[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 5079 Introduced in Senate (IS)]

<DOC>






118th CONGRESS
  2d Session
                                S. 5079

  To provide for special enforcement provisions with respect to COVID-
   related employee retention credit claims, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 18, 2024

 Mr. Romney (for himself, Mr. Manchin, and Mr. Tillis) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
  To provide for special enforcement provisions with respect to COVID-
   related employee retention credit claims, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``ERTC Repeal Act of 2024''.

SEC. 2. ENFORCEMENT PROVISIONS WITH RESPECT TO COVID-RELATED EMPLOYEE 
              RETENTION CREDITS.

    (a) Increase in Assessable Penalty on COVID-ERTC Promoters for 
Aiding and Abetting Understatements of Tax Liability.--
            (1) In general.--If any COVID-ERTC promoter is subject to 
        penalty under section 6701(a) of the Internal Revenue Code of 
        1986 with respect to any COVID-ERTC document, notwithstanding 
        paragraphs (1) and (2) of section 6701(b) of such Code, the 
        amount of the penalty imposed under such section 6701(a) shall 
        be the greater of--
                    (A) $200,000 ($10,000, in the case of a natural 
                person), or
                    (B) 75 percent of the gross income derived (or to 
                be derived) by such promoter with respect to the aid, 
                assistance, or advice referred to in section 6701(a)(1) 
                of such Code with respect to such document.
            (2) No inference.--Paragraph (1) shall not be construed to 
        create any inference with respect to the proper application of 
        the knowledge requirement of section 6701(a)(3) of the Internal 
        Revenue Code of 1986.
    (b) Failure To Comply With Due Diligence Requirements Treated as 
Knowledge for Purposes of Assessable Penalty for Aiding and Abetting 
Understatement of Tax Liability.--In the case of any COVID-ERTC 
promoter, the knowledge requirement of section 6701(a)(3) of the 
Internal Revenue Code of 1986 shall be treated as satisfied with 
respect to any COVID-ERTC document with respect to which such promoter 
provided aid, assistance, or advice, if such promoter fails to comply 
with the due diligence requirements referred to in subsection (c)(1).
    (c) Assessable Penalty for Failure To Comply With Due Diligence 
Requirements.--
            (1) In general.--Any COVID-ERTC promoter which provides 
        aid, assistance, or advice with respect to any COVID-ERTC 
        document and which fails to comply with due diligence 
        requirements imposed by the Secretary with respect to 
        determining eligibility for, or the amount of, any COVID-
        related employee retention tax credit, shall pay a penalty of 
        $1,000 for each such failure.
            (2) Due diligence requirements.--Except as otherwise 
        provided by the Secretary, the due diligence requirements 
        referred to in paragraph (1) shall be similar to the due 
        diligence requirements imposed under section 6695(g).
            (3) Restriction to documents used in connection with 
        returns or claims for refund.--Paragraph (1) shall not apply 
        with respect to any COVID-ERTC document unless such document 
        constitutes, or relates to, a return or claim for refund.
            (4) Treatment as assessable penalty, etc.--For purposes of 
        the Internal Revenue Code of 1986, the penalty imposed under 
        paragraph (1) shall be treated in the same manner as a penalty 
        imposed under section 6695(g).
            (5) Secretary.--For purposes of this subsection, the term 
        ``Secretary'' means the Secretary of the Treasury or the 
        Secretary's delegate.
    (d) Assessable Penalties for Failure To Disclose Information, 
Maintain Client Lists, etc.--For purposes of sections 6111, 6112, 6707 
and 6708 of the Internal Revenue Code of 1986--
            (1) any COVID-related employee retention tax credit 
        (whether or not the taxpayer claims such COVID-related employee 
        retention tax credit) shall be treated as a listed transaction 
        (and as a reportable transaction) with respect to any COVID-
        ERTC promoter if such promoter provides any aid, assistance, or 
        advice with respect to any COVID-ERTC document relating to such 
        COVID-related employee retention tax credit, and
            (2) such COVID-ERTC promoter shall be treated as a material 
        advisor with respect to such transaction.
    (e) COVID-ERTC Promoter.--For purposes of this section--
