Infrastructure Bill Impacts ERTC – The recently passed infrastructure bill, which President Biden is expected to sign soon, includes a provision that will end the Employer Retention Tax Credit (ERTC) early for many businesses. The bill ends the credit as of September 30, 2021, instead of at the end of 2021. There is a caveat to the new ERTC provision; Recovery Startup Businesses (RSBs) will still be eligible to receive ERTC through the end of the year.


While the credit is ending a quarter early, businesses will continue to be able to file retroactively for the tax credit for 2020 and the first three quarters of 2021.  Businesses will be allowed to file these amended returns for up to three years from the due date of the original return.


The ERTC was originally created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and amended by the Consolidated Appropriations Act, 2021. The American Rescue Plan, enacted in March of this year, extended the credit to eligible employers through the third and fourth quarters of 2021. The infrastructure bill repeals the fourth quarter extension.


The provision in the infrastructure bill had put some employers in a precarious position, being unsure if they should claim the ERTC for the 4th quarter with the legislation pending.  With that question now answered, those that have already claimed part of the credit for the 4th quarter will have to assess their next steps and await any guidance.


In early August, the IRS issued guidance on claiming the credit in the third and fourth quarters of 2021 (Notice 2021-49), and noted at the time that it was watching this legislative development. The IRS has yet to release additional guidance for businesses that will be affected by the retroactive date.