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Tax Alert: The Employer Tax Impacts of the American Rescue Plan Act

With the passage of The American Rescue Plan Act (“the Act”) last week, employers may be wondering what impacts the new law may have on corporate tax credits or incentives. The impacts, while minimal, are listed below:

  • Extension of the paid leave credits enacted in the Families First Coronavirus Response Act (FFCRA)
    • The paid FMLA credits in the FFCRA (applicable to employers with less than 500 employees) are extended through September 30, 2021, with an increased credit limit to $12,000 /employee.
  • Extension of the employee retention tax credit (ERTC) enacted in the Coronavirus Aid, Relief, and Economic Security (CARES) Act
    • The ERTC is extended through December 31, 2021, with a provision allowing “severely financially distressed” employers to consider all wages paid as eligible, regardless of size. Severely financially distressed employers are those with gross receipts less than 10% when compared to the same calendar quarter in calendar year 2019.

As always, we at FADV will continue to monitor all tax incentive legislation, especially those newly enacted COVID-related programs, so please ensure you are subscribed to our Tax Alerts to stay informed. If you have any questions on the programs discussed in this alert and how they might impact you, please contact your First Advantage Tax Consultant or your legal counsel.

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