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1 1 (December 8, 2021)

handle is hein.crs/goveeyk0001 and id is 1 raw text is: Congressional *.Research Service Early Sunset of the Employee Retention Credit Updated December 8, 2021 The Employee Retention Credit (ERC) was designed to help employers retain employees during the Coronavirus Disease 2019 (COVID-19) public health emergency. The Infrastructure Investment and Jobs Act (IIJA, P.L. 117-58) moved the termination date for the credit forward, to September 30, 2021, from December 31, 2021. This change effectively repeals the ERC for the fourth quarter of 2021 for businesses other than recovery startup businesses. Some employers may have anticipated receiving the ERC for the fourth quarter (the IIJA was signed into law on November 15, 2021), and therefore either underpaid their employment tax liability or received an advance refund from the IRS. IRS guidance provides that taxpayers who received ERC advance payments in the fourth quarter of 2021 must repay those amounts. The IRS also provided relief from late deposit penalties for employers that reduced payroll tax deposits in anticipation of receiving the ERC in the fourth quarter of 2021. Employee Retention Credit: Summary and Legislative History The credit was first enacted in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136) in March 2020. The ERC allowed businesses to claim a refundable credit against their payroll tax liability for a percentage of wages they paid to workers after March 12, 2020, and before January 1, 2021. Initially, the credit was 50% of up to $10,000 in qualifying wages. Eligible employers included those who (1) were required to fully or partially suspend operations due to a COVID-19-related order (including nonprofit employers); or (2) had gross receipts 50% less than gross receipts in the same quarter in the prior calendar year (with the credit no longer available once gross receipts were 80% of prior year calendar quarter gross receipts). Eligible employers included tax-exempt organizations. Employers with more than 100 full-time employees could only claim the credit for wages paid when employee services were not provided. Employers with 100 or fewer full-time employees could claim the credit for any otherwise qualifying wages that were paid. The credit was structured so that employers could be reimbursed when processing payroll by reducing required deposits of payroll taxes by the anticipated amount of the credit. Many businesses make regular payroll tax payments with their payroll cycle (e.g., biweekly). The credit was also advanceable, meaning Congressional Research Service https://crsreports.congress.gov IN11819 CRS INSIGHT Prepared for Members and Committees of Congress

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