NFIB is urging Congress to consider fourth-quarter reinstatement during the lame-duck session this month
NFIB is urging Congress to reinstate the Employee Retention Tax Credit (ERTC or ERC) during the lame-duck session of Congress. 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 for up to $28,000 per employee in tax credits last 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 the fourth quarter.
On Feb. 10, the U.S. Senate joined the U.S. House of Representatives by introducing the Employee Retention Tax Credit Reinstatement Act which, if passed, would restore the original timeframe for the ERTC.
The video series “In Their Own Words” features small business owners from around the country speaking on the issues that affect their businesses daily. Jerry Akers, owner of 36 Great Clips salons across Iowa and Nebraska, spoke out on the value and challenges of the ERTC.
“When we went into the pandemic, it was exceptionally frustrating and scary for us because we were worried about our 200 employees and what was going to happen to them. Then as the government came out with different programs, in particular the ERTC, we saw that as a real opportunity to solidify the lives that our employees were leading and make sure that they were well-taken care of.”
According to NFIB’s March COVID-19 Small Business Survey, a fifth of small employers claimed the ERTC for wages in 2020, and another 18% claimed the ERTC for wages in 2021.
“Not only did they take away money that we had anticipated on using to help enhance our employee’s lives but also, the IRS sent us a warning and a fine because of the monies that we were not sending in because it was a part of the ERTC, Akers explained. “They didn’t understand, so they fined us and we had to fight that battle.”
The uncertainty of this tax credit makes it difficult for small business owners to plan for their economic future. Many businesses across the nation were counting on receiving the ERTC for all four quarters during the pandemic recovery.
“[Congress] simply cannot make promises to the American public, in particular business owners, and then at the last minute pull that back because we as business owners make plans, especially financial plans, quite a ways in advance,” Akers said. “And many times, we do it based on the regulations and the guidelines you’re giving us at that point in time.”
To learn more about how to claim the ERTC from a CPA, you can join the Dec. 7 webinar. If the early termination of the ERTC is harmful to your business, please tell your Representative and Senators to support the ERTC Reinstatement Act and make this crucial credit available as planned.