Tax Alert: Potential ERC Impact of H.R. 7024 the Tax Relief for American Families and Workers Act of 2024

At a glance: 

• The main takeaway: On January 17, 2024, the U.S. House of Representatives introduced H.R. 7024 which, if passed by the House and Senate in its current form, will significantly impact the filing of new Forms 941-X to request Employee Retention Credits (ERC) and increase the timeline for potential ERC audits.
• Impact on your business: In order for ERC claims to be considered for review and approval by the IRS, they must be filed by January 31, 2024. In addition, the ability of the IRS to audit ERC-related amended returns extends to six years from the date the amended return was filed.
• Next steps: The bill has not been finalized in the House and still needs to be reviewed by the Senate before passage and signing by the President. ERC eligible organizations that have not previously claimed an ERC but are considering whether to pursue the claim, will need to finalize amended 941-X payroll returns and submit them to the IRS prior to the January 31, 2024 deadline.

Do you have ERC questions? Schedule a consultation with our team.  

The full story: 

On January 17, 2024, H.R. 7024 the Tax Relief for American Families and Workers Act of 2024, was introduced in the House. The stated goal of the legislation is:

To make improvements to the child tax credit, to provide tax incentives to promote economic growth, to provide special rules for the taxation of certain residents of Taiwan with income from sources within the United States, to provide tax relief with respect to certain Federal disasters, to make improvements to the low-income housing tax credit, and for other purposes.

Among various provisions, the proposed legislation includes two significant changes to the current ERC program designed to provide funding for the tax credits and economic growth goals stated:

1. The Employee Retention Credit program will be closed to NEW refund applications effective with claims filed after January 31, 2024, and
2. The statute of limitations for the IRS to audit ERC claims will be extended to six years from the date of filing the amended return (i.e., the Form 941-X).

The bottom line:

Although the legislation’s passage is not certain, we believe it is critical to consider the timing of the submission of currently unprocessed ERC claims, via Forms 941-X, to meet the closure deadline. If eligible, completed Forms 941-X must be sent to the IRS via certified mail prior to the January 31, 2024 deadline, with the certified mail receipt retained.

If your company has previously submitted an ERC claim that is pending acknowledgment of receipt by the IRS, it may be worthwhile to request an account transcript to confirm timely receipt and act accordingly if the IRS has not received your prior amended returns.

Lastly, if your claim has been received by the IRS, it will be important to retain all backup data for at least six years from the date the amended return requesting the refund was filed.

How Aprio can help:

Aprio was at the forefront of helping clients navigate pandemic-era programs like the ERC, and we stand ready to help business owners dealing with these new issues. Because of the truncated deadline to submit claims, assuming January 31, 2024 is the new closure date, we can no longer assist in new amended return processing, but we are happy to consult with you otherwise. 

With that being said, we know that many innocent business owners will be caught in the ERC web — which is why we have developed a strong team to assist businesses in the event of an audit. 

If you need a trusted CPA and accounting team to help you address your ERC questions or assist in the audit process, schedule a consultation with Aprio today.   

Related Resources:

IRS Announces Second Phase – ERC Amnesty Program
Tax Alert: The IRS Releases an ERC Claim Withdrawal Process
2023 End of Year Tax Update 
Aprio’s Employee Retention Credit Audit & Controversy Services