Letter From the CEO, Summer 2023

Dear Friends of Sagemont Tax,

Since my last client newsletter, Sagemont Tax celebrated its second birthday while the original ERC legislation celebrated its third birthday. Similarly, a lot of small business employers are still celebrating being released from social distancing and other mandatory COVID-19-related rules and restrictions. However, we also know many are still in need given the inflationary and uncertain economic climate.  

While much of our world feels “back to normal,” there are still plenty of confusing, volatile, and disruptive events and circumstances that are very present in the world of commerce: 

• An Irrational Stock Market – Despite 1980s-esque interest rate hikes and monetary policy actions that could have had the effect of pushing our economy into a recession, signs of a bull market on Wall Street have emerged over the past few months. 
• A Raised Debt Ceiling – Much like my Uncle Ned, whom we all try so hard to forget exists, the U.S. debt ceiling reared its head into the party recently, sobering up our bipartisan Congress into action and resulting in a rushed bill rolling back various measures, including a large chunk of previously approved IRS funding. 
• A Hopeless Push for Business Tax Cuts – The House Ways and Means Committee revealed three draft bills proposing meaningful tax cuts for businesses, including an extension of 100% bonus depreciation, net interest deductibility, and immediate R&D expensing, which will be undoubtedly blocked by the U.S. Senate if passed in the House, barring significant modifications.
• A Vigilant, Yet Frustrated IRS – The IRS issued its fourth warning to employers regarding the Employee Retention Credit (ERC), while simultaneously coming under attack from a U.S. Senator for failing to meet promises made regarding the ERC/941-X backlog.

Amid these disorienting conditions, the U.S. unemployment rate remains outstandingly low, which signals some stability and health in our economy. Hence, we owe a big THANK YOU to the owners and operators of small to medium-sized businesses that are reading this and continue to be the backbone and shining light of the U.S. economy.

Where do we go from here?

While we’d love to share a crystal ball and our wisdom on the stock market, economy, and politics, we’re probably safer to stay in our lane and stick to what we do best: tax credits and advisory.   

We can certainly advise you conclusively that the debt ceiling measures left the ERC untouched. My partner Maxwell Burns wrote a great article that I’d encourage you to read if you are worried about the debt ceiling might affect the ERC:  https://www.sagemonttax.com/biden-signs-debt-ceiling-bill-into-law-erc-remains-active/. 

If you have already claimed the ERC with us, or another firm, or are still considering whether to file, we would encourage you to pay attention to the IRS’ warnings related to selecting an ERC provider. In the most basic terms, the IRS urges you to work with bona fide tax professionals. If you are interested to hear my take on ERC mills, IRS audits, and other relevant topics, check out the recent podcast on “ERC Enforcement,” where I was a guest of the Tax Rep Network: https://taxrepllc.com/tax-rep-network-podcast/. 

And finally, we’ve got some big things in store before the year-end that we are excited to share with you. Sagemont Tax’s team is diligently working to bring new credits and incentive offerings along with developing new tax and compliance-related technologies and services. We look forward to bringing these new enterprises to market and continuing our work as a trusted tax advisor beyond the ERC program.   

As always, we thank you tremendously for being a client, partner, or just a fan of our incredible team and best-in-industry ERC content!

Cheers,

Kenny