A new $78 billion bipartisan tax proposal would boost some small-business tax credits and expand the child tax credit but it would also end the Employee Retention Credit early.
The tax deal, unveiled Tuesday by Senate Finance Committee Chairman Ron Wyden, D-Ore., and House Ways and Means Chairman Jason Smith, R-Mo., would be paid for in part by accelerating the deadline under which small-business owners can apply for the ERC from April 15, 2025, to Jan. 31, 2024. The lawmakers said in a news release the move would save more than $70 billion in taxpayer dollars in a program “hit by major cost overruns and fraud.”
The legislation would also increase penalties for people who know, or have reason to know, their advice would lead to an understatement of tax liability for someone else. Right now, that penalty is $1,000, but the legislation would boost that to $10,000 in the case of an individual or $200,000, or 75% of the gross income, if it’s a “promoter,” or third-party provider of ERC application services.
