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The New Infrastructure Law and the ERC: What Does It Mean for You?

The Infrastructure Investment and Jobs Act was signed into law today. Although the $1 trillion package seeks to expand the nation’s infrastructure, at least one provision has direct bearing on U.S. employers.

The Employee Retention Credit (ERC) was established in 2020 to encourage businesses to keep employees on the payroll during the pandemic. While the American Rescue Plan Act (ARPA) of 2021 initially extended the ERC through the entirety of this year, the new law retroactively ends the credit as of Sept. 30, 2021 — but with one significant exception remaining in place.

Organizations that claimed the ERC under the “recovery startup business” category created by the ARPA remain eligible for the credit during both the third and fourth quarters of 2021.

A recovery startup business is one that:

  • began operating after Feb. 15, 2020
  • does not have average annual gross receipts exceeding $1 million for the three-year taxable period ending with the taxable year that precedes the quarter for which the credit is being claimed
  • is not otherwise eligible for the ERC during the same quarter

As a reminder, recovery startup businesses claiming the ERC are limited to $50,000 per quarter.

Paycom is here for you

Paycom is here to assist. To help determine whether you qualify as a recovery startup business, view our ARPA Employee Retention Credit decision tree. As the legislative landscape continues to evolve, our commitment to keeping you informed never stops. Please continue following the Paycom blog for compliance-related information and much more.

 

DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.