In a significant development regarding the Employee Retention Credit (ERC) program, lawmakers are proposing to end the ERC in the new 2024 federal budget bill. This move aims to redirect funds to other areas, reflecting a shift in legislative priorities and a response to issues surrounding the program, including fraudulent claims and processing challenges.
Key points
Proposal to End ERC Program
Key among the proposed changes in the 2024 federal budget is the early termination of the ERC program, potentially on January 31, 2024. This decision, supported by bipartisan agreement, is part of a larger strategy to reallocate funds to expand other tax credits, including the child tax credit.
Ongoing Moratorium on ERC Claims Processing
The IRS continues its moratorium on processing ERC claims received after September 14, 2023. The IRS Commissioner has stated there is no definitive timetable for ending this moratorium.
Efforts to Combat Fraudulent Claims
In response to rampant ERC fraud, the IRS is employing new technologies and processes to manage and prevent illegitimate claims.
Increased Penalties and Requirements for ERC Promoters
Proposed legislative changes include stricter penalties for ERC promoters and enhanced due diligence requirements to curb abuse of the program.
Taxpayer Advocate's Push for Faster Processing
The Taxpayer Advocate is advocating for speedier processing of ERC claims to ensure timely aid to eligible taxpayers.
Uncertainty Over the Program's Future
Despite the bipartisan support for ending the ERC program, its future remains uncertain with Congress's focus on preventing a government shutdown.
Potential Government Shutdown
A government shutdown looms if a new budget or continuing resolution is not signed, with a shutdown starting January 20, 2024, and a complete shutdown possible by February 3, 2024.
