Us Congress House Bill HB9738

Us Congress 2023-2024 Regular Session

• Introduced: 9/20/24
• Refer: 9/20/24

Caption

To increase the penalties applicable to persons facilitate fraud with respect to any COVID-related employee retention credit, and for other purposes.

Impact

The legislation seeks to alter existing provisions in the Internal Revenue Code, significantly extending the limitation on the time during which assessments related to erroneously claimed credits can be made. Specifically, the assessment period would be allowed to extend to six years after the relevant tax period. Additionally, failure to comply with specific due diligence requirements will also result in penalties, emphasizing the increased scrutiny on those involved in tax matters pertaining to the ERTC.

Summary

House Bill 9738 aims to address fraud concerning the COVID-related employee retention tax credit (ERTC). The bill proposes significant increases to the penalties imposed on individuals or entities, referred to as COVID-ERTC promoters, who facilitate or promote fraudulent claims related to this tax credit. If passed, the penalties could include a maximum of $200,000 or 75% of the gross income derived from aiding or abetting fraudulent activities concerning employee retention credits. This move is part of the federal government's broader effort to maintain the integrity of tax relief measures introduced during the pandemic.

Contention

Although the intent behind HB 9738 is to prevent fraudulent claims, it may raise concerns regarding the balance between necessary enforcement and potential overreach. Critics may view the increased penalties as excessively harsh, particularly for small businesses that may have genuinely sought assistance in navigating the complexities of COVID-related tax credits. There is also concern that these changes may inadvertently deter legitimate claims, affecting businesses' abilities to access much-needed tax relief.