Here's Why the ERTC Is Important to You (Even if You Don't Qualify)
At its most basic, the ERTC was implemented in March 2020 via the CARES act to help small and mid-sized businesses avoid layoffs. The program offered tax credits for employee wages up to $7,000 per employee, per quarter ($28,000 total in annual tax credits per employee for wages between March 2020 through end of 2020).
The ERTC was available to small to mid-sized business owners (up to 500 employees) that had a 20% decline or more in gross receipts.
If you are doing a double-take at the 20% loss criteria, then you must be a travel professional and you are in the right place! According to Eben Peck, Executive Vice President of Advocacy at American Society of Travel Advisors (ASTA), advisors lost 82% of their revenue on average . . . that’s a heckuva a lot more than 20%.
In HAR’s 2021 travel agent survey asked advisors how much their income decreased due to COVID. The graph below illustrates their responses:
Here’s the takeaway: Just about any travel professional with an employee of any sort would have qualified for the ERTC. Not only that but amidst legislative rigamarole (that’s the technical term for the American Rescue Plan), the ERTC was extended to apply toward 2021 wages as well. Yay! Great news! More much-needed assistance for travel professionals who, quite literally, needed it the most.
Who are these advisors that needed the ERTC? Data from HAR’s 2021 Travel Agent Survey indicated that 4% of travel advisors overall applied for ERTC funding. Of the travel advisors who applied for ERTC funding, 64% received it.1
This is good news, buuuuuut . . .
The ERTC Plot Thickens
This one is a nail-biter, and it doesn’t lend itself to a happy ending. The fourth-quarter ERTC funds were reallocated to offset congress’ 1 trillion infrastructure bill (the Infrastructure Investment and Jobs Act) which passed the Senate on Aug. 10th.
The infrastructure bill was a great Kumbaya moment for members to cross the aisle in relative harmony to create a piece of bipartisan legislation. But it’s not so great for the small to mid-sized businesses that received ERTC funding. Why?
In order to (partially) fund congress’ 1T infrastructure bill, ERTC credits will expire one quarter earlier than originally planned, the deadline moving up from Dec. 31st to Sept. 30th2. What this means is that any travel professionals (or any business owner) who made hiring decisions dependent on the fourth-quarter credit will have the rug pulled out from underneath them with ERTC’s accelerated deadline.
Let’s Work Toward a Happier Ending . . .
Here's the good news: ASTA has organized a grassroots portal to ask congressional leaders to reinstate the promised Q4 ERTC and to advance constituent appeals for congressional leaders to dedicate more funds to small businesses as a part of the 3.5 trillion SAVES Act infrastructure. (According to ASTA, less than 1% of the SAVES act is allocated to the support of small businesses).3
Even if the ERTC doesn't directly impact your business, preserving the fourth quarter credit will support your industry partners that are relying on the ERTC to keep their businesses in operation through 2021 and beyond.
Why will your advocacy make a difference? There's pent-up demand for travel: According to the U.S. Travel Association, 77% of American plans to travel this summer compared to only 29% last year (2020)4. At ASTA's Global Conference, Erika Richter, Senior Director of Communication, noted that 44% of travelers who didn't originally use a travel advisor before the pandemic plan to when they begin traveling again. There's a brighter possibility for a strong recovery, but together we need to build the bridge to get there.
Join your travel community to advocate for your industry in a mere 2min. Use ASTA's grassroots portal to tell your congress members to restore the ERTC and to additional relief in the SAVES Act for advisors (and all small business owners!). Bonus: Any constituent can complete it! So send it to family and friends who are invested in your professional security and in the health of the industry!
Thanks for your critical industry support!
- A 4% application rate. In 2020 (the year HAR’s 2021 Travel Agent Survey profiled) the ERTC wasn’t compatible with the PPP . . . advisors had to choose one or the other. More agencies chose to apply for a PPP loan than the ERTC in 2020. ↩
- Source: ASTA (American Society of Travel Advisors) ↩
- Source: ASTA ↩
- Source: Insights into Summer Leisure Travel ↩