How Does the ERTC Interact with the American Rescue Plan Act?
Some business owners who haven’t yet applied for the Employee Retention Tax Credit, also known as the ERTC or ERC, may have refrained from doing so because they still have a lot of questions about the tax credit. For instance, they might be aware that the ERTC was enacted as part of federal legislation, but may not know much more than that.
How the ERTC Interacts with the American Rescue Plan Act
The Employee Retention Tax Credit is a refundable payroll tax credit. Some businesses can claim it for qualified wages paid to employees if the business owners kept staff on their payroll despite major financial setbacks during the early days of the COVID-19 pandemic in 2020 and 2021.
The ERTC was included in the Coronavirus Aid, Relief, and Economic Security Act, also referred to as the CARES Act. The CARES Act was passed on March 27, 2020.
However, the tax credit was initially available for wages paid between March 12, 2020, and December 31, 2020. It has since been expanded several times.
The Consolidated Appropriations Act, 2021 (CAA) extended the ERTC to include wages paid before July 1, 2021 instead. There were a few changes to the ERTC made through this specific Act, including a change in the definition of “large employer.” It was changed to be defined as businesses with more than 500 full-time employees. The CAA also allowed many Paycheck Protection Program (PPP) loan participants to claim the Employee Retention Tax Credit, as long as they used wages they did not use for PPP forgiveness.
It was after the CAA that the ERTC got expanded again, and when the American Rescue Plan Act came into play. The American Rescue Plan Act of 2021 (ARPA) extended the ERTC another time, through December 31, 2021.
ARPA also had an impact on other tax benefits. It led to an expanded Child Tax Credit, an increased Child and Dependent Care Credit, “a more generous Earned Income Tax Credit,” and more, according to the IRS.
But when it comes to the Employee Retention Tax Credit, the main way it interacts with the American Rescue Plan Act is simply when it comes to the periods of time employers can claim the credit for eligible wages paid. ARPA expanded the coverage period to incorporate wages paid between July 1, 2021, and December 31, 2021.
Notably, the Infrastructure Investment and Jobs Act later changed the dates of the ERTC extension. For many business owners, the new legislation meant the credit applied to wages paid through September 30, 2021. However, Recovery Startup Businesses can still claim the Employee Retention Tax Credit for wages paid after June 30, 2021, and before January 1, 2022.
How Dayes Law Firm Can Help
It’s now late 2023, and we are clearly long past those aforementioned dates. However, if your business qualifies, there is still time to retroactively claim the ERTC.
The team of tax professionals at Dayes Law Firm can help you file the appropriate amended quarterly payroll tax returns on your behalf to retroactively claim ERTC funds. We are proud to say that our clients have already received over $25 million in funds for Employee Retention Tax Credit claims, and we can prove to you that we’re the right partner to work with on your ERTC application.
Please call us at (800) 503-2000 or feel free to contact us through our site. There are no upfront costs to hire our firm, and you are under no obligation to work with us following your free consultation. Give us a call today and see how we can assist you and your business with the ERTC!