Employee Retention Credits Are Being Cancelled
Finally, after the tragic year that 2020 was, things were starting to look up again. Businesses were reopening and hiring people. The economy had finally started to show signs of recovery and strength after a year of stagnation and recession. The summer of 2021 was the start of making up for that lost year. The Roaring 20s were beginning at last. One of the programs that Congress passed to help with the recovery was the Employee Retention Credit. A valuable, albeit confusing, tool we could use to rebuild our businesses. EmployerIncentives has helped businesses recoup millions of dollars through this credit this year alone. It was all going to be ok after all.
The Delta Variant raging, hospitals full again and even more people dying from this terrible disease. The Employee Retention Credit is at a crossroads. The bipartisan infrastructure bill, “INVEST in America Act of 2021” may cancel the Employee Retention Credit. This bill was passed by the Senate on August 10 and is going before the House of Representatives for a vote by September 27. One of the ways the Senators found to pay for this bill is to change the expiration date of the Employee Retention Credit to October 1, 2021, instead of January 1, 2022. That’s 3 months or 1 full quarter of ERC credits that will be lost to businesses if the infrastructure bill is paid for in this way.
Even before Delta, many business sectors were still struggling to get going and recovering. We are still 5 million jobs short of pre-pandemic levels. Last week’s jobs report only added 235,000 jobs, well below expectations. To really hit the point home, the Joint Committee on Taxation which contains members of both the Senate and House of Representatives estimates that it will cost employers $8.2 billion if the ERC is cancelled for the fourth quarter 2021.
COVID is still here and isn’t going anywhere soon. Hurricane Ida just devastated a huge swath of the country. We are going to need to shore up our small business income and add jobs to the economy now. The infrastructure bill is a great way to do that. However shutting down an emergency program that helps small businesses stay afloat is not the way to pay for the bill. There must be a different way to pay for the infrastructure improvements we desperately need and keep our small businesses thriving and hiring.
We need to let our leaders in Congress know that shutting down an emergency program like the Employee Retention Credit too soon is very unwise. If you can, please consider contacting your representatives in the House especially the Black and Hispanic Caucuses, Speaker Nancy Pelosi, Deputy Leader James Clyburn, Ways and Means Chairman Richard Neal, and other Ways and Means Committee members. To find your representative, go to https://www.house.gov/representatives/find-your-representative.
If your business needs help navigating the Employee Retention Credit or the Work Opportunity Tax Credit, we are here to help you. Contact us!