Draft Legislation Proposes Halt to All ERC Filings by January 31, 2024

  • Tax Reform
  • 1/17/2024
Cropped shot of a couple going over their finances together

Key insights

  • On January 16, 2024, the House Ways and Means Committee released draft legislation titled “The Tax Relief for American Families and Workers Act of 2024.”
  • Many provisions have been addressed, including research capitalization, the business interest limitation, bonus depreciation, and others.
  • To pay for the changes, the proposal calls for an early end to ERC filings, moving the date to January 31, 2024.

If you are waiting to file your ERC claim, now is the time.

Talk to an Advisor

A proposed bipartisan tax deal in Congress would mean an early end to the employee retention credit (ERC) filing process. In draft legislation titled “The Tax Relief for American Families and Workers Act of 2024,” the House Ways and Means Committee addressed a variety of matters, including:

  • Changes to the child tax credit
  • Restoration of immediate expensing for domestic research and experimental expenditures
  • An extension of 100% bonus depreciation
  • Changes to the limitation on the deductibility of business interest expense
  • An increase in the limitation on expensing of depreciable business assets

While all of these are significant, of particular interest is the “pay for” proposal to end the ability of employers to submit ERC claims after January 31, 2024. The original and current final deadline for submission is April 15, 2024 for 2020 claims and April 15, 2025 for 2021 claims.

The legislation imposes additional penalties on ERC “promoters,” and contains language about extending the statute of limitations for assessment.

As of now, the legislation is in draft form and is not final

As with all proposed legislation, the House and the Senate need to pass the bill and the President needs to sign it into law before it becomes a reality. Employers should be aware that even if the January 31 deadline is not adopted, the program may come to an abrupt and early halt sometime in 2024, in advance of the current April 15, 2025 deadline.

What should you do if you are in the midst of processing or filing an ERC claim?

If you are in the process of filing an ERC claim, first make sure you are working with a qualified tax advisor to be certain you meet the eligibility requirements for the credit. If you do not meet the requirements for eligibility, do not proceed with filing the claim.

If you are working with an ERC promoter or someone who is not a qualified tax professional, be mindful of the documentation supporting your claim and reach out to your CPA or other advisor for confirmation your claim is appropriate.

If you file a claim, use care in obtaining proof of timely filing, such as a certified mail receipt, and retain that in your records along with all documentation to support your eligibility for the credit. Keep in mind while this is only proposed legislation and the deadline for filing has not changed, it could do so in the coming weeks or months.

How we can help

Contact your CLA tax professional if you are an employer considering whether you may be eligible for the employee retention credit. We can assist in determining eligibility and collecting appropriate documentation to support the claims. If you are concerned about having filed an improper claim, CLA is here to educate you and equip you with the information you need to work with your original provider to return the funds.

Contact us

If you are waiting to file your ERC claim, now is the time. Complete the form below to connect with CLA.

Experience the CLA Promise