Congress Proposes an Abrupt Halt to Employee Retention Credit Claims


Last week, the House Ways and Means Committee approved a bill that could imminently close the window for Employee Retention Tax Credit (ERTC) claims. If passed, the deadline to file amended payroll returns to claim the Employee Retention Tax Credit moves to January 31, 2024. There are other changes to the program including extending the period for IRS audits of ERTC claims to six years and significant penalties for promoters. The termination of ERC was included as a vehicle to pay for $78 billion in tax relief for individuals and businesses in the Tax Relief for American Families and Workers Act of 2024.

The bill was approved in Committee with wide, bi-partisan support as it includes tax relief programs popular on both sides of the aisle, such as: increasing the child tax credit, allowing deduction of certain domestic research and experimentation expenses, and providing more generous accelerated deductions on the purchase of business assets. The bill still needs to be enacted by both the House and Senate, which may not happen until after January 31st. Even if this is the case, Congress may not extend the January 31st ERTC termination date.

The Employee Retention Tax Credit program has become highly scrutinized due to aggressive promotors and perceived abuse by taxpayers. If this bill is passed by Congress, there is a high likelihood that an end to the ERTC program will remain as the means to pay for the various tax benefits. If your business or non-for-profit organization has a legitimate ERTC claim being prepared or is considering filing a claim, time is of the essence to file the claim to avoid an accelerated deadline that could be coming shortly.