Potential Change to the Employee Retention Tax Credit Deadline
February 2, 2024
The Tax Relief for American Families and Workers Act of 2024, was passed by the House of Representatives on January 31st, 2024. As drafted, H.R. 7024 would not allow new Employee Retention Credit (ERC) claims to be submitted after January 31, 2024, and all improper claims would be subject to longer potential enforcement periods and higher penalties.
Under current law, April 15, 2024, is the deadline to file ERC claims for the 2020 tax year and April 15, 2025 is the deadline to file claims for the 2021 tax year. Also, currently, the IRS has three years to audit most ERC claims, but it has five years to audit payroll returns with ERCs filed for the last two quarters of 2021.
The bill still needs to be reviewed and approved by the Senate before passage and signing by the President. While it is not clear that H.R. 7024 will pass in its current form, this bill creates the risk that no ERC claims filed after January 31 will be processed – even if a final tax bill is passed after January 31.
As part of an ongoing process to educate and inform people about the ERC, the IRS will host a free ERC Voluntary Disclosure Program webinar on Thursday, Feb. 8 at 2 p.m. EST. If you would like to learn more, please visit their website to register: https://www.irs.gov/newsroom/irs-to-offer-an-employee-retention-credit-webinar-on-feb-8-provide-updates-on-voluntary-disclosure-program-moratorium
This tax bill should not affect our members who filed their ERC claims before January 31 through our ERC vendor partners, CLRA Group and Occams Advisory. And thankfully, each of our partners has audit protection in place for these members who have already filed and are expecting a refund.
SBAM will continue to bring updates as there are more definitive answers. Please visit sbam.org/employee-retention-credit for additional information.