I was very saddened to learn the other day that snowfighter and ASCA member George Sosnowski had died last week (July 24). I had learned some time ago that he was battling cancer, however it never seemed to impact his positive attitude and joyful and fun-loving nature when we would see each other at various industry events.

George was a fixture at ASCA's Executive Summits and Snow Shows over the years. He was an industry cheerleader and an advocate for professional snow and ice management. Like he always said, he was born for this industry because he had "snow" in the middle of his last name.

George, you will be missed.

CLICK HERE to read his online obituary.

Mike Zawacki is editor of Snow Magazine. You can reach him at mzawacki@gie.net.

The Paycheck Protection Program (PPP) was aimed at helping small businesses keep workers on the payroll and pay other bills during the pandemic.  However, confusion about turning PPP loans into non-repayable grants is palatable.  The U.S. Department of the Treasury and the Small Business Administration (SBA) have promised they will audit all PPP loan recipients who seek loan forgiveness.  

Today the IRS is reaping larger and larger amounts from fewer and fewer targeted snow removal and ice management businesses thanks to better profiling of potential audit targets and better use of their limited resources.  The IRS’s own figures reveal that, in general, only one or two percent of all taxpayers actually face audits each year, the nerve-wracking threat of a potential audit remains high.

PPP LOANS
PPP loans are loans that may be forgiven if the snow removal business meets certain criteria, chiefly spending at least 75% of the loan amount on payroll and no more than 25% on rent, mortgage interest and utilities.  Sweetening the pot, the Coronavirus Aid, Relief and Economic Security (CARES) Act allowed any amount forgiven can be ignored for federal tax purposes.  Of course, no tax deduction is allowed for otherwise deductible expenses (e.g., payroll costs, rent, etc.) if the payment of the expense results in forgiveness of the covered loan.

 

Most of the problems surrounding the PPP involve the conditions needed to turn the loans into grants.  PPP loan recipients were required to certify that “current economic uncertainty makes the loan request necessary to support the ongoing operations of the Applicant.”  What’s more, snow removal contractors and businesses seeking loan forgiveness were also required to certify they “used the forgiveness amount of keep employees and make eligible mortgage interest, rent and utility payments.”

Certifications found to be inaccurate or untrue are punishable under criminal and civil law.  But, how can anyone certify to an uncertainty and what makes the funds necessary?  Ultimately, of course, it will be the courts that decide, but given the stakes, all borrowers can expect a bare-minimum file review -– or a deep-dive forensic audit.

In addition to SBA audits, borrowers must prepare for investigation by the Special Inspector General for Pandemic Recovery and reviews by the Pandemic Response Accountability Committee and the Congressional Oversight Commission, although these presumably will be limited to borrowers of larger amounts.

A snow or ice removal business that fails a PPP audit jeopardizes all or part of their loan forgiveness and, potentially face False Claim Act prosecution by the U.S. Department of Justice (DOJ).  In the face of the threat posed by all of these audits and reviews and a lack of guidance about calculating the portion of the loan that is forgivable, many contractors and other business owners are concerned that they’ll be on the hook to repay those amounts.

RECORDS AND MORE RECORDS
Many snow and ice removal business owners, even those with no intent to commit fraud, often fall short when it comes to documentation and paperwork.  More often than not, businesses are cautioned to keep good records for tax purposes.  This time, those records could be crucial to forgiveness of a PPP loan.

Even if the snow removal business pays its taxes dutifully, it may be penalized for lacking documentation.  After all, the law requires every taxpayer to retain the records used when preparing the tax returns.  Those records generally should be kept for three years from the date the return is filed.

A good recordkeeping strategy might include depositing PPP funds into a separate bank account.  Beyond that, all expenses should be documented.  Utility bills, rent statements, leases, cancelled checks, bank statements tracing any electronic transfers and other expenses that qualify for loan forgiveness such as health insurance.

These amounts should be consistent with the amounts in the loan forgiveness application.  Obviously, judgement is required to project revenue and expenses during these uncertain times, including the ramp-up period as the snow and ice removal business reopens but before the economy returns to pre-pandemic levels.

PPP RECORDKEEPING CRITERIA
Auditors consider contemporaneous documentation – or an accurate written record of how the funds were applied – as more persuasive than information created once an audit or review begins.  In other words, it is more efficient to organize records and documents now rather than attempt to create them later when under pressure.

Among the supporting documentation for funds used to cover payroll costs, mortgage interest, rent and utility costs should be:

• Payroll verification to demonstrate funds used for payroll, mortgage interest or lease and utility payments.
• Invoices for mortgage interest, lease payments and utility services.
• Lease agreements stating amount due.
• General ledger entries showing use of PPP funds.
  

When it comes to showing employee and compensation levels, from periods beginning February 15, 2020, through the end of the period after the loan was made include:

• Payment records such as payroll tax reports, employee benefit records and compensation records.
• Calculation of full-time equivalents and pay rates, and
• Documentation to support headcount changes.
  
  

Any remaining cash surpluses should be supported by documenting the use of those funds beyond the period analyzed.  Naturally, the underlying supporting documents should provide enough support for the certification.

