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Houses passes Bill setting Deadline to Claim Employee Retention Credit to January 31, 2024

An earlier version of this article titled “Countless business owners set to miss out on relief checks as deadline looms” has been rescinded because a new tax bill effectively sets the deadline for submitting new ERC applications to January 31, 2024, effectively ending the ERC program early if it is signed into law. The bill passed the House on January 31, 2024. Even though it hasn’t been signed into law yet, the January 31, 2024, deadline could apply retroactively.

On Wednesday, the House successfully passed a tax bill totaling approximately $78 billion, known as the Economic Growth and Relief Act of 2024, H.R. 7024. This legislative move entails key provisions aimed at modifying the employee retention credit (ERC), broadening the eligibility criteria for the child tax credit (CTC), and temporarily reinstating the expensing of research or experimental (R&E) expenditures. Additionally, it addresses the extension of tax breaks for businesses under the Tax Cuts and Jobs Act, P.L. 115-97, that had either expired or were set to expire in the near future.

The decisive House vote, with a count of 357–70, reflects widespread support for the bill, notably backed by House Speaker Mike Johnson, R-La. The legislation is now set to advance to the Senate, where it enjoys support from Finance Committee Chair Ron Wyden, D-Ore., and Majority Leader Chuck Schumer, D-N.Y., among other proponents.

Among the prominent features of the bill is a provision to halt additional claims for the ERC as of January 31, 2024, altering the current deadline of April 15, 2025. Bottomline Concepts, an accounting firm that we previously recommended for helping with ERC applications, has stopped taking new clients for ERC applications because of this bill that will likely pass and may end the ERC for new applicants retrospectively with the January 31, 2024 deadline.

According to the Joint Committee on Taxation, the bill carries additional costs amounting to $77.5 billion, partially offset by $77.1 billion in savings resulting from the revised ERC filing deadline.

In the previous version of this article, we warned about signs that legislators will end the ERC early. If the Economic Growth and Relief Act of 2024, H.R. 7024, gets signed into law, which looks likely, the ERC will effectively end early.

Many accounting firms processing ERC have already stopped taking new clients. Business owners who haven’t submitted their ERC application before January 31, 2024, could still try to submit their application, but there is a good chance the application will not be considered because the deadline of January 31, 2024, may apply retroactively even though the bill will be signed into law after this date.

In general, we recommend business owners seek professional help. This is more important than ever, as with the new bill, penalties for wrong filings will be increased, and all filings are under greater scrutiny.