On Monday, November 15th, President Biden signed into law the bipartisan Infrastructure Bill. The $1.2 trillion bill included a few tax provisions in the legislation, one significant change being the earlier end date for the Employee Retention Credit (ERC).
The ERC was previously set to last until the end of the 2021 calendar year but has now been terminated at the end of the third quarter of 2021 (September 30, 2021). This change comes as a surprise to many and will result in the coordination of new tax strategies and planning for employers who planned to claim the credit through year-end.
Congress originally enacted the ERC in the Coronavirus Aid, Relief, and Economic Security Act (CARES) in March of 2020 to encourage employers to retain employees during the pandemic. If eligible, the credit is capped at $5,000 for all qualified wages paid between March 13, 2020, to Dec. 31, 2020 (the credit amount allowed for the $10,000 in qualified wages x 50% credit rate). The credit rate cap in 2021 is increased to $7,000 per quarter for qualified wages paid between Jan. 1, 2021, and Sept. 31, 2021 (the credit for $10,000 in qualified wages x 70%).
Have you taken advantage of this refundable credit?
Many businesses have yet to claim the employee retention credit due to a lack of eligibility awareness. Big dollars are being missed, but it’s not too late. To learn more about the ERC and how businesses might be able to claim the ERC for wages already paid in 2020 and 2021, click on the link below or schedule a call with KHA. You could be missing out on a substantial amount of credit, as much as $26,000/employee.
More Information on the ERC
For more information on qualification rules outlined by the IRS, please visit: https://www.irs.gov/coronavirus/employee-retention-credit
If you have any questions about the ERC or would like to see if you are eligible to receive the credit, please contact us at: erc@kha.cpa