Updated November 22nd, 2021:
The Employee Retention Credit (“ERC”) came into existence with the passing of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act in March 2020. This tax credit encouraged businesses to keep employees on payroll during a time of extreme economic uncertainty. Following the CARES legislation, The Consolidated Appropriations Act (“CAA”) was enacted in December of 2020, and the American Rescue Plan Act (“ARPA”) enacted in March of 2021. Both subsequent legislative enactments amended and extended the availability of Employee Retention Credit throughout the entirety of the 2021 tax year. **Please see updated guidance below:
Legislative changes made through the recent passing of the Infrastructure and Investment Jobs Act discontinued the Employee Retention Credit for the fourth quarter of 2021 (10/01/2021 – 12/31/2021). As the current tax year comes to a close, the availability of funds for the previous quarters of tax years 2020 and 2021 can provide crucial funding for future payroll, equipment purchases, infrastructure, or special projects.
While the criteria for eligibility was certainly restructured in some respects, one thing is clear: ERC has remained as an active and valuable tax benefit far longer than most experts anticipated. Under the latest legislation, ERC is currently poised to sunset at the end of 2021. Further, such legislation permitted ERC amendments to occur so long as the statutory deadline from the date of filing remains open–traditionally three years from the date of filing. In other words, ERC claims can occur well into the 2024 tax year. While the three major legislative actions in the past 8 months have refined and extended the availability of ERC, one key question remains: “What’s next for ERC?”
The honest answer is rather simple – the future remains uncertain. ERC is unquestionably a lucrative and valuable tax benefit for companies across the U.S. However, one must remember ERC came to fruition during a time of extreme economic uncertainty resulting from the COVID-19 Pandemic. Today, this economic uncertainty has arguably been significantly reduced. By contrast, the surge of COVID-19 cases resulting from the Delta Variant lends itself to the reintroduction of economic uncertainty for businesses across the nation. Given this, it is fundamental that businesses continue to position themselves to be ready for anything – and the potential benefit of ERC is an evaluation companies must consider. More importantly, while amendments to payroll tax returns are now permitted, the delay associated with amending can certainly be a difference-maker regarding the receipt of a significant tax benefit in a timely manner. Like anything, a future prediction comes with caveats. What remains true is ERC is here today – and taking advantage of its potential benefit in real-time continuously puts you and your company in a stronger financial position. With countless ERC claims evaluated, analyzed, and ultimately delivered, Ayming USA remains at the forefront as a partner to American businesses of all sizes. Contact us today to maximize the benefit you deserve.
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