the form of a refundable payroll tax credit. PPP hit the mainstream news like wildfire. It was everywhere, and the ERTC received zero coverage. It literally went by the wayside, and the many businesses who may have been eligible knew nothing about it. Congress amended the ERTC program three more times in December 2020, March 2021 and October 2021, expanding and restricting the program. This led to further confusion, but the news never made it into the mainstream media.
The good news is that unlike programs such as the PPP that have come and gone, the ERTC is a payroll tax credit that can be filed retroactively up to four years later. That means if you were not aware of the ERTC and the business is eligible, there is still time to file for a payroll tax refund for tax year 2020, up until April 2024 and for tax year 2021, up until April 2025.
There are two ways to qualify for the ERTC, whether it is suffering a decrease in revenue or if the business was negatively impacted and restricted by a government order. Qualification could mean a tax credit/refund up to $26,000 per employee. That is a serious amount of funds that could benefit any cannabis business. Don’t miss out; inquire with a professional that is familiar with the ERTC, as there is still a lot of misinformation in circulation.
Romeo Chicco, President/CEO, PayMaster, can be reached at romeo@paymaster.net.
