“Due Process Analysis of Proposed Retroactive Changes to the ERC,” Tax Notes Federal

Tom Cullinan, Sam Kuzniewski and Jala White’s recent article, “Due Process Analysis of Proposed Retroactive Changes to the ERC,” in Tax Notes Federal

In an article published in Tax Notes on March 25, 2024, Atlanta-based Shareholder Tom Cullinan and Atlanta-based Associates, Sam Kuzniewski and Jala White, discussed the latest provisions to the recently passed Tax Relief for American Families and Workers Act.

The first three paragraphs of the article are included below with permission from the publication. To read the full article, subscribers may click here.

On January 16 members of the House Ways and Means Committee unveiled a framework for legislation titled the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024).1 Draft legislation was released on January 17. If enacted, the draft legislation would expand the child tax credit and accelerate deductions for certain research and development expenses, along with other changes that generally would not be expected to increase revenue. To pay for these measures, legislators also proposed changes to the employee retention credit regime, including an accelerated deadline for filing ERC claims, which the Congressional Budget Office determined would decrease outlays by $17.8 billion and raise $60.8 billion in revenue.2 At the time of this writing, the House of Representatives had passed the legislation and the Senate was considering it.

This article examines two provisions of the current draft that would apply retroactively and considers arguments that taxpayers might make that those provisions would be inconsistent with due process jurisprudence.3 We believe Congress could avoid these constitutional issues by enacting the legislation prospectively.

The bill does a few things concerning the ERC4:

1. It implements an accelerated deadline of January 31 to file all ERC claims, regardless of the date the bill ultimately passes. For reference, the current deadline to file ERC claims is April 15 for credits arising from quarters in 2020 and April 15, 2025, for credits arising from quarters in 2021.

To view the full article, subscribers may click here.