Employee Retention Credit (ERC) to Die a Premature Death

The ERC, which was originally scheduled to expire on December 31, 2021, will now retroactively end on September 30th under the Infrastructure Investment and Jobs Act which has passed Congress and will most likely be signed into law by President Biden. The ERC, enacted in the early stages of the COVID-19 pandemic to aid businesses impacted by shutdowns and closures to retain their employees, is a refundable tax credit against certain employment taxes on qualified wages.

Keep in mind that:

• Certain recently-formed businesses with less than $1,000,000 of annual revenue (aggregation rules for certain related entities apply) may still qualify for limited benefits.
• Businesses that previously qualified for the ERC in 2020 or the first three quarters of 2021 can still apply for the credit for those periods.

Employers who have already reduced their 4th quarter payroll tax deposits in anticipation of an ERC, or requested an advanced ERC payment through Form 7200, will need to make an immediate catch-up payment for the outstanding tax in order to mitigate the accrual of interest on the late payment of the payroll tax deposits. The IRS is expected to provide penalty relief for businesses that reduced payroll tax deposits in anticipation of receiving an ERC for the 4th quarter.

If you have any questions, or if you need help seeing if you can still qualify, please reach out to Joseph Molloy, Martin Arking or your Anchin Relationship Partner.