Small business owners in the Southeast who have been waiting for long-delayed pandemic aid are pushing to get that money back from this fall’s brutal hurricane season. The federal government says more of this will be on the way soon.
About 400,000 claims worth $10 billion are currently being processed for eligible business owners who filed for tax refunds during the Covid era. Employee Retention Credit Programthe Internal Revenue Service said Thursday.
The agency did not give a concrete timeline or geographic details on the applicants, but said Thursday that it is accelerating work on those claims, estimating this summer that at least 1.4 million They were still in line.
“Our top priority is to quickly assist taxpayers affected by the devastation from Hurricane Helene and Hurricane Milton,” IRS spokesman Mike Martinez told NBC News. He also highlighted recently announced tax breaks for those in affected regions, including submission and payment extensions for individuals and companies. “We understand the urgent need across the federal government to provide financial assistance to small businesses.”
Martinez urged small business owners in affected communities whose ERC claims are still under review to contact the IRS Disaster Hotline and check the status of your application. For taxpayers with fully processed ERC applications whose postal routes have been disrupted, the USPS will conduct checks at the nearest distribution center until operations resume, it said.
The tax program allows businesses to claim up to $26,000 per employee on their payroll. Many of the delays are due to efforts to redress a wave of fraudulent claims and scam companies promising to help employers apply for funding through the program.
Maia Toll and Andrew Celwyn, spouses and co-owners of Herbiary, an apothecary in Asheville, North Carolina, said the nearly $115,000 in ERC money they are owed would be a lifeline for their business right now.
They applied for the tax credit, first launched as part of the CARES Act in March 2020, last summer, hoping to shore up the $100,250 Small Business Administration loan they took out when the pandemic reduced their stores’ revenue. in a third.
With sales picking up in the following months and Toll, an author and writing coach, publishing about a book a year, the Herbiary’s business had stabilized somewhat. But since Helene devastated western North Carolina two weeks ago, the historic Pack Square area where her business is located still has no water, meaning her six Asheville employees, some of whom remain scattered after the evacuation, they cannot use the bathroom or wash themselves. your hands to safely handle the organic herbs and teas you sell.
The store was without Internet until Wednesday, hampering sales to customers without cash or Cash App. And with package shipping routes disrupted in the devastated Asheville area, so was the store’s “symbiotic” relationship with its Philadelphia location, where spouses ship inventory, Toll said. Opening hours have been cut in half, from 12 to 4 p.m.
The business’s losses amount to $12,000, the couple estimated. Home insurance will cover the necessary roof repair after Helene tossed a tree onto her home in the wooded Riceville neighborhood, but they are still submitting estimates to remove the other 11 downed trees on the property.
“It would be transformative,” Toll said of the ERC credit, “especially because right now we’re going to be in the same situation again: We’re going to try to retain our employees and keep them as healthy as possible.” and viable as possible without the income.”
“Our life is mush,” he added.
Toll contacted North Carolina Sen. Thom Tillis’ office in early October asking for help obtaining funding for his application. “One of the best things small businesses in WNC can do is get ERTC payments into our hands,” he wrote in an email, seen by NBC News, in response to his office’s request that he complete the IRS claim and privacy documents. .
Senator Tillis’ office did not respond to requests for comment. Last month, the Republican legislator co-authored a bill close the program and stop processing any claims submitted after January 2025.
“Repealing the ERTC is a critical step in addressing the US debt crisis,” he said in a statement at the time. “It is time to eliminate this fraud-ridden pandemic-era policy so we can focus on getting our fiscal house in order.”
The tax program was originally projected to cost the government $55 billion. But by last fall, that estimate had skyrocketed to $230 billion as a result of what IRS officials described as a massive fraud driven by third-party companies that urged entrepreneurs to file with dubious promises of maximizing their profits. credits.
The agency has attributed the reimbursement delays to the resource-intensive work to eliminate invalid claims. Established a months-long moratorium on processing applications and configure programs for applicants to withdraw incorrect submissions without penalties or interest.
Toll and her husband contacted an outside company to file their ERC application last May and now have questions about the contractual agreement, which required them to pay the company 18% of their planned refund up front, or 25%. % after the funds had been received. disbursed. In an effort to avoid destabilizing Herbiary’s operating margins, they borrowed $30,000 from Intuit at an interest rate of 12.5%.
Between that loan and the SBA loan, the couple now pays about $2,300 a month to take care of the balances.
“It would almost put us at zero,” Toll said of the expected ERC refund. “I know larger companies tend to take on debt, but we’re a small company and that just doesn’t make sense for us.”