Congress has released draft legislation titled The Tax Relief for American Families and Workers Act of 2024 that addresses several tax matters including changes to the child tax credit, extension of bonus depreciation and more. Among the most notable proposals is a call to end the ERC filing process early, meaning employers will be unable to submit ERC claims after January 31, 2024. Let’s dive into the details.

Check out our ERC Insights for more information on the ERC and claiming the credit.

For quite some time now, the IRS has been inundated with false claims for the credit. Many employers have been pushed to submit claims even though they are ineligible. This led to a moratorium on new ERC claims as of September 14, 2023. As of December 6, 2023, the IRS sent out 20,000 initial disallowance letters to taxpayers who were deemed ineligible for the credit. The letter, Letter 105 C, Claim Disallowed, aims to help taxpayers avoid audits, interest, penalties and future repayments.

What is the proposed change to ERC?

The existing deadline to submit claims for the ERC is April 15, 2024 for claims related to 2020 and April 15, 2025 for claims related to 2021.

If signed into law, the proposed tax package would shorten the deadline to file all ERC claims to January 31, 2024.

What should businesses do now?

Employers, if you’re considering filing a valid ERC claim, it is wise to prepare as if the deadline will be the proposed January 31, 2024 date and submit your claim ASAP.

What other changes are proposed in The Tax Relief for American Families and Workers Act of 2024? We explore in our blog, What’s Inside the Tax Relief for American Families and Workers Act of 2024?

We will keep you posted if/when the proposal is signed into law.

Wondering what actions your business should take at this time? We can help. Contact us.