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Ways and Means Releases Final Text of Tax Package Extending Expiring Business Tax Deductions, Stimulating Affordable Housing, and Curtailing COVID-Era Employee Retention Tax Credit

House Ways and Means Committee Chair Jason Smith (R-MO) released the final bill text of the “Tax Relief for American Families and Workers Act of 2024.” Among other provisions, this legislation would: (1) restore full and immediate expensing for investments in machines, equipment, and vehicles; and (2) 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.

With the House in recess this week, lawmakers are signaling that they intend to bring the bill up for a vote on the House floor as early as next week. Leadership will likely bring the bill up under suspension of the rules, which needs a 2/3 majority vote in order to pass and would require significant Democratic support, after members of the House Freedom Caucus said they would refuse to vote in favor of rules on the floor in protest of the recently-passed continuing resolution.

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