On August 1, the Senate failed to invoke cloture (cut off debate) on HR 7024, the House-passed tax bill that would, among other things, cut off employee retention tax credit (ERTC) claims, and provide better depreciation and business interest tax rules. The failed 48 to 44 cloture vote makes it ever more unlikely that the bill—which passed the House on January 31 by an overwhelming 357 to 70 vote—can be enacted into law this year.
GOP opposition to the bill was largely political, but not entirely partisan—many, but not all, Republican Senators believe that their chances of controlling the Senate in 2025 are good enough that it makes sense to wait until then in order “to get a better bill,” according to the Senate’s Republican Whip, Sen. John Thune (R-SD). There was also some substantive opposition based on the bill’s expanded child tax credit (CTC). In addition, there was some Democratic concern about the bill—some Democratic Senators say they are concerned about the fact that the bill does much more for business than for families.
Generally, HR 7024 cuts off claims to the ERTC as of January 31, 2024, and imposes substantial penalties on promoters of fraudulent ERTC claims. It also enhances depreciation write-offs for certain business investments (including software) and improves business interest deductibility. Other provisions in the bill that make it the subject of intense lobbying to enact it include research & development tax credits, expansion of the CTC, and natural disaster relief.
Prospects: While there appears to be enough support among both Senate Republicans and Democrats to enact the provisions in the bill, the politics of which side could claim a “win” from enacting the bill seems to have doomed its chances in the Senate, at least until the post-November election lame-duck session and possibly into 2025. Whether the bill’s chances will improve in November-December could depend largely on the results of the November elections.
NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.