by alliantgroup staff, Houston, TX (International Headquarters)
October 6, 2021
Bi-partisan Effort to Ensure the Much-Needed Reinvestment in Employees Remains for America’s Small and Medium Sized Businesses as Pandemic Continues to Hurt Economy and Exacerbate Worker Shortages
Today former U.S. Members of Congress, Joe Crowley, Rick Lazio and U.S. Senators, Heidi Heitkamp and Mike Johanns released an open letter expressing their bi-partisan opposition to proposals to retroactively end the Employee Retention Credit (ERC) in the fourth quarter of 2021 as well as provide greater education to business owners about the ERC. As COVID-19 and its effects linger on, businesses – and our economy – rely heavily on the ERC tax credit to help keep them afloat. And, at a time when worker shortages are the primary cause of stilted supply chains, it is more imperative than ever to educate as many small and medium-sized businesses about the ERC and ensure they have time to access it.
A COPY OF THE LETTER:
October 6, 2021
To Whom It May Concern:
We write today to express our deep concern over the potential loss of one of the most impactful COVID-19 relief tools available to American businesses. It is our understanding that the Employee Retention Credit (ERC) would end prematurely should the U.S. Senate’s $1.2 trillion infrastructure bill, which passed in early August, make its way to President Biden’s desk for signature. The infrastructure bill was negotiated and agreed to with the administration. As former members of the U.S. Congress, we strongly believe that an early termination of this tax incentive would be a mistake, as American businesses continue to feel the economic impact of this pandemic.
Congress enacted the ERC with the passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The credit was created as a means for U.S. businesses to meet their payroll obligations, retain their workers, and ensure that their business continued to contribute to a struggling American economy.
Eligible businesses were initially able to claim the credit through the end of 2020. However, having seen the continued economic damage to American businesses wrought by the pandemic, the ERC was expanded and extended, ultimately through the end of this year, via the Consolidated Appropriations Act of 2021 and the American Rescue Plan Act of 2021 – which was signed into law by President Biden.
It is thanks to this expansion and extension of the ERC (as well as recent IRS guidance) that small and medium businesses and their tax advisors are finally learning about and becoming educated about the significant benefits of the ERC. Just since June, we have seen a week-by-week dramatic increase in the number of small and medium businesses that are applying for the ERC. The additional dollars these small and medium businesses are receiving under the ERC has been extremely meaningful for these businesses to retain employees and hire new employees.
Retroactively ending the ERC after the third quarter of 2021– as proposed in the infrastructure bill negotiated by the Senate with the administration would deal a blow, particularly to American small and medium sized businesses, at a time when companies continue to struggle.
We can say with confidence that now is not the time to pull the proverbial rug out from under these companies. The Delta variant continues to wreak havoc on our nation, and businesses continue to face economic hardships as our economy works its way back to normal operating capacity. The economic stall from the COVID-19 pandemic is evident as recent reports have shown a severe lack of American jobs being added back into the fold in recent months. Specifically, job creation for the month of August showed the U.S. adding only 235,000 new positions, falling woefully behind the anticipated 720,000 new hires.
These statistics clearly signal the fact that issues remain when it comes to U.S. businesses bringing on the workers necessary to not just survive, but thrive. As supporters of American small and medium sized businesses, we have seen firsthand the power of the ERC and the need for it to remain intact. It is apparent that the administration and Congress should not only reconsider the early sunset of this provision, but also consider extending the credit’s availability.
Further, we see first-hand that many businesses remain unaware of the ERC and could desperately use this tax benefit that will help our economy recover. The vast majority of the businesses we have worked with dealt with confusion surrounding their eligibility for the ERC and its interplay with other COVID-19 incentives such as PPP. It is only with the enactment of legislation this year – extending and expanding the ERC – that businesses and their tax advisors began to understand the big lift provided by ERC. For these reasons, we would encourage the Treasury and IRS to consider putting on their website updated current information that educates businesses about the ERC and its benefits and urge Treasury and the IRS to coordinate with the SBA on making sure businesses are informed about this tax credit.
Lastly, business owners have made hiring plans and decisions based on Congress’ commitment to having the ERC in place for all of 2021. We are now in the fourth quarter of 2021, and businesses are spending valuable time and resources preparing to apply for the ERC – and are rightfully relying on current law. It would be unfair to these small businesses and the employees who rely on them to reverse this critical leg of support when the pandemic is still very much with us. The administration must think hard about how to work with Congress to remove this retroactive legislation which undermines efforts to bring Americans back to work.
We have talked to countless employers, some as recently as this week, who have claimed the ERC, and in turn been able to keep employees on payroll, reinvest in their business, and push back against this catastrophic pandemic. This was the intent of the credit, and we can say with certainty that it is working.
There are many more U.S. businesses who have yet to claim the credit and who are just now learning about the ERC. Ending this provision an entire quarter early would rob these businesses of the opportunity to access capital that they desperately need in this moment.
alliantgroup Chairman for Job Creation and Retention
Former U.S. Congressman
alliantgroup Senior Vice President
Former U.S. Congressman
alliantgroup Director of Agriculture
Former U.S. Senator
alliantgroup Chairman of Agriculture
Former U.S. Secretary of Agriculture
alliantgroup is a management consulting company with a mission to strengthen American businesses through reinvestment in innovation and job growth. We educate businesses, the industry groups that serve them and the accounting firms that advise them on federal and state credits and incentives that are legislated by our government to keep the U.S. competitive in the global landscape. We are proud to have helped over 20,000 businesses claim nearly $13 billion in credits and incentives. alliantgroup is headquartered in Houston, Texas with additional offices located in Austin, Boston, Chicago, Indianapolis, New York, Irvine, Sacramento, Washington, D.C.; and Bristol and London in the U.K. For more information, visit alliantgroup and engage with us on LinkedIn, Facebook, Twitter, and YouTube.