Infrastructure Act Ends Employee Retention Tax Credit Deadline Early

On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act into law. While key initiatives in the law include improving and rebuilding roads, bridges, and broadband access, a major change impacting employers is also included in the law.

In the law, the Employee Retention Tax Credit deadline has been moved up to September 30, 2021, instead of December 31, 2021, ending the employer's ability to claim the credit a quarter early. Only startup recovery businesses still remain eligible to access the credit through the end of 2021 (companies that began operations after February 15, 2020, and with average annual gross receipts of $1 million or less).

Referenced in a SHRM article, the Employee Retention Tax Credit was created by the CARES Act in March 2020 to encourage businesses to keep employees on the payroll. Later legislation amended and extended the credit and the availability of certain advance credit payments through the end of 2021.

Eligible employers (those forced to suspend operations due to COVID-19 and those that experienced a significant decline in gross receipts) could claim up to $7,000 of the first $10,000 in pay and health benefits in each qualifying quarter.

According to this recent SHRM article, "ending the ERTC early would save the federal government more than $8 billion."

Ahola clients that claimed the CARES Act Employee Retention Business Credit in Q4 2021 will need to enter negative amounts in the CARES Act Business Credits equal to the amounts that were previously claimed for Q4 2021.  The negative Business Credits will be processed on the next payroll for the Employer to repay the Credits taken in Q4 2021.