The death knell of the Employee Retention Credit (ERC)—a provision of the Coronavirus Aid, Relief, and Economic Security Act, H.R. 748, (CARES Act,) an economic stimulus bill passed by the 116th U.S. Congress and signed into law by President Donald Trump in March 2020—has been sounded by the Infrastructure Investment and Jobs Act (IIJA.) The refundable payroll tax credit was claimable by small businesses during the COVID-19 pandemic. It was designed to help employers keep employees on the payroll during the midst of the health crisis.
However, Biden’s Infrastructure Investment and Jobs Act (IIJA)—originally, the INVEST in America Act (H.R. 3684), a federal statute enacted by the 117th United States Congress—signed by him in November 2021 has retroactively and almost entirely removed the right to claim ERC for wages after September 2021. For the 2020 period, an employer could claim up to $5,000 per employee. Afterwards, an extension of the ERC increased the per-employee rate to $7,000 per quarter for the first half of 2021. Qualifying employers were those who were affected by COVID shutdown orders or whose gross receipts declined by 50%, in 2020, for the corresponding quarters of 2019 and below 80%, in 2021; new businesses could use the corresponding quarters from 2020. Participants in the Paycheck Protection Program (PPP) loans, retroactively to March 27, 2020 were allowed to make claims. The Consolidated Appropriations Act, 2021 (CAA) extended the ERC to include wages paid before July 1, 2021 and the American Rescue Plan Act of 2021 (ARPA) extended coverage to include wages paid between July 1, 2021, and Dec. 31, 2021. Claimants can still apply for periods covered but the ERC is no more.
–Richard Thomas
