The Employee Retention Tax Credit is a tax credit that is being offered by the United States government in order to encourage employers to retain their employees. The act was introduced by Senator Hassan and is set to expire in the fourth quarter of 2021.
About the Employee Retention Tax Credit
The Employee Retention Tax Credit Reinstatement Act (ERTCRA) is an attempt to reinstate the employee retention tax credit through 2021. This tax credit has helped many businesses keep employees during the COVID-19 pandemic.
When the Employee Retention Tax Credit program was terminated in September of this year, many employers found out that they would have to pay the IRS back for taking advantage of the credit. This is a significant financial burden and is likely to have a negative impact on some businesses.
While there is no official information on the ERC reinstatement deadline, it appears that Congress is aiming to enact legislation to restore the credit as soon as possible. Senators Maggie Hassan and Tim Scott have introduced similar bills in the Senate, while House Representatives Carol Miller, Kevin Hern and Terri Sewell have introduced the Employee Retention Tax Credit Reinstatement Act in the House.
The Employee Retention Tax Credit Reinstatement act is a refundable tax credit that was intended to help small businesses and nonprofits retain employees. It was implemented in conjunction with the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
A group of members of Congress sent a letter to Speaker of the House Nancy Pelosi and Minority Leader Mitch McConnell, urging the passage of the Employee Retention Tax Credit Reinstatement act. They claimed that the repeal of the CARES tax credit hit at an inopportune time.
Although the reinstatement of the tax credit is not expected to happen in the near future, the ERTC is being reinstated through 2021. Many lawmakers argue that the repeal of the tax credit earlier in the year caused confusion and uncertainty for many businesses. Specifically, they noted that the CARES act provided payroll assistance to small businesses.
In addition to the reinstatement of the ERC, lawmakers are working to pass other legislation that will provide relief to businesses. These bills include a bill that will allow eligible small businesses to participate in the Paycheck Protection Program.
Another piece of bipartisan legislation that has been introduced in the Senate is a bill that will extend the credit to the end of 2021. Other legislation has been introduced in the House to reinstate the Employee Retention Tax Credit and the CARES Act.
Initiated by Senator Hassan
Senator Hassan has worked with Republicans and Democrats to make a difference. She has fought for critical New Hampshire priorities and held corporate special interests accountable. With her work, she has ensured Granite Staters have access to quality health care.
Senator Hassan is a leading voice for lower prescription drug prices and has successfully negotiated bipartisan legislation to help patients with substance use disorder. She has also fought to end the “gag clause” that prevents pharmacists from informing patients of cheaper drug options.
As an independent leader, Hassan has a reputation for getting results. She is a staunch advocate for children with disabilities, women's reproductive rights, and fiscal responsibility. Currently, she is focusing on pocketbook issues, including fighting to suspend the federal gas tax.
Senator Hassan is a strong ally for veterans and their families. She is working to increase opportunities for veterans to receive quality health care. In addition, she is helping to combat the opioid and heroin crisis. The senator is dedicated to keeping America free and safe.
A former attorney, Hassan started her career with the Massachusetts Department of Social Services. Before going to law school, she worked as an assistant counsel at Brigham and Women's Hospital in Boston. Her experience is a great foundation for her legislative work.
She was the leading negotiator of the Bipartisan Infrastructure Law, which invested billions of dollars to repair roads and expand high-speed internet in every community in the state. Moreover, her efforts led to the expansion of the Employee Retention Tax Credit.
On the health front, Hassan has worked to reduce student loan debt, provide tax relief to hard-working families, and increase access to lower-cost prescription drugs. She has also helped to pass into law bipartisan legislation to strengthen cybersecurity, eliminate barriers to care for women veterans, and improve access to COVID-19 vaccines.
Senator Hassan is also a leader on clean energy, focusing on reducing dependence on oil. Her Senate bill will invest $369 billion toward clean energy technology and sustainable farming practices.
Senator Hassan will continue her fight to lower health costs for Granite Staters. She has introduced legislation to allow Medicare to negotiate the price of prescription drugs.
Expires in the fourth quarter of 2021
The Employee Retention Tax Credit (ERTC) is a good old fashioned federal tax break for retaining employees. However, it's time for this government sponsored philanthropy to go the way of the dinosaurs. With an aging population, more employers will be retiring than hiring and claiming an ERTC may be a pipe dream. Fortunately, the elusive credit is not out of reach if you're willing to troll the IRS. After all, no one wants to go to the effort of hiring and firing an apathetic employee.
To make matters more complicated, there are many trolls out there. To that end, the IRS has rolled out an alert system that will help you avoid these boogie woogies. If you haven't already, consider enlisting a tax preparer to guide you through the tangles. Once you have it nailed down, you can get back to the business of attracting and retaining top talent. ERTCs of the past have a ceiling in the neighborhood of $13,500 per employee per year. That's about $4,000 a month. Depending on your company size, you could be looking at a grand slam. Getting a qualified candidate to take the job is no small feat.
To help you navigate this new and improved state of affairs, the IRS has put together a nifty infographic. It's not a comprehensive guide, but it's a decent starting point.
Sponsors
The Employee Retention Tax Credit Reinstatement Act is an effort to revive the tax break that expired last year. It would give small businesses and nonprofits a chance to rehire employees by refunding money they have already paid to the IRS.
The ERTC is intended to keep people on the payroll of businesses, so they can stay in business. However, many organizations are finding that the credit is being discontinued by the IRS, and they are having to adjust their budgets. Many nonprofits are also facing retroactive tax increases, so they are asking Congress to provide them with relief tools.
The Employee Retention Tax Credit is a refundable tax break of up to $7,000 per employee. Businesses are eligible to receive this credit if they lost twenty percent of their quarterly gross revenue during a fiscal year. A business with a hundred employees could receive $700,000 for one quarter.
The ERTC was originally in effect from March 2020 to September 2021. However, the House passed a bipartisan infrastructure bill in November, which terminated the credit for the fourth quarter of 2021. This means that many nonprofits and businesses may be forced to refile their taxes, if they qualify for the refundable tax credits.
In the 118th Congress, there are a number of lawmakers who are looking to revive the refundable tax credit. The bill has 114 cosponsors, including several Democrats and Republicans.
Representatives Terri Sewell (D-TX), Tim Scott (R-SC), Ben Cardin (D-MD), and Maggie Hassan (D-NH) all cosponsored the ERTC Reinstatement Act. They were joined by seven other Democratic and Republican cosponsors.
Sponsors of the ERTC Reinstatement Act include a broad array of organizations and lawmakers. One of them is the National Automatic Merchandising Association. NAMA is a nonprofit that represents the unattended food services industry. During a meeting with congressional representatives in November, 100 representatives from the convenience services industry expressed their concerns.
Another nonprofit organization that has also been supporting the ERTC Reinstatement Act is the National Council of Nonprofits. More than 1,000 charitable organizations sent a letter in February to Congress requesting that the fourth quarter of the tax break be reinstated.
