U.S. Representatives Stephanie Murphy, Carol Miller, Kevin Hern, and Terri Sewell introduced the Employee Retention Tax Credit (ERTC) Reinstatement Act, which was designed to help small businesses rehire and retain employees they had to let go due to the COVID-19 pandemic. It was overwhelmingly supported in the bipartisan Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020.
“Over the last year and a half I was proud to lead the bipartisan effort to establish the employee retention tax credit, which provides financial support to businesses who retain or rehire workers, rather than lay them off,” said Rep. Murphy. “This provision has helped thousands of businesses and their workers recover and rebuild from the COVID-19 pandemic, and so my fellow Ways and Means colleagues and I are introducing this bipartisan legislation to ensure this program can continue and give small businesses and hardworking Americans the support they need.”
Originally, to be eligible for the ERTC, business owners had to demonstrate at least a 20% decline in gross receipts in either a given quarter compared to the same quarter in 2019 or the immediately preceding quarter. Alternatively, the business owner may have been eligible if the business is subject to a full or partial suspension of business operations due to a government order.Specifically, for this year’s third and fourth quarters, business owners can qualify for the ERTC as a “recovery startup business” or qualify as a “severely financially distressed employer.” To claim the ERTC as a “severely financially distressed employer,” the business must have suffered 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 recently enacted 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 that they will now have to forfeit. “I’m pleased to lead my Ways and Means colleagues in introducing the Employee Retention Tax Credit Reinstatement Act,” said Miller. “By reinstating the ERTC, struggling small businesses can access one of the last remaining pandemic recovery programs to receive the help they need to replenish their workforce and get back on track. As we continue to emerge from this public health emergency, we must remember that small businesses in West Virginia and across the country still need our support. I urge Congressional leaders and President Biden to pass our bill into law as soon as possible to give these businesses and employees the certainty they need.” “Eliminating the Employee Retention Tax Credit was the wrong decision and hurts our small businesses who are still recovering from the economic fallout of the pandemic. We must provide certainty and predictability to American small business owners. I am proud to join my colleagues in support of this legislation and I hope to earn strong bipartisan support in the House,” said Hern. “From our biggest cities to our rural towns, our nation’s small businesses help our communities thrive,” said Sewell. “As we build back better from the COVID-19 pandemic and grow our economy, we must make supporting our small business owners a top priority. By reinstating the Employee Retention Tax Credit, this bipartisan bill will provide much needed relief to Alabama’s small businesses, helping them rehire workers lost due to the pandemic. I was proud to join my colleagues in introducing this commonsense legislation and urge swift passage!”