The IRS has issued guidance for employers regarding the retroactive termination of the employee retention credit (ERC).
The Infrastructure Investment and Jobs Act, enacted Nov. 15, amended the law so that the ERC applies only to wages paid before Oct. 1, 2021, unless the employer is a recovery startup business.
The guidance (Notice 2021-65) applies to employers who paid wages after Sept. 30 and received an advance ERC payment for wages or reduced employment tax deposits in anticipation of the credit for Q4 2021 but are now ineligible due to the law change.
Generally, those businesses can avoid penalties by repaying the amounts by the due date of their applicable employment tax returns. Learn more.