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Update on retroactive termination of the Employee Retention Credit

Written on Dec 9, 2021

OSCPA staff report 

The IRS issued guidance for employers regarding the retroactive termination of the Employee Retention Credit. In Notice 2021-65 its stated employers that paid wages after Sept. 30, 2021, and received an advance payment of the Employee Retention Credit for those wages or reduced employment tax deposits in anticipation of the credit for the fourth quarter of 2021, are now ineligible for the credit. 

This is because the Infrastructure Investment and Jobs Act, enacted Nov. 15, changed the law so that it only applies to wages paid before Oct. 1, 2021, except for employers that are recovery startup businesses. 

Employers that are not recovery startup businesses and received advance payments for fourth quarter wages of 2021 will avoid failure to pay penalties if they repay those amounts by the due date of their applicable employment tax returns. 

Read more from the IRS here