Congress is currently considering legislation which may affect the deadline for Covid-19 tax relief employers have to file a claim for Employee Retention Tax Credits (ERTCs or ERCs). The current ERTC deadline is April 15th of this year. The legislation Congress is currently working on will move the deadline to January 31, 2024t. This means businesses that have not yet filed for ERTCs may have only a few days to complete and file their ERTC claims.
The ERTC gives eligible employers a credit of up to $5,000 per employee for 2020 and $7,000 per quarter in 2021, leading to a maximum possible amount of $26,000. The credit is generally available to businesses that had employees on their payroll during the Covid-19 pandemic and were subject to a shutdown order or significant decrease in gross receipts.
Besides changing deadlines, the proposed legislation also gives the IRS additional weapons to fight tax preparers and businesses that filed inaccurate or fraudulent ERTC claims. Among other things, the proposed legislation provides a $200,000 penalty (or 75% of income earned, whichever is greater) for preparers who knowingly aid and abet inaccurate ERTC claims. The proposed legislation extends the statute of limitations to six years for the IRS to examine inaccurate ERTC claims.
The ERTC program has provided much needed and much deserved relief to countless American businesses. Unfortunately, the program has also been abused. Both the IRS and Congress are recognizing the abuse and appear to be closing the door on businesses truly entitled to relief under the program as well as those businesses that abused the program.
At RJS LAW, our team of experienced tax attorneys advise clients on a wide range of tax issues including Employee Retention Tax Credits and other tax issues. If you have tax questions or tax issues arising from Employee Retention Tax Credits, or any other areas of taxation, please call our office at 619-595-1655 for a free consultation.