Employee Retention Credit (ERC) Update

On November 5, 2021, the U.S. House of Representatives passed the Infrastructure Investment and Jobs Act of 2021, which President Biden signed into law on November 15, 2021. As part of the act, the Employee Retention Credit which was previously set to expire on January 1, 2022 was retroactively terminated as of October 1, 2021. For an eligible employer that is a recovery startup business, wages paid before January 1, 2022, remain eligible for the credit.

As a result, the only employers eligible for an employee retention credit for the fourth quarter of 2021 are recovery startup businesses. The January 2022 supplement will provide detailed information on this change.

Planning Ahead

If you retained payroll taxes in anticipation of receiving the ERC for the fourth quarter of 2021 contact your tax advisor to review your situation and determine how and when to repay those taxes and address any other compliance issues. The IRS is expected to issue guidance to assist employers in handling any compliance issues.

Eligible employers that have not yet claimed full credits for qualified wages paid between March 13, 2020 through Sept. 30, 2021, may still claim the employee retention credits by amending the applicable quarterly employment tax returns (941-x).