After the law on investment in infrastructure and employment eliminated employee retention credit (ERC) for wages paid after September 30, 2021, employers who received ERC advances in the fourth quarter of 2021 became obligated to repay those advances.

Reimbursement of ERC installments for Q4 2021 is due by January 31, 2022. Employers must also report the amount of the deposit on Form 941 (Employer’s Quarterly Federal Income Tax Return), Part 1, line 1 p.m.

In the absence of IRS guidance on this, the refund amount cannot be offset by any refund from the ERC that the employer is expecting.

The only employers who do not need to repay the ERC installments for the fourth quarter of 2021 are “recovery startup companies(RSB), who were permitted under the Act to continue claiming the credit until the end of 2021. An RSB is defined as one who:

  • began to carry on a trade or business after February 15, 2020, and
  • has average annual gross receipts that do not exceed $1 million for the 3-year period ending with the taxation year preceding the calendar quarter for which the ERC is calculated.

If you have any questions about the reimbursement or declaration of ERC installments for the fourth quarter of 2021, please contact your Grassi adviser or Robert Tobeytax partner.

Robert L. Tobey Robert L. Tobey, CPA, is a partner in the tax services practice at Grassi, where he guides clients through the complexities of federal, state and international tax planning and compliance. He specializes in helping FTEs, multi-state corporations, high net worth individuals and investors achieve their business, tax savings and wealth preservation goals. Robert advises clients in a wide range of industries, with… Read the full biography

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