The Senate’s massive Infrastructure and Jobs Act would end the Employee Retention Tax Credit on Sep. 30, three months ahead of the Jan. 1, 2022, expiration date set earlier this year.
The COVID-era payroll tax break offers up to $7,000 a worker per quarter for distress businesses, which includes many vending, micro market office coffee service operations that have been using the tax allowance to help keep their workers on the payroll.
To reduce the size of the bipartisan bill, the Senate added language that repeals the ERTC extension. If the bill is passed by the House of Representatives, this fall, with the current language, operators and other industry members could lose a $7,000 tax credit for each employee. In other words, the total tax credit per employee for the year would be only $21,000 instead of $28,000.
“The National Automatic Merchandising Association is asking members of Congress to add the last quarter of the Employee Retention Tax Credit to the $3.5 trillion budget reconciliation bill,” advised Mike Goscinski, NAMA’s senior director of external affairs. “We’re asking Congress to add the fourth-quarter to the overall spending package and keep the program running through Q4 as promised under the American Rescue Plan.”
If Congress does not restore the credit, it could amount to significant losses for many convenience services operators, Goscinski warned.
Goscinski is urging operators to support NAMA’s effort by contacting their representatives. Operators can go to NAMA’s Action Center page to identify their representatives, access a form letter and send it. Letters can easily be sent using NAMA’s online form.
The NAMA government affairs official would also like to hear from operators on how the final-quarter ERTC elimination would impact their businesses and employees. Goscinski can be emailed at [email protected].
“It is beneficial to hear how important this issue is to individual companies,” he said. “NAMA would love to hear from you.”
Created by the CARES Act in March 2020, the ERTC was an incentive for struggling employers to keep workers on their payrolls during a period of mass layoffs. The tax credit has been extended several times, most recently by the American Rescue Plan, which authorized the credit through all of 2021.
The refundable tax credit is available to private-sector companies with 500 or fewer employees that lost substantial business (at least a 20% decline in receipts) or had to suspend operations during the pandemic because of government restrictions.
NAMA’s Goscinski believes that many operators are using the ERTC for the reason it was created: so they don’t have to furlough, lay off or fire their employees. And with the Delta variant raging, he noted, businesses are relying on the Q4 tax credit.