ARRA Provision for Small Business

September 9, 2009
TIP OF THE WEEK | Management

Robbyn P. Wysocki, an attorney with the Dallas-based Wysocki Legal Group P.C. recently sent out a notice to the firm's small business clients to make them aware of a provision of the American Recovery and Reinvestment Act that may offer them a way to regain some cash if their businesses were profitable in previous years, but operated at a loss in 2008.

Under the ARRA, small businesses that had a net operating loss (expenses in excess of income) for 2008 can choose to carry their loss back for up to five years, instead of the usual two, Wysocki explains. This carry-back option could put money back in a business owner's pocket in the form of a refund of taxes paid in previous years.

To be eligible, a small business may have no more than an average of $15 million in gross receipts over a three-year period ending with the tax year of the net operating loss. This choice may be made for only one tax year.

This option is only available for a limited time, so small businesses should consult their tax advisors, consider their options carefully and act before it’s too late. Eligible calendar-year corporations only have until September 15 to choose this option; eligible individuals (including sole proprietors, individual partners, and S-corporation shareholders) have until October 15. Deadlines vary for fiscal-year taxpayers, so consult your tax advisor.

"We encourage you to consult your CPA to determine whether or not your business is eligible and would benefit from this option," Wysocki concludes.

The Wysocki Legal Group is located at 14785 Preston Rd., Suite 550, Dallas, Texas 75254.  It can be reached at 972/789-5132