AICPA Advocates on Behalf of Businesses that Benefit from the Employee Retention Credit

[ Article was originally posted on www.aicpa.org/news/ ]

The American Institute of CPAs (AICPA) has sent a letter to Congressional leadership on the Senate Finance Committee and the House Ways & Means Committee concerning a provision of the Infrastructure Investment and Jobs Act which, if enacted, would terminate the employee retention credit by sunsetting its benefits three months early, effective October 1, 2021.

With October 1^st behind us, pending legislation such as this can be very confusing to taxpayers and their advisors. When Congress passed the employee retention credit (ERC) as part of a larger COVID relief package nearly two years ago, they did so in an effort to help businesses pull through the pandemic and boost our nation’s economic recovery. This benefit was intended to sunset at the end of 2021.

If pending legislation moves to enactment, creating a retroactive sunset, the AICPA recommends that there be a committee report directive to the IRS and Treasury to waive any penalties and provide a reasonable, practical method for payment of unpaid employment taxes.

“Many do not understand that the credit continues to be available, and others are reluctant to take advantage of the credit by reducing current payroll tax deposits, fearing that it may be retroactively repealed and penalties for failure to deposit taxes may apply,” the AICPA says in the letter.

“It is vital that business owners and their advisors understand what the passage of this legislation will mean for them and their businesses,” said AICPA Vice President of Taxation Edward Karl, CPA, CGMA. “Fairness and administrability would dictate that taxpayers not be penalized for taking advantage of a tax provision that was clearly available to them in the law.”