Happy Birthday, Employee Retention Tax Credit: Congress’s Gift to Cash-Strapped Employers Extended Through December 31

ArentFox Schiff

The Employee Retention Tax Credit (“ERTC”) has been expanded and extended further, providing relief to small and large employers affected by COVID-19 business disruptions. As we approach the one-year anniversary of its original enactment, employers should take a fresh look at their eligibility for the expanded ERTC in order to obtain the maximum tax benefits available.

On Thursday, March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (the “Rescue Act”) into law. The Rescue Act further expanded and extended the ERTC through the end of 2021, following up on changes made in December 2020 as part of the “Taxpayer Certainty and Disaster Tax Relief Act of 2020” (the “Relief Act”). The Relief Act and the Rescue Act extended and substantially expanded the availability of the ERTC for both large and small employers, including recipients of Paycheck Protection Program (PPP) loans (who previously were ineligible to claim the ERTC).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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