Lawmakers Announce Sweeping Tax Package Extending Expiring Business Tax Deductions, Stimulating Affordable Housing, and Curtailing COVID-Era Employee Retention Tax Credit
This morning, House Ways and Means Committee Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR) announced their wide-ranging, bipartisan tax package entitled The Tax Relief for American Families and Workers Act of 2024.
Among other things, this legislation would: (1) restore full and immediate expensing for investments in machines, equipment, and vehicles; (2) permit U.S. companies to once again immediately deduct the cost of their U.S.-based research and development investments instead of over five years; and (3) extend and increase for inflation the section 179 expensing of “qualifying property” (i.e., depreciable tangible personal property, off-the shelf computer software, and qualified real property) that is purchased for use in the active conduct of a trade or business.
To pay for these tax benefits, the bill is moving forward from April 15, 2025 to January 31, 2024 the deadline by which companies may file backdated claims under the COVID-era Employee Retention Tax Credit (ERTC) – a program that has come to be widely viewed as permeated with fraud and abuse. The legislation also seeks to dramatically increase the penalties associated with improper ERTC claims and extends to six years from the date of filing the statute of limitations for the government to pursue fraudulent ERTC claims.
In addition to these business tax provisions noted above, the legislation includes tax incentives for more affordable housing, an extension of the child tax credit, and disaster relief for recent events like the Hawaii wildfires and the New Palestine, Ohio train derailment. Additionally, the bill seeks to raise the threshold for IRS reporting on Forms 1099-NEC and 1099-MISC from $600 to $1,000.
A detailed breakdown of this sweeping tax package is available here. House Ways and Means Chairman Smith and Senate Finance Committee Chair Wyden are hoping to pass the legislation through Congress by January 29, 2024, which is the official start date of the tax season when the IRS will begin accepting and processing 2023 tax returns.
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