Although the threat of PPP loan and loan forgiveness audits is a major concern, wading through a backlog of applications, removing duplicates from borrowers that applied at more than one bank and the Congressional confusion continue to slow the process.  But, don’t forget about the IRS, an agency that appears increasingly determined to find and audit all businesses.

A SMALLER TARGET
Computers are less forgiving than humans.  Any snow and ice removal contractor who hopes to survive and thrive under the new algorithm-based IRS, should follow a few guidelines.
Always be prepared for scrutiny.  Understanding the tax rules and potential red flags is essential to knowing what information should be saved and for how long.
Be prepared to move quickly.  Information Document Requests (IDRs) and face-to-face audits now move on a shockingly fast timeline so have a plan of action.  Build a relationship with an accountant who can step in quickly when you get the dreaded IRS audit notice.
Consistency is key.  Inconsistencies in paperwork happen even to honest people when the accounting is not handled professionally.  The IRS, however, is increasingly seeing discrepancies as fraud until proven otherwise.
Expect no mercy. IRS agents are being allowed no wiggle room and no grace.  This attitude is being passed on to the businesses they deal with.

TAXPAYER RIGHTS
The Taxpayers Bill of Rights, part of the IRS Restructuring and Reform Act of 1998, requires the IRS to provide a written statement detailing the taxpayer’s rights and the IRS’s obligations during the audit, appeals, refund and collection processes.
These rights include:

• A right to professional and courteous treatment by IRS employees.
• A right to privacy and confidentiality about tax matters.
• A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.
• A right to appeal disagreements, both within the IRS and before the courts.
  

Among the most important of the rights given every taxpayer whose returns are targeted for an audit is whether to be represented by a tax professional, or whether to attempt to answer the IRS's questions alone.  Another important consideration for everyone and every business owner and manager being audited is where to hold that meeting.  Not too surprisingly, there is no one right answer.

HAVING THE LAST WORD
Until a snow and ice removal contractor agrees with the IRS, the appeals process remains open.  Most importantly, from the initial screening for accuracy that each return receives up to the final appeal has been exhausted, mistakes in the favor of the taxpayer are discovered in about 25% of all cases.

The IRS is usually quite sympathetic to honest mistakes and more than willing to discuss underpayments of taxes that may result from the many so-called "gray" areas of our tax rules.  They'll frequently negotiate the amount of tax due on occasion.  But they don't like fraud.

Honesty and clarity go a long way toward preventing, dealing with and surviving an IRS audit.  Naturally, every snow removal and ice management operation should have a strategy for avoiding audits as well as for dealing with an IRS auditor.  A fallback position if those strategies fail should also be in place.

PROFESSIONAL HELP NEEDED
The PPP was intended to ensure all businesses had access to sufficient resources to keep workers employed while the snow removal operation weathered the coronavirus pandemic.  Borrowers should not be frightened by the government’s warning that audits are inevitable, instead preparing now to ensure those benefits are not lost.

Beginning early, maintaining accurate documentation, assessing risks and considering the assessment criteria and preparing for a likely audit from any of a variety of sources can help every snow and ice removal business withstand the added scrutiny.  The advice and assistance of a qualified professional is also an invaluable tool.

Mark E. Battersby is Snow Magazine's finance and accounting writer. He's based out of Ardmore, Pa.

I recently came across a really great article authored by Silvia Coulter, the Co-founding Principal of LawVision, a firm that provides business coaching to law firms. Coulter, herself, has an extensive background is in sales, client planning and leadership development. Her article aims to supercharge business development, and focused on topics that are universal to all business owners, not just legal pros.

So with Coulter's permission, here are her tips (a few slightly modified for this audience) you can employ right now to fuel, grow and expand your snow and ice management business.

Make it easy for people to do business with you.
Add your contact information to the emails you initiate and to the emails to which you reply. It’s easy to do and it makes life much easier for people who are trying to find your contact information. In Outlook, click on Tools; Options; Mail Format and Signatures, and you will see how easy it is to check the box to add your contact info to all messages.

Get your contact information into a user-friendly format.
Provide the opportunity for people to download your v-card directly from your bio. Then all your contacts have to do is click on your v-card and save it in their files. Again, this makes it easy for them to do business with you. If they have to copy all your information from your bio manually, it may not get done and then your info is not what’s in their files!

Categorize your contacts in Outlook.
Go to your “Contacts” folder and look for the “Category” label and click on it. You can add multiple (not too many!) categories to sort through your contacts quickly and efficiently. Most company databases easily transfer this information from Outlook to the database information you have on file. This allows you to then sort through your contacts for specific purposes. To be totally efficient, print out your contacts and write onto your list which categories you want each contact to be labeled. Some of the suggestions we have: industry, specialty, position, holiday card, gender, etc.

Rebuild past relationships.
So often we try to meet new people and we already have a lot of good clients who are contacts. Make it a point to call every past client you’ve ever had. They are either referral sources or sources of new business (repeat business) for you. This is one of the best ways to obtain new business. It works all the time for our clients. Call them to find out how they are doing. Go back at least 10 years and make it a point to call to say hello and hear how their life/their business is going. You’ll be amazed at the results.

