Construction Industry Opportunities for Extended Employee Retention Credit

On February 27, 2021 the House of Representatives passed the American Rescue Plan Act of 2021 (ARPA).  One of the items included in this bill is an extension of the Employee Retention Credit (ERC).  The ERC is a refundable payroll credit that is currently set to expire in June 2021.  The ARPA proposes extending the ERC period through December 2021.  The bill will next go to the Senate where it is expected to be approved using the budget reconciliation process.  If the bill is signed into law this would be great news for all qualifying businesses, especially those in the construction industry. 

While companies engaged in residential construction may have seen increased demand, those who work in the nonresidential construction sector are more likely to have experienced a decline in the volume of jobs available.  According to Ed Zarenski’s “2021 Construction Economic Forecast”, new jobs started in 2020 declined 24% for nonresidential buildings and 14% for non-building construction work.  This is anticipated to result in reduced construction spending and jobs over the next two years.  A reduction in construction spending into 2021 would make construction companies prime candidates for the extended ERC. 

The ERC currently allows employers to claim a refundable payroll tax credit for 70% of eligible wages and health insurance costs for up to $10,000 per employee, per quarter for the first two quarters in 2021.  Eligible employers include businesses that have full or partial restrictions due to a government public health order.  It also includes businesses with a 20% or greater reduction in gross receipts for a quarter of the year in 2021 as compared to the same quarter in 2019 (for example, Q3 2021 as compared to Q3 2019). Businesses with fewer than 500 employees may include wages and health benefits when calculating the credit regardless of whether the employees were providing services.  Businesses with more than 500 employees may only include wages and benefits paid to employees who were not providing services (i.e. employees who continued to receive compensation or health benefits while furloughed) when calculating the ERC. 

If passed, the ARPA would extend the aforementioned rules for calculating the ERC through December 2021, giving employers who may see more long-term negative effects of the pandemic an additional opportunity to utilize the ERC. 

For more detailed information on the Employee Retention Credit check out our prior article, “The Latest Stimulus Package Enhances the Employee Retention Credit”. 

For additional information or assistance with the Employee Retention Credit, reach out to any of your contacts at Schneider Downs or contact Matthew Werner at [email protected] or Ross Alessandro at [email protected].

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2021 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Will We See Charitable Gift Breaks Post 2021?
Timber! The Rise and (Hopeful) Fall of Lumber Prices
IRS Announces 2020 Marginal Well Credit
G-7 Countries Reach Milestone Global Minimum Tax Agreement
Heavy Equipment Dealers Increase Profitability with GPS Tracking
Proposed Tax Reform 2021: Proposed Increased Individual Income Taxes on High Income Taxpayers
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Map of Pittsburgh Office
Pittsburgh

One PPG Place, Suite 1700
Pittsburgh, PA 15222

[email protected]
p:412.261.3644     f:412.261.4876

Map of Columbus Office
Columbus

65 East State Street, Suite 2000
Columbus, OH 43215

[email protected]
p:614.621.4060     f:614.621.4062

Map of Washington Office
Washington, D.C.

1660 International Drive, Suite 600
McLean, VA 22102

[email protected]
p:571.380.9003

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×