Say Goodbye to the ERC for the Fourth Quarter
Parts of this article are published with permission from Bradford Tax Institute, © 2021 Daniel Morris, Morris + D’Angelo
Regarding the Employee Retention Credit (ERC): lawmakers giveth, and lawmakers taketh away. In this case, what lawmakers did is unfortunate. It’s like magic: now you see it, now you don’t.
On March 11, 2021, the American Rescue Plan Act of 2021 became Public Law 117-2. This new law extended the ERC to the third and fourth quarters of 2021, as we wrote about in Don’t Miss Out on the Employee Retention Credit (August 2021).
On November 15, 2021, the Infrastructure Investment and Jobs Act became Public Law 117-58 and ended the ERC three months early, retroactive to September 30, 2021.
You cannot consider any retroactive repeal of a tax law to be a good tax policy. And this retroactive repeal was done only nine months after passage… This is unfortunate.
You may remember that the purpose of the ERC was to encourage small businesses to keep their employees on the payroll rather than let them go.
Escapee: Lawmakers did not kill the fourth-quarter 2021 ERC for start-up businesses. That tax benefit survived.
Planning Point: Don’t let this bad news deter you from claiming the credit for 2020 and for the first three quarters of 2021. You may remember that the remaining credits can add up to $26,000 per employee. For more on this, see Don’t Miss Out on the Employee Retention Credit that we published in last August 31, 2021.
And keep in mind that there’s no mad rush—you have time. You can claim the ERC anytime during the three-year statute of limitations.
With the New Year (2022) upon us, if you need help or guidance regarding the Employee Retention Credit (ERC), please contact us at Morris + D’Angelo. This is our Expertise!
Parts of this article are published with permission from Bradford Tax Institute, © 2021 Daniel Morris, Morris + D’Angelo
Daniel Morris
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