Fourth Quarter 2021 ERC Gets the Axe with Passing of Infrastructure Bill

2021 ERC

Written by Jessica Raymond

November 17, 2021

The Infrastructure Investment and Jobs Act was recently signed into law by President Biden. Included in the 1,039 page Bill are plans for federal highway, transit and safety programs, the nation’s broadband system, and climate change initiatives sprinkled amongst a litany of other matters. The Bill is partially paid for by shifting funds set aside for The Employee Retention Credit (ERC) resurrected under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Sec 80604 of the Infrastructure Bill prematurely terminates ERC for qualified employers as of September 30, 2021. ERC is still available for 2020 and the first three quarters of 2021 to businesses that kept employees on payroll through the worst of COVID-19 times.

For those that braved opening commerce during tumultuous economic conditions, Congress did leave one exception to the early termination ruling: recovery startup businesses. An employer that began carrying on a trade or business after February 15, 2020, subject to certain limitations, is considered to be a recovery startup business and can seek the benefit of ERC to the maximum of $50,000 for third and fourth quarter 2021.

Although ERC will end early, the program has provided significant benefits to those businesses and not-for-profits that have been impacted by COVID-19 by means of governmental shutdown or a gross receipts test.

Hawkins Ash CPAs has prepared several ERC’s for clients harvesting millions of dollars in refunds to date and counting. A common misconception is the credit is not worthwhile if the employer received funds from other COVID-19 programs such as Payroll Protection Program (PPP) loan forgiveness. Hawkins Ash CPAs is finding this misconception untrue as a majority of clients benefiting from ERC have also received PPP loans. While each client’s unique circumstances vary, the benefits of ERC deserve serious consideration and a phone call to your Hawkins Ash CPAs representative.

ERC can still be claimed on amended federal payroll tax form 941-X as long as the statute of limitations remains open which is three years from the date of filing or two years from the date of payment, whichever is later. All quarterly 941’s are considered filed on April 15 of the succeeding year.

Please contact your local Hawkins Ash CPAs office to learn more about pursuing the ERC.

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Jessica Raymond
Jessica Raymond joined Hawkins Ash CPAs in 2021. As a Tax Manager in the Firm’s La Crosse office.

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