The Infrastructure Investment and Employment Act provides an exception for salaries paid by a recovery startup. As the name suggests, the ERTC is a credit to offset the cost of employee payroll taxes that small businesses withheld during the pandemic. While the ERTC is a great tool to help struggling companies reduce their tax burden, it's still a bit difficult to take advantage of it. Employers cannot apply to the same employee for the ERTC credit and the work opportunity tax credit during the same period, nor can they claim the same salary under the ERTC and the employer credit in section 45S for the Family and Medical Leave Act (FMLA).
Basically, if they are considered to be majority owners, their salaries are not ERTC-qualified salaries. However, if your company did apply for a PPP loan, you cannot apply for the ERTC for the same salary counted for PPP forgiveness. While the Employee Retention Tax Credit (ERTC) program has officially expired, this does not affect a company's ability to apply for the ERTC retroactively. In addition, since the beginning of the ERTC program, several laws have come into effect that affect the way in which credit can be applied for.
ERTC eligible salaries for a small employer are all salaries and health insurance benefits paid to an employee during the period in which the employer is considered an eligible employer. The ARPA, for example, allows small employers who received a Paycheck Protection Program (PPP) loan to also apply for the ERTC. The early termination of the ERTC means that companies must pay withheld payroll taxes to monetize their early credit, advised Marvin A. The employee retention tax credit (ERTC) was a relief measure under the CARES Act for companies that qualified and kept employees on the payroll.
The ERTC is a refundable credit that companies can apply for on qualified salaries, including certain health insurance costs, paid to employees. Eligible employers can apply for the ERTC by calculating the ERTC amount for a pay period and reducing the required payroll deposit by that amount. The ERTC was designed to help small businesses that lost revenue due to the pandemic, but only a few businesses are eligible. In addition, most of the notice reiterates the ERTC FAQs that were previously posted on the IRS website.
Before the IIJA became law, the NFIB led a coalition with six other small business associations to send a letter to congressional leaders, urging them not to restrict the ERTC.