A bipartisan bill to cut off employee retention tax credit (ERTC) claims has been introduced in the Senate. The bill pulls the ERTC provisions from the House-passed HR 7024, a bill that has been long-stalled in the Senate.

Introduced September 18, by Sens. Joe Manchin (I-WV), Mitt Romney (R-UT), and Thom Tillis (R-NC), the bill seeks to contain what is viewed as widespread fraud in connection with ERTC claims. The Senators called the ERTC “fraud-ridden, costly, and no longer necessary.”

This bill would block any claims for the ERTC (available under the law on a quarter-by-quarter basis, if stringent eligibility requirements are met, also on a quarter-by-quarter basis) as of January 31, 2024. It would also impose new, tough penalties on promoters of fraudulent ERTC claims. A revenue raiser, the bill is projected to raise about $79 billion over a 10-year period.

Prospects: This legislation mirrors provisions passed by the House but stalled in the Senate in a wider business tax/child tax credit bill, HR 7024. The hurdle in the Senate is apparently political—many Republicans prefer to wait for 2025, when they think they will control the Senate and thus be in a better position on the bill’s business tax and child tax credit issues, than they are now. Plus, the IRS regulatory stance also uses the January 31, 2024, cut-off date. Thus, whether or not this bill (or HR 7024) is enacted, chances are good that no ERTC claim filed after January 31, 2024, will be considered.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.