Employee retention tax credit could be cut early

Lawmakers are planning to repurpose about $205 billion in unused COVID relief funds to pay for the $1 trillion infrastructure bill the House will vote on in September, Inc. reports, but the employee retention tax credit (ERTC) could be one of the programs getting axed. 

The ERTC was first authorized by the Cares Act and extended by the American Rescue Plan Act to run through 2021. The credit allows employers to receive about $28,000 per employee for the year. If it ends a quarter early, on October 1, it will be reduced to $21,000 per employee.

The timing of the cut could have been better. The U.S. economic outlook is a bit dimmer now that the delta variant has taken hold of many states, especially in the south. 

As of May, a little less than 146,500 employers had claimed about $10.2 billion of the credit. It is estimated that ending the program early would save the country about $8 billion. 

However, many businesses eligible for the credit do not realize it, says Bill Smith, national director of tax technical services at CBIZ MHM’s National Tax Office.

Some employers may also be able to access an additional credit per full-time employee. Read the full story from Inc.