President Biden’s signing of the Infrastructure Investment and Jobs Act (IIJA) on November 15, 2021, retroactively eliminates an employer’s ability to claim employee retention credits (ERC) for eligible wages paid after September 30, 2021. This means the maximum ERC per employee available to an eligible employer in the tax-year 2021 is $21,000, not $28,000.
The Coronavirus Aid, Relief, and Economic Security Act (CARES) Act provided a refundable employment tax credit for eligible employers paying qualified wages and health plan expenses. This tax credit was available for any employer whose business operations were fully or partially suspended due to orders from a governmental authority or an employer with a significant decline in gross receipts.
Originally, the covered period for the ERC under the CARES Act was March 13, 2020, to December 31, 2020, with a maximum ERC of up to $5,000 per employee. Subsequent legislative acts both extended and expanded the ERC:
The Consolidated Appropriations Act, 2021 (CAA), effective December 27, 2020, extended the ERC to include wages paid before July 1, 2021, and expanded the maximum ERC to $7,000 per employee per quarter.
The American Rescue Plan Act of 2021 (ARPA), effective April 1, 2021, extended the coverage period to include wages paid between July 1, 2021, and December 31, 2021.
The Internal Revenue Service (IRS) previously issued guidance on claiming the ERC in the third and fourth quarters of 2021 (Notice...
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