The law would revert the ERTC to cover all four quarters of 2021
On Tuesday, December 7, the Employee Retention Tax Credit (ERTC) Reinstatement Act was introduced in the U.S. House of Representatives. Its sponsors are Rep. Carol Miller (R-WV), Rep. Stephanie Murphy (D-FL), Rep. Kevin Hern (R-OK), and Rep. Terri Sewell (D-AL). If passed into law, the bill will revert the ERTC to cover all four quarters of 2021, instead of only the first three quarters.
In 2020, Congress created the ERTC, a tax credit to offset the cost of payroll taxes on employees that small businesses retained through the pandemic. According to NFIB’s November COVID-19 impact survey, 13% of small employers claimed the ERTC for wages in 2020 and another 13% claimed the ERTC for wages in 2021.
The ERTC was originally set to expire on January 1, 2022, giving employers the ability to claim it for all four quarters of 2021. Since the ERTC offered savings of $7,000 per employee per quarter in 2021, this meant employers were eligible to up to $28,000 per employee in tax credits this year.
However, on November 15, 2021, the federal Infrastructure Investment and Jobs Act (IIJA) was signed into law. This bipartisan physical infrastructure law includes a provision changing the ERTC’s timeframe to only apply for the first three quarters of 2021, and not Q4.
NFIB issued a letter of opposition to the shortening of the ERTC at the time, and now has issued a statement of support for the ERTC Reinstatement Act. “Small businesses continue to manage several challenges such as the labor shortage, supply chain disruptions, and COVID-19 variants,” said Courtney Titus Brooks, NFIB’s Senior Manager of Federal Government Relations, in a statement.
“The Employee Retention Tax Credit is one of the last COVID-19 recovery programs available to small businesses and by reinstating it for the fourth quarter, owners who were planning on using the tax credit will no longer face a retroactive tax increase or burdensome paperwork. NFIB thanks Reps. Carol Miller, Stephanie Murphy, Kevin Hern, and Terri Sewell for their work to support Main Street and introduce the Employee Retention Tax Credit Reinstatement Act.”
If the early termination of the ERTC is harmful to your business, make sure your Members of Congress know that you also support the passage of the ERTC Reinstatement Act to return the ERTC to its originally planned timeframe instead of being subjected to an eleventh-hour shortening.