Thank your clients for their business.
It may sound trite, but it works. Make a special effort to write a hand-written note or place a phone call to each client and thank him/her for doing business with you/your firm. They will always appreciate the special effort.

Send a gift.
Everyone likes presents. Send a book from the NY Times bestseller list for summer reading; send your favorite new book on leadership to owners/managers with whom you do business. For people who send referrals your way, thank them by sending a thank you gift for the gesture once you land the new client. For referrals that may not end up as a client, send the referring party a thank you note for thinking of you enough to recommend you. These gestures go a long way toward building relationships.

Know your clients.
Identify the top five clients with whom you work. Take each one to lunch or schedule a virtual lunch, and learn more about their business. If you are limited due to geographic distance, then visit their web site and learn about their business goals and products by reading press releases, their mission statement and investor relations’ pages if public. Ask them how they are doing this year with their goals. People like to know they matter to you and that you are interested. We hear all the time from clients that few of those with whom they have outside relationships ask these questions.

Get set up on Linked In and Facebook.
Complete your profiles so it’s easy to find you. Keep in mind you will want to maintain the utmost professional profile at all times. Again, make it easy for people to find you and to do business with you. To learn more about Linked In, visit the website linkedin.com, or westlegaledcenter.com for a November 2008 webcast on the topic. Or, simply ask your IT person to provide you with a tutorial.

Make yourself memorable.
For example, don't just say: "I'm a snow contractor." That’s not entirely memorable. Try something like, “I help businesses reduce their risk to frivolous winter slip-and-fall claims (Note: this focuses on end results and benefits to the perspective client) and when I’m not working for clients, I enjoy hiking and other outdoor activities with my family.” They’ll remember you the next time. Give people opportunities to connect with you by saying things about yourself that they will remember. It makes you much more interesting, too.

Mike Zawacki is editor of Snow Magazine.

In OSHA’s original guidance from April 2020, the agency acknowledged the difficulty in determining whether a COVID-19 case was “work-related” due to possible employee infections from outside the workplace.  Most employers did not have a reporting obligation unless the employer had “objective evidence” that the COVID-19 case was work-related.  

However, under new guidance set forth below, OSHA confirms COVID-19 is a recordable illness, and all employers – including non-health care employers – are expected to investigate COVID-19 cases and make a determination of work-relatedness.

OSHA’s COVID Recordability Test
A COVID-19 case must be recorded if:

• The case is a confirmed case of COVID-19 as defined by the Center for Disease Control and Prevention (CDC). The CDC defines a confirmed case as an individual who tests positive for SARS-CoV-2, the virus that causes COVID-19.
• The case is work-related; and
• The case results in death, days away from work, restricted work or transfer to another job, medical treatment beyond first aid, or loss of consciousness.

If the employee meets these three requirements, the COVID-19 case should be recorded on the employer’s OSHA 300 log.  A COVID-19 case should also be coded as a respiratory illness.  In accordance with existing regulations (CLICK HERE TO READ), the only employers that are exempt from maintaining such records are those with 10 or fewer employees or certain low-risk industries.

The key issue for an employer in assessing a COVID-19 case is determining whether it is “work-related.” OSHA’s new guidance indicates it will consider the following factors in determining whether an employer has made a reasonable determination on this issue:

The reasonableness of the employer’s investigation into work-relatedness.Under this new standard, it would be reasonable for an employer to engage in the following steps upon learning of the employee’s COVID-19 illness:

• Ask the employee how he or she believes the virus was contracted;
• Discuss with the employee activities at work and outside of work that may have led to the illness; and
• Review the employee’s work environment for potential exposure.

OSHA also notes that “due weight” should be given to the opinion of a medical provider or a public health authority in making a determination.  With that said, the employer is not expected to undertake extensive medical inquires.

The evidence available to the employer.
This will include the information reasonably available to the employer at the time it made the decision about work-relatedness.  However, it can be changed later when the employer learns additional information that may impact the determination.

The evidence that a COVID-19 illness was contracted at work.
The new guidance outlines some evidence that weigh in favor or against work-relatedness:

• Evidence that may weigh in favor of work-relatedness includes: Several cases developing among workers who work closely together and there is not an alternative explanation; and
  an employee testing positive shortly after lengthy, close exposure to a customer or coworker who has a confirmed case and there is not an alternative explanation.
• Evidence that may weigh against work-relatedness includes: A worker who tests positive is the only worker in his or her vicinity to contract the virus and his or her job duties do not involve frequent contact with the public; and a worker who contracts COVID-19 has close contact with a family member or close friend who is not a coworker who has the virus.

In summary, it is imperative that employers conduct a reasonable and objective evaluation for work-relatedness when assessing COVID-19 cases in the workplace.

Elizabeth Fellmeth is an attorney in Freeman Mathis & Gary’s Los Angeles and Orange County offices. Her practice focuses on business, commercial and employment litigation.