What is ERTC?

The Employee Retention Tax Credit (ERTC) is a refundable tax credit that rewards eligible businesses up to $26,000 per employee. The ERTC was designed to help small businesses rehire and retain employees they had to let go due to the COVID-19 pandemic. It was overwhelmingly supported in the bipartisan Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020. The benefit of the ERTC was extended until December Business owners could take advantage of the ERTC against federal employment taxes via qualified wages paid to their employees from March 13, 2020 to December 31, 2021. Businesses can retroactively claim the credit against past quarters.

ERTC Expiration Date Cut Short

In November 2021, Congress passed The Infrastructure Investment and Jobs Act which reduced the active period for the ERTC, removing Q4 2021. IFA joined several other business groups to urge Congress not to subject businesses to retroactive tax increases if they had taken advantage of the Employment Retention Tax Credit (ERTC) in Q4 of 2021. Unfortunately, with the passage of the Bipartisan Infrastructure Law, three months were cut short and wages paid after Sept. 30, 2021, were ineligible for the credit.

Congressional Action

In late 2021, Rep. Carol Miller (R-WV) introduced the Employee Retention Tax Credit (ERTC) Reinstatement Act. The legislation would reinstate the ERTC through the end of 2021 to help struggling small businesses who were counting on the ERTC to pay their employees through the end of the year. The bill is cosponsored by fellow Ways and Means Members Stephanie Murphy (D-FL), Kevin Hern (R-OK), and Terri Sewell (D-AL). Today, the legislation has over 100 cosponsors. A Senate companion bill has also been introduced by U.S. Sens. Maggie Hassan (D- NH), Tim Scott (R-SC), Mark Warner (D-VA), Shelly Moore Capito (R-WV) and Ben Cardin (D-MD).  The ERTC Reinstatement Act (H.R. 6161/S.3625) would restore the assistance that was previously promised and subsequently rescinded. The need for passage has only grown more dire as employers face ongoing supply chain disruptions and increased inflation, making the costs of operating insurmountable in many cases. 

Additional Resources

Current guidance on ERTC can be found here. Congresswoman Carol Miller (R-WV) led 28 of her colleagues in sending a bipartisan letter to congressional leadership calling for swift passage of the Employee Retention Tax Credit Reinstatement Act (ERTCRA). IFA letter to White House advocating for reinstatement of ERTC.