Potential Legislation Could Eliminate Q4 ERC Benefits

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  • 8/3/2021
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Late Sunday night, the bill text of the bi-partisan infrastructure bill (H.R. 3684) was finally released to the public. As expected, it included funding for roads, b...

Late Sunday night, the bill text of the bi-partisan infrastructure bill (H.R. 3684) was finally released to the public. As expected, it included funding for roads, bridges, rail, ports, broadband, and waterworks, as well as some energy/climate provisions.

The bill has been presented as a bill with no new tax hikes, and is still waiting to be scored by the Congressional Budget Office (CBO). Some of the initial criticism of the bill is that the pay-fors aren’t truly pay-fors that would pay for the bill, but rather moving unspent money from previous bills. One such pay-for is the potential elimination of the 4th Quarter Employee Retention Credit (ERC).

The maximum ERC per employee is $7,000 per quarter for businesses that have a 20% reduction in their quarterly 2021 revenues (compared to the same quarter in 2019).

As written, H.R. 3684 would shorten the lifespan of ERC on October 1st, except for recovery startup businesses (defined as businesses which began after February 15, 2020 for which the average annual gross receipts for the three taxable year period ending with the year that precedes the calendar quarter for which the credit is determined does not exceed $1 million). All other provisions related to the ERC in theĀ Consolidated Appropriations Act, 2021, as well as the American Rescue Plan, would remain unchanged.

This bill has not passed yet, and will need to work its way through the House and Senate. We just wanted to give you a heads up as to the possible changes.

This blog contains general information and does not constitute the rendering of legal, accounting, investment, tax, or other professional services. Consult with your advisors regarding the applicability of this content to your specific circumstances.

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