The Employee Retention Credit (ERC) was established by the federal government to provide a refundable payroll tax credit to employers to help cover the cost of keeping staff employed. The passage of a bill by the Senate in early August meant that employers were aware that the ERC could be eliminated during the fourth quarter. Despite this, many employers continued to apply for the credit, as employees returned to work and revenues recovered due to the pandemic. However, with the infrastructure bill now in place, it appears that the ERC will be repealed.
This could cause difficulties for employers who have already accepted an advance against their fourth quarter ERC. The IRS is expected to soon publish guidance on what happens in this situation. Fortunately, eligible employers can still apply for the ERC for previous quarters by filing an adjusted employment tax return within the deadline set out in the instructions on the corresponding form. This will help employers to avoid any federal tax deficiencies resulting from federal employment taxes.
It is important for employers to stay up-to-date with changes in legislation and understand how they may affect their business. By taking advantage of available credits such as the ERC, employers can ensure that they are able to keep their staff employed and their business running smoothly.
Leave Reply