New Infrastructure Bill Kills PPP 3 and Ends Employee Retention Credit (ERC) Early
The new Infrastructure Bill that was approved by the Senate and House and is now on its way to the desk of President Biden to be signed into law, will not allow remaining PPP loan funds to be used for a new PPP 3 program, and it will not allow eligible wages of 4th quarter 2021 to be claimed for the Employee Retention Tax Credit or ERC program.
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We wanted to do this quick video. As you can see, if you follow our channel, I’m not working from the office today, I’m working from home, and usually don’t do videos on the weekend but I wanted to do this quick video because there is very important news that small business should know.
If you have been following the news, the infrastructure bill of the Biden’s administration has passed the Senate and now the house, and it’s on its way to president Biden’s desk to be signed into law. Now, I’m not going to talk about politics here, the infrastructure bill has many good things in it, but there are two things that will affect small business owners that we were hoping that they would change; they did not change, and now they will affect small business owners directly.
The first thing that you should know is that this new infrastructure bill, once it becomes law, it basically kills any possibility of a third PPP loan program; now, as you know, there was PPP one, and PPP two, both ended in May 2021; now, there was a little bit of hope that there may be a third PPP program in the future, why? Because it was estimated that approximately 27 million dollars were going back into the PPP program, even though the funds were already depleted, because around 27 million dollars were going back to the PPP, because not all PPP loans are going to be forgiven; there are a lot of PPP loans that will not be forgiven a 100%, there are a lot of PPP loans that the SBA is now knowing that they are fraudulent, or fraud loans, and basically all that money needs to be returned to the PPP program. And in the government, if there is money allocated towards a program, meaning that the money that was allocated towards PPP, if that money comes back into the program, there was a chance that they were going to use those returning funds for a third PPP program.
Once this infrastructure bill becomes law, basically is just heading now to the president desk, pretty sure it’s going to become law pretty soon; the infrastructure bill states that, any money coming back toward the PPP program will not be used for the PPP program, basically all, around 27 million dollars are going back into the PPP program, but the government can now use those funds for something else.
Obviously, anything can change, as we all know in these two years of the pandemic PPP program has been constantly changing and things can change quick, but basically this was the last remaining hope that a third PPP program was going to be a reality in the future, because we were waiting for these funds to come back. The infrastructure bill, basically kills the PPP program
Now, the second thing that you should know according to the infrastructure bill, is that this bill once it becomes law will end early the Employee Retention Tax Credit. If you don’t know what the Employee Tax Credit is, it is a very good credit that we have been helping our client to get thousands and thousands of dollars in payroll tax credits towards their business. That credit, the eligible wages for that credit were supposed to go all the way through the end of 2021, meaning that the eligible wages of the fourth quarter of 2021, you were able be used to apply for the employee retention tax credit; that’s no longer the truth. The infrastructure bill ended the Employee Retention Credit in the third quarter of 2021. So, basically, if you want to apply for the Employee Retention Tax Credit, the eligible wages will only be up until September 30th 2021.
Now, all of you that apply for the Employee Retention Credit through forms 7200 for fourth quarter 2021, we are going to have to see now how the IRS handles those cases, okay?
This is sad because the Employee Retention Credit basically was the only remaining financial help available for small business, at least we have been able to get our clients thousands of dollars in the employee retention tax credit. If you don’t know what it is, it’s a payroll tax credit that for eligible for 2020 wages you will get up to $5.000 dollars per employee; for 2021, that change to up to $7.000 per employee, per quarter; that means that you would have been able to get up to $28.000 thousand dollars per employee, for 2021.
Now, if you still have not applied for the Employee Retention Tax Credit, you can apply for it retroactively for 2020, and now you could only apply for first second and third quarter of 2021, since the infrastructure build now has eliminated the four quarter of 2021 for those eligible wages to apply for the ERC, okay?
So, once again, anything can change, maybe they may find a way for the third PPP loan, you never know, if that does come it’ll be, I would expect it, in 2022.
The Employee Retention Tax Credit, if you still haven’t received it, you can call our office at 407-344-1012, get a consultation and see if your business is eligible for the Employee Retention Tax Credit. Remember that the Employee Retention Tax Credit is available for eligible employers; independent contractors don’t apply for ERC, you have to have employees on payroll, in order to get the Employee Retention Tax Credit, and you have to show some kind of financial hardship and reduction in revenue in 2020, 2021, compared to 2019.
Call our office at 407-344-1012, schedule your consultation and see if you can still get your Employee Retention Tax Credit for 2020, and for the first half and third quarter of 2021.
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