Congress Approved Early End To Major Small Business Tax Credit Without Notice
By Terri Jo Neff |
As if small business owners haven’t had enough to deal with, now comes word that Congress pulled the rug out from under a major COVID-19 relief program that was supposed to run through the end of 2021.
Instead, many business owners are left scrambling to adjust their business plan with just three weeks left in the year.
The Employee Retention Tax Credit (ERTC) program was approved by Congress in 2020 to allow many small business owners to offset much of the cost of payroll taxes for those employees who were retained despite the pandemic. The program was to run through Jan. 1, 2022, allowing employers to claim credits of up to $7,000 per employee per quarter for all four quarters this year.
But that abruptly changed when President Joe Biden recently signed the Infrastructure Investment and Jobs Act.
According to the White House-supported legislation, the ERTC program came to a halt as of Sept. 30. That retroactive end means business owners who developed their budget based on claiming the credits Congress previously approved for the fourth-quarter will have a rude awakening at tax time.
Restaurants, retail, and professional services businesses are among the industries expected to be hardest hit by ERTC’s early termination, which was not previously publicized by the Biden Administration. It has fallen on business and trade associations to get the word out after the fact, but it is feared the message will be too late for many small businesses.
The National Federal of Independent Businesses is encouraging impacted business owners to notify their U.S. Representatives and Senators in hopes Congress will address the problem by restoring the original end date.
Information about the ERTC, including employer eligibility and claiming the credits, can be found at https://www.nfib.com/content/legal-blog/coronavirus/the-employee-retention-tax-credit-erc-what-small-businesses-need-to-know/