The Employee Retention Tax Credit (ERTC) got a lot of attention the past few months as the IRS is working to eliminate fraudulent claims and warn business owners about ERTC scams and unscrupulous promoters. While we’re empathetic for eligible businesses that have seen a delay in receiving their stimulus money, Asure supports the IRS move to prevent fraud and ensure these taxpayer fund get distributed as intended. 

Things took another twist on January 19th when the House Ways and Means committee introduced a bill that could prematurely end ERTC. Here’s what businesses considering applying for ERTC credit need to know: 

Understanding ERTC: A Lifeline for Businesses
The ERTC, as detailed by the IRS, is a tax credit introduced under the CARES Act in March 2020. It was designed to encourage businesses to keep employees on their payroll during the COVID-19 pandemic. This credit allows qualifying employers to claim a percentage of wages paid to employees, offering substantial relief during uncertain economic times. For a thorough understanding of ERTC, the IRS website provides an authoritative explanation at IRS Employee Retention Credit. 

Eligibility and Application Process
Determining eligibility for ERTC can be complex. The IRS has set up a helpful checklist for businesses to understand their eligibility for this credit. It’s crucial for businesses to visit IRS Employee Retention Credit Eligibility Checklist to ensure they meet the criteria before applying. Businesses must attest to their eligibility so it’s important to rely on authoritative sources like the IRS website and their CPA. 

Legislative Changes: The Early End of ERTC?
A comprehensive, bi-partisan bill, H.R.7024 – Tax Relief for American Families and Workers Act of 2024, was introduced into the House of Representatives on January 17th, passed by the Ways and Means committee on January 19th, and passed by the House of Representatives last night by a vote of 357-70. This bill introduces tax relief measures that, in part, get funded by bringing an early end to ERTC.  

Current law says that eligible employers have until April 15, 2024 to file ERTC claims from 2020 and they have until April 15, 2025 to file claims for qualifying quarters in 2021. As it stands, this new bill ends the entire ERTC program effective to January 31, 2024. Since the Senate has not yet taken the bill up for debate, the passage would require an amended expiration date or a retroactive expiration date.  

The Senate’s Role and the Cloud of Uncertainty
The future of ERTC is not yet set in stone. The bill’s passage in the House is just the first step. The Senate now holds the key to the final decision. According to PwC, “The Senate now must determine when and under what circumstances it will begin consideration of the House-passed Tax Relief for American Families and Workers Act of 2024. It remains unclear if the Senate will act on H.R. 7024 before the two-week recess scheduled to begin the week of February 12.” This statement, from the article PwC House Clears Business and Family Tax Relief Bill, highlights the prevailing uncertainty surrounding the bill’s fate. 

The strong bipartisan support in the House does indicate a favorable outlook for the bill’s passage in the Senate, but nothing is certain. Businesses relying on ERTC must stay informed and prepared for any outcome. 

The Deadline Dilemma and Navigating Forward
Given debates on The Hill around the war in Ukraine, the U.S. southern border, and a budget crisis, there’s no way to predict exactly how this will all fall out. 

The only thing that is certain is that the ERTC program will eventually come to an end and, if a business is eligible, there is no reason whatsoever to wait.  

Asure encourages eligible business who haven’t yet applied for ERTC to do so. No one can predict if and when the IRS will process ERTC filings submitted after January 31, 2024 but we do know this thing ends by April 15, 2024 for 2020 and April 15 2025 for 2021. The worst thing that can happen is eligible businesses applies for the tax credit and they get denied.

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