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Infrastructure Act Ends Employee Retention Credit Early

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On Friday, November 5, 2021, Congress passed H.R. 3684, the $1.2 trillion Infrastructure Investment and Jobs Act. The legislation will deliver $550 billion of new federal investments in America’s infrastructure over five years, from bridges and roads to the nation’s broadband, water, and energy systems.

Within the 1,039 pages of this new legislation is a section of the bill that many business owners should be aware of: the termination of the Employee Retention Credit (ERC) for employers who are subject to closure due to COVID-19.

The infrastructure legislation ends the ERC early, making wages paid after September 30, 2021, ineligible for the credit (except for wages paid by an eligible recovery startup business).

The employee retention tax credit was created by the CARES Act in March 2020 and amended by the Consolidated Appropriations Act in December 2020. The American Rescue Plan Act, enacted in March 2021, extended the ERC through the end of 2021 so eligible employers could claim the credit in the third and fourth quarters of the year. However, the Infrastructure Investment and Jobs Act now repeals the fourth quarter extension.

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