Employee Retention Retroactively Expires September 30, 2021

• The Infrastructure Investment and Jobs Act includes a provision to end the Employee Retention Credit for most businesses for eligible wages paid after September 30, 2021. Under the ARPA, this credit was supposed to be available until December 31, 2021.
• Employers who qualify as a Recovery Startup Business can continue to take the credit until December 31, 2021.

Employee Retention Credit for Business Interruption

On November 5, 2021, Congress passed the Infrastructure Investment and Jobs Act which contains a provision to retroactively end eligibility for Employers claiming the Employer Retention Credit due to a decline in gross receipts. Employers who previously qualified for this benefit are no longer eligible to claim this credit for wages paid after September 30, 2021. The bill is currently awaiting the President’s signature.

Employers who claim the credit as a Recovery Startup Business will still be eligible to take the credit until December 31, 2021.

Recover Startup Businesses must have $1 million or less in annual gross receipts and must have started operations after February 15, 2020. Recovery Startup businesses are limited to $50,000 in Employee Retention Credit per calendar quarter. To learn more, visit PCTY-97899.

Next Steps

In anticipation of this legislation’s adoption, Paylocity has removed the option for clients to claim the Employee Retention Credits for wages paid after September 30, 2021 except for in cases of Recovery Startup businesses. In order to minimize the need for corrections or amendments, this credit will no longer be calculated and applied against current payroll liabilities or requested via form 7200 or on your quarterly 941.

Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.