There’s no question Texas is a leader in business. Our state boasts the 8th largest economy worldwide, leads the nation in annual job growth, and was recently named the Top Business Climate in America. The Dallas-Fort Worth metroplex is home to 24 Fortune 500 and 42 Fortune 1000 company headquarters, in industries ranging from transportation and hospitality to energy and manufacturing.
However, it’s not just the big names in business that make such a difference to Texas’ strong economy — thousands of small businesses contribute every day to not only our state’s GDP, but to our Texan identity.
Small businesses nationwide are responsible for two-thirds of all newly created U.S. jobs. Unfortunately, they’re also the most vulnerable to economic instability, especially in times of crisis, like we experienced during the COVID-19 outbreak. Texas entrepreneurs are resilient, but attempts from the federal government to revoke benefits that provide a safety net for Texas business owners in turbulent times are making today’s business environment even more difficult.
In March 2020, Congress employed the Employee Retention Credit (ERC) program as part of the bipartisan CARES Act to ensure small businesses’ ability to retain workers through the pandemic. Since Hurricane Katrina in 2005, the federal government has leveraged the ERC program as a pragmatic way to quickly disperse critical economic aid to help employers preserve jobs during times of crisis and natural disasters.
For eligible employers, the ERC program has proven to be crucial to businesses – at least the ones that have been able to access it – saving jobs and keeping restaurants, hotels, and other vital employers open in DFW and communities across America. However, the Internal Revenue Service’s (IRS) mismanagement of the program has resulted in tens of billions in unclaimed funds and a backlog of over 700,000 claims with some small business owners waiting months for disbursement.
Despite employing a staff larger than the Department of Defense, Department of State, and the Department of Homeland Security, the IRS has failed to administer this ERC in a competent and timely fashion. As more than 700,000 ERC claims remain in limbo, businesses are feeling the strain while waiting for this critical relief. Unfortunately, the IRS has placed a moratorium on new ERC applications until at least January 2024, citing purported concerns over fraud, leaving small businesses hung out to dry.
There’s no question that instances of fraud should be relentlessly pursued and prosecuted. However, among the 3.6 million small businesses that have benefitted from ERC relief, the IRS discovered 252 bad actors who filed fraudulent claims. Of those investigations, just 15 have resulted in federal charges and six convictions — certainly not the level of widespread fraud that would justify shutting down a program that is actively buoying so many small business owners.
The impact of this moratorium is not an abstract concept. It affects real people, real jobs, and the real economy of our DFW communities. Now, when continued support is crucial, the program’s abrupt halt and potential sunset poses a real threat to many small businesses.
This is not merely an issue for business owners; it affects every member of our community who loves the locally owned business that makes Dallas-Fort Worth what it is today. For example, one local non-profit organization received ERC funds that allowed it to continue operating and providing food to thousands of families each month. Another small business was able to keep all their employees when the economy took a downturn and in fact, was able to hire additional staff.
We urge federal legislators like Representative Van Duyne, who has direct jurisdiction over this issue on the House Ways and Means Committee, to recognize the dire need to lift the moratorium and ensure continued support for the ERC through an extension of the sunset. The Metrocrest Chamber of Commerce stands ready to amplify the voices of our community members, advocating for the small businesses that are the bedrock of the DFW — and larger Texas — economy.
Michael Gallops, IOM, TDM is the President and CEO of the Metrocrest Chamber of Commerce, representing businesses in Addison, Farmers Branch, and Carrollton.
