![]() ![]() ![]() 31, 2021," said Allan Smith, senior manager of operating risk and strategic initiatives at Paychex, an HR and payroll services firm. "Eligible employers are still able to take advantage of the employee retention credit against applicable employment taxes and qualified wages paid to their employees through Dec. SHRM Online articles House Passes Infrastructure Bill with Workplace Provisions and After Repeal of Employee Retention Credits, Next Steps for Employers.)Īlthough the Employee Retention Tax Credit (ERTC) is expiring at the end of 2021, there's still time for eligible businesses to claim the credit, if they haven't already. Kirsner, a shareholder in the Fort Lauderdale, Fla., office of law firm Greenberg Traurig LLP. This would effectively reduce the maximum credit available to eligible employers from $28,000 to $21,000.Įarly termination of ERTC means that " businesses will need to pay back the payroll taxes retained to monetize their anticipated credit," advised Marvin A. 1, 2022 (except for wages paid by a recovery startup business, for which the expiration date would remain unchanged). 5, 2021, accelerated the end of the credit retroactive to Oct. Infrastructure Investment and Jobs Act approved by the House on Nov. The Section 118 treatment is welcome relief for taxpayers receiving government payments such as tax incentives from Alabama that may have been treated as included in federal taxable income.Update: Infrastructure Bill Ends ERTC as of Oct. With the state’s pass-through entity tax, Alabama joins a growing number of states that have enacted SALT deduction limitation ‘workarounds.” Read our Insight here that discusses the states that have enacted these pass-through taxes. Additional guidance may be offered by the state that would provide some relief for affected taxpayers who otherwise would be eligible for refunds in these prior years. Although it appears taxpayers may be able to file amended returns to increase attributes (e.g., net operating losses and credits) that could be carried into later years, it is not clear how other taxpayers may be able to benefit from the retroactive provisions. Furthermore, eliminating throwback will provide relief to in-state companies.Īlthough the GILTI deduction and the exclusion for amounts contributed by Alabama or its political subdivisions are both retroactive, the legislation largely erases the benefit of these favorable adjustments by prohibiting refunds from being granted or paid for tax years ending before January 1, 2020, to the extent related to the provisions of H.B. However, the relief provisions around tax reform may reduce many Alabama taxpayers’ tax liabilities. Out-of-state taxpayers generally will see an increase in Alabama apportionment due to the change to a single-sales factor. 170 represents one of the most significant changes to Alabama’s corporate income tax in many years. With the state’s pass-though entity tax, Alabama joins a growing number of states that have enacted SALT deduction limitation ‘workarounds.’ Although certain favorable provisions have retroactive relief, the legislation prohibits refunds for tax years ending before January 1, 2020, to the extent such refunds are related to provisions of the new law. Throwback repeal and tax relief provisions may provide some Alabama taxpayers with tax relief. Change to a single-sales factor may benefit in-state taxpayers while out-of-state taxpayers may see an increase in tax. implementation of an elective pass-through entity tax.Īdditionally, the state decouples from GILTI income inclusions retroactive to tax years beginning after December 31, 2017.Īlabama taxpayers should be prepared for significant modifications to their Alabama taxable income.specified treatment for calculating Section 163(j) limitations. ![]() 170 makes significant changes to Alabama’s income tax, including the following effective for tax years beginning on or after January 1, 2021: ![]()
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