The Infrastructure Investment and Jobs Act, passed by the House of Representatives last week and expected to be signed into law by President Biden, contains a provision that ends the employee retention credit (ERC) early for most employers.
The Act makes wages paid after September 30, 2021 ineligible for the ERC. However, “recovery startup businesses” are the exception and can continue to claim the credit through the end of 2021.
Under the Act, a recovery startup business is defined as one that:
- began carrying on any trade or business after February 15, 2020, and
- has average annual gross receipts that do not exceed $1 million for the 3-year period ending with the tax year that precedes the calendar quarter for which the ERC is calculated.
Grassi’s Tax Planning & Compliance advisors will keep you informed of developments in the ERC and other changing tax law. For more information, please contact your Grassi Tax Advisor.