Congresswoman Miller urges lawmakers to pass Employee Retention Tax Credit Reinstatement Act

Congresswoman Carol Miller (R-WV) today led 28 of her colleagues in sending a bipartisan letter to congressional leadership calling for swift passage of the Employee Retention Tax Credit Reinstatement Act.

Introduced by Rep. Miller in December 2021, the bipartisan legislation would reinstate the Employee Retention Tax Credit (ERTC) through the end of calendar year 2021. The ERTC was designed to help small businesses and nonprofits rehire and retain employees they had to let go due to the COVID-19 pandemic. It was overwhelmingly supported in the bipartisan Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020 and has gained support from numerous national small business and nonprofit advocacy organizations.

"By reinstating the ERTC, struggling small businesses and nonprofits can access one of the last remaining pandemic recovery programs to receive the help they need to replenish their workforce and get back on track," said Miller. "As we continue to emerge from this public health emergency, we must remember that small businesses and nonprofits in West Virginia and across the country still need our support. I urge congressional leaders to pass our bill as soon as possible to give these businesses and employees the certainty they need to keep their doors open.”

"Inclusion of the ERTCRA as part of the upcoming spending package is critical for small businesses throughout the nation," said Carla Balakgie, president and chief executive officer, National Automatic Merchandising Association (NAMA). "Employers are experiencing challenges filing their 2021 tax returns and some are even being penalized for lawfully taking the credit in the first pay periods of Q4. These employers are not asking for anything more than they were originally promised and were depending on. Quick passage is the best way to rectify the wrongful early termination of ERTC."

Tim Delaney, president and chief executive officer, National Council of Nonprofits, added: “From the day the Employee Retention Tax Credit was announced as part of the CARES Act in March 2020, charitable nonprofits recognized the refundable payroll tax credit as a lifeline, enabling their organizations to deliver desperately needed services to people in local communities throughout the country. This fall, in direct reliance on the promise of ERTC relief, frontline nonprofit service providers staffed up, parochial schools reopened, nonprofit performing arts organizations commenced their fall seasons, and many more charitable organizations brought employees back to work – only to see the ERTC taken away retroactively. Charitable organizations everywhere celebrate the bipartisan group of Representatives who are leading the charge to restore the ERTC and urge all Members of Congress to work for swift passage of the ERTC Reinstatement Act.”

Click here to read the full letter.

Background:

Originally, to be eligible for the ERTC, business owners had to demonstrate at least a 20% decline in gross receipts in either a given quarter compared to the same quarter in 2019 or the immediately preceding quarter. Alternatively, the business owner may have been eligible if the business is subject to a full or partial suspension of business operations due to a government order. 

Specifically, for last year's third and fourth quarters, business owners can qualify for the ERTC as a “recovery startup business” or qualify as a “severely financially distressed employer.” To claim the ERTC as a “severely financially distressed employer,” the business must have suffered at least a 90% decline in gross receipts in a specific quarter compared to the same quarter in 2019.

The ERTC was scheduled to expire at the end of 2021, but the recently enacted Infrastructure Investment and Jobs Act disallowed this credit for the fourth quarter of 2021. Many small businesses continued to take the tax credit into the fourth quarter, and now face a retroactive tax increase and a complex, frustrating process in reconciling the credit that they will now have to forfeit. 

The bill was introduced in the House of Representatives by fellow Ways and Means Members Stephanie Murphy (D-FL), Kevin Hern (R-OK), and Terri Sewell (D-AL) and cosponsored by over 60 bipartisan House members. The companion bill was introduced in the Senate by Senators Maggie Hassan (D-NH) and Tim Scott (R-SC).