Bid farewell to the employee retention credit (ERC) for the 4th quarter. Lawmakers giveth, and lawmakers taketh away.
In this case, what lawmakers did is pitiful. It's like magic: now you see it, now you don't.
On March 11, 2021, the American Rescue Plan Act of 2021 turned into Public Law 117-2. This brand-new law extended the ERC to the 3rd and 4th quarters of 2021.
On November 15, 2021, the Infrastructure Investment and Jobs Act turned into Public Law 117-58 and ended the ERC 3 months early, retroactive to September 30, 2021.
Lawmakers did not eliminate the fourth-quarter 2021 ERC for start-up businesses. That tax benefit made it through. Thank goodness!
Still, you can certainly rule out any retroactive repeal of a tax law to be great tax policy. And this retroactive repeal was done just 9 months after passage. It is shameful.
However do not let this bad news hinder you from claiming the credit for 2020 and for the first 3 quarters of 2021. You might bear in mind that the remaining credits can amount to $26,000 per employee.
And remember that there's no mad rush-- you have time. You can claim the ERC anytime throughout the three-year statute of limitations.
If you require assistance getting your ERC, MY CPA PRO is here for you. Please get in touch with us