On Friday, November 5th, Congress passed the Infrastructure Investment and Jobs Act. The bill is currently awaiting President Biden’s signature but is expected to be signed this week. A notable provision contained in the Act is the termination of the employee retention credit as of October 1, 2021. As such, the credit will no longer be available for the fourth quarter of 2021. The IRS will likely issue guidance for employers who may have already requested and/or received advance payments against their previously expected fourth quarter credit.
One exception to the termination of the credit on October 1, 2021, is for recovery startup businesses. Recovery startup businesses are still able to claim the maximum $50,000 credit for the fourth quarter of 2021. A recovery startup business is one that began operating after February 15, 2020 and has annual gross receipts for the three previous tax years of less than or equal to $1 million. These employers can claim the employee retention credit for up to $50,000 total per quarter for the third and fourth quarters of 2021, without showing suspended operations or reduced receipts.