Sign in Subscribe
Legislative bills

Bipartisan Effort to Reinstatement Employee Retention Tax Credit Act

Strategic Insights

— 1 min read

U.S. Representatives Stephanie Murphy, D-Fla., Carol Miller, R-W.Va., Kevin Hern, R-Okla., and Terri Sewell, D-Ala., introduced the Employee Retention Tax Credit (ERTC) Reinstatement Act to provide financial support to small businesses that retain or rehire workers laid off due to the COVID-19 pandemic. The ERTC was designed to help small businesses recover and rebuild from the pandemic. Representative Murphy, who led the bipartisan effort to establish the ERTC, stated that this provision has helped thousands of businesses and their workers recover and rebuild.

Key Takeaways:

  • The Employee Retention Tax Credit (ERTC) was originally introduced in the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020.
  • The ERTC provides financial support to small businesses that retain or rehire workers laid off due to the COVID-19 pandemic.
  • To be eligible for the ERTC, business owners must demonstrate at least a 20% decline in gross receipts in a given quarter compared to the same quarter in 2019 or the immediately preceding quarter.
  • Alternatively, business owners may qualify as a "severely financially distressed employer" if they suffer at least a 90% decline in gross receipts in a specific quarter compared to the same quarter in 2019.
  • The ERTC was scheduled to expire at the end of 2021, but the Infrastructure Investment and Jobs Act disallowed this credit for the fourth quarter of 2021.
  • Many small businesses have continued to take the tax credit into the fourth quarter, and now face a retroactive tax increase and a complex, frustrating process in reconciling the credit.
  • The ERTC Reinstatement Act aims to provide certainty and predictability to American small business owners.

Statistics:

  • Estimate of small businesses that have benefited from the ERTC: Thousands (accurate estimate not provided)
  • Percentage of decline in gross receipts required to qualify as a "severely financially distressed employer": 90%
  • Number of quarters that small businesses can qualify for the ERTC as a "recovery startup business": Unknown (not specified in the source)
  • Date of introduction of the CARES Act: March 2020
  • Date of expiration of the ERTC: End of 2021
  • Period disallowed for the ERTC by the Infrastructure Investment and Jobs Act: Fourth quarter of 2021

Sources:

  • [United States House of Representatives, Congressman Tim Murphy (PA-18), Stephanie Murphy (D-Fla.), Carol Miller (R-W.Va.), Kevin Hern (R-Okla.), and Terri Sewell (D-Ala.)]

Read more