Infrastructure Bill ends ERTC for employers early

The recently passed $1.2 trillion Infrastructure Investment and Jobs Act includes key provisions affecting American employers, including an early end to the Employee Retention Tax Credit (ERTC), also referred to as the Employee Retention Credit (ERC).  The ERTC was created in March 2020 to encourage businesses to keep employees on payroll and had been set to expire on Jan. 1, 2022, but the infrastructure bill accelerates the end of the credit retroactive to Oct. 1, 2021 (except for wages paid by a recovery startup business, for which the expiration date would remain unchanged). This would effectively reduce the maximum credit available to eligible employers from $28,000 to $21,000.

Employers eligible for the ERTC included those forced to suspend operations due to the pandemic and those that experienced a significant decline in gross receipts. Qualifying employers could claim up to 70 percent ($7,000) of the first $10,000 in pay and health benefits in each qualifying quarter. Small employers that received a Paycheck Protection Program loan could also claim the ERTC.

Early termination of the ERTC means that employers who were previously permitted to reduce their employment tax deposits (including all withheld federal employment taxes) to take advantage of the credit in October and November 2021 would now owe those credits back to the IRS.

Employers who reduced their deposits in September and October in anticipation of the credit should deposit any amounts that will now be due, as soon as possible.  Contact a ShindelRock tax professional for assistance.