Another week has passed without action in Congress. House Democrats delayed an expected vote on the infrastructure bill as it became evident they didn’t have enough votes to pass the Senate-passed bipartisan legislation without further action on the much larger budget reconciliation (Build Back Better) bill.
House Speaker Pelosi and Senate Majority Leader Schumer have now set the end of October as their next self-imposed deadline. Their goal is to get both the infrastructure bill as well as the budget reconciliation bill done in the next month. Democratic leadership continues to negotiate a top-line figure on the reconciliation bill with moderates in the party. Once the top-line figure is established, we expect to get more clarity on what portions of the proposed tax increases will likely be included.
One important item to note is that the infrastructure bill eliminated the employee retention credit after the third quarter of 2021. Businesses who have qualified for the credit this year cannot count on the credit being available in the fourth quarter. The current enacted legislation allows businesses to retain payroll taxes to the extent of the expected credit generated during the quarter through December 31, 2021. If the legislation passes as drafted, it is unclear whether penalties and interest will be assessed for amounts retained in the period before new legislation passes. There has been no indication from Congress whether this part of the bill will be amended.
We will continue to provide updates as the news progresses. If you have any questions, please contact us.