Summary

The current draft of the Tax Relief for American Families and Workers Act of 2024 includes a proposed provision that would dramatically accelerate the deadline to file claims for the Employee Retention Credit (ERC) to January 31, 2024.

The Upshot

• The ERC is a much-scrutinized refundable tax credit of up to $26,000 per employee for certain wages paid by employers between March 12, 2020, and before October 1, 2021.
• Generally, an employer is eligible for the ERC if (1) it was subject to a COVID 19-related governmental order that wholly or partially suspended its business operations, or (2) it suffered a substantial reduction in gross receipts.
• The current proposal would move up the filing deadline for all ERC claims to January 31, 2024.

The Bottom Line

Taxpayers considering submitting a claim for the ERC should act quickly to gather relevant information and carefully vet claims before submission. Ballard Spahr’s Tax Group will continue to monitor the bill and provide updates and is available to assist.

The Tax Relief for American Families and Workers Act of 2024, the 2024 tax bill vehicle, moved from the House Ways and Means Committee to the full House last week. Among other tax changes, the bill includes a provision that would dramatically accelerate the deadline to file claims for the Employee Retention Credit (ERC).

The ERC is a refundable tax credit of up to $26,000 per employee for certain wages paid by employers between March 12, 2020, and before October 1, 2021. Generally, an employer is eligible for the ERC if (1) it was subject to a COVID 19-related governmental order that wholly or partially suspended its business operations, or (2) it suffered a substantial reduction in gross receipts.

Under current rules, a business that qualifies for the ERC can make a claim (1) until April 15, 2024, for qualified wages paid between March 13 and December 31, 2020, and (2) until April 15, 2025, for qualified wages paid between January 1, 2021, and September 30, 2021.

Due to aggressive marketing by promoters and perceived abuse by taxpayers, the IRS has targeted taxpayers who claimed the ERC. Currently, the IRS has placed a moratorium on processing claims for the ERC—with no announced ending date—and recently announced a voluntary disclosure program for taxpayers who may have improperly claimed the ERC.

The bill represents another attack on the ERC, this time by Congress. The current version would require all claims for the ERC (for qualified wages paid in 2020 or 2021) to be filed on or before January 31, 2024, giving taxpayers who have not yet filed practically no time to perfect claims. Even if the bill is amended by the House and Senate and the deadline changes, given the continued skepticism toward the ERC, it would not be surprising if the final tax package includes an accelerated ERC deadline. Accordingly, taxpayers who are considering a submitting a claim for the ERC should act quickly to gather relevant information and submit carefully vetted claims.

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