The Infrastructure Investment and Jobs Act (IIJA) that was signed into law on November 15 ends the Employee Retention Tax Credit (ERC) one quarter early, meaning that the third quarter of 2021 is the final quarter eligible for the credit. Businesses will not be able to apply for the ERC for the fourth quarter of 2021, with the exception of recovery startup businesses.
Join us on December 8th to learn more about this change and about the ERC in general. Speakers will also address:
- Potential implications for employers that have held back on employment tax deposits for the 4th quarter in anticipation of claiming the credit.
- The ERC in general, including critical tests for eligibility.
- How your organization can take advantage of this credit.
- How a Redmond-based small business applied for and received the credit.
Real Life Employee Retention Examples
Shared with permission from Clark Nuber PS
- Restaurant in downtown Seattle with about 15 people, many which are part-time
Total ERC: $110,000 for 2021 Q1-Q3
- Daycare in Bellevue with about 60 employees
Total ERC: $230,000 for 2021 Q1
- Consulting company in Seattle with 25 people
Total ERC: $565,000 for 2021 Q1 – Q3
About the ERC
The ERC gives eligible businesses a refundable payroll tax credit that can be claimed quarterly, and can provide reductions to payroll taxes or cash refunds. Through the ERC, eligible businesses can claim a tax credit of up to $5,000 per employee per quarter in 2020 and up to $7,000 per employee per quarter in 2021 (so the maximum credit is $21,000 per employee in 2021). If your credit winds up being more than your Social Security tax liability, and you meet additional eligibility requirements, you will receive a refund from the IRS.
Small employers (i.e., employers with 500 or fewer full-time employees in 2019) may request advance payment of the credit (subject to limits). Most employers, including colleges, universities, hospitals and 501(c) organizations can qualify for the credit.
In August, the IRS issued additional guidance on the ERC, clarifying that wages allocated to the Restaurant Revitalization Fund (RFF) and Shuttered Venue Operator Grant (SVOG) programs are also allocable to the ERC. The “double dipping” prohibitions that apply to other programs, like the PPP, are not applicable here (note this double dipping prohibition only applies to 2020 and 2021 Q1 and Q2).
Join us to learn more about this guidance, eligibility requirements, and how your organization can take advantage of this credit.