Employee Retention Credit

Updated 11/15/2021

What Does it Mean?

The Infrastructure Investment and Jobs Act (IIJA), that President Biden signed on Monday, November 15, 2021, retroactively ends the Employee Retention Tax Credit (ERTC). It will apply only through September 30, 2021 rather than through December 31, 2021. As a result of the retroactive termination of the ERTC, we may need to review your payroll tax compliance (including tax deposits) to make sure that it conforms with this change.

Background

Eligible employers could claim the refundable ERTC against their share of Medicare (1.45% rate) taxes equal to 70% of the qualified wages paid to each employee (up to a limit of $10,000 of qualified wages per employee per calendar quarter) in the third and fourth calendar quarters of 2021.

IIAJ Retroactive Termination

If you retained payroll taxes in anticipation of receiving the ERTC based on post-September 30, 2021 payroll taxes, we should review your situation and determine how and when to repay those taxes and address any other compliance issues. We anticipate the IRS will issue guidance to assist employers in handling any compliance issues.

If you have additional questions or concerns about how the retroactive termination of the ERTC will affect your business, please contact your tax professional or Pat Thompson at 401-831-0200.

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