            (1) In general.--The term ``COVID-ERTC promoter'' means, 
        with respect to any COVID-ERTC document, any person which 
        provides aid, assistance, or advice with respect to such 
        document if--
                    (A) such person charges or receives a fee for such 
                aid, assistance, or advice which is based on the amount 
                of the refund or credit with respect to such document 
                and, with respect to such person's taxable year in 
                which such person provided such assistance or the 
                preceding taxable year, the aggregate gross receipts of 
                such person for aid, assistance, and advice with 
                respect to all COVID-ERTC documents exceeds 20 percent 
                of the gross receipts of such person for such taxable 
                year, or
                    (B) with respect to such person's taxable year in 
                which such person provided such assistance or the 
                preceding taxable year--
                            (i) the aggregate gross receipts of such 
                        person for aid, assistance, and advice with 
                        respect to all COVID-ERTC documents exceeds 50 
                        percent of the gross receipts of such person 
                        for such taxable year, or
                            (ii) both--
                                    (I) such aggregate gross receipts 
                                exceeds 20 percent of the gross 
                                receipts of such person for such 
                                taxable year, and
                                    (II) the aggregate gross receipts 
                                of such person for aid, assistance, and 
                                advice with respect to all COVID-ERTC 
                                documents (determined after application 
                                of paragraph (3)) exceeds $500,000.
            (2) Exception for certified professional employer 
        organizations.--The term ``COVID-ERTC promoter'' shall not 
        include a certified professional employer organization (as 
        defined in section 7705).
            (3) Aggregation rule.--For purposes of paragraph 
        (1)(B)(ii)(II), all persons treated as a single employer under 
        subsection (a) or (b) of section 52 of the Internal Revenue 
        Code of 1986, or subsection (m) or (o) of section 414 of such 
        Code, shall be treated as 1 person.
            (4) Short taxable years.--In the case of any taxable year 
        of less than 12 months, paragraph (1) shall be applied with 
        respect to the calendar year in which such taxable year begins 
        (in addition to applying to such taxable year).
    (f) COVID-ERTC Document.--For purposes of this section, the term 
``COVID-ERTC document'' means any return, affidavit, claim, or other 
document related to any COVID-related employee retention tax credit, 
including any document related to eligibility for, or the calculation 
or determination of any amount directly related to any COVID-related 
employee retention tax credit.
    (g) COVID-Related Employee Retention Tax Credit.--For purposes of 
this section, the term ``COVID-related employee retention tax credit'' 
means--
            (1) any credit, or advance payment, under section 3134 of 
        the Internal Revenue Code of 1986, and
            (2) any credit, or advance payment, under section 2301 of 
        the CARES Act.
    (h) Limitation on Credit and Refund of COVID-Related Employee 
Retention Tax Credits.--Notwithstanding section 6511 of the Internal 
Revenue Code of 1986 or any other provision of law, no credit or refund 
of any COVID-related employee retention tax credit shall be allowed or 
made after January 31, 2024, unless a claim for such credit or refund 
is filed by the taxpayer on or before such date.
    (i) Amendments to Extend Limitation on Assessment.--
            (1) In general.--Section 3134(l) of the Internal Revenue 
        Code of 1986 is amended to read as follows:
    ``(l) Extension of Limitation on Assessment.--
            ``(1) In general.--Notwithstanding section 6501, the 
        limitation on the time period for the assessment of any amount 
        attributable to a credit claimed under this section shall not 
        expire before the date that is 6 years after the latest of--
                    ``(A) the date on which the original return which 
                includes the calendar quarter with respect to which 
                such credit is determined is filed,
                    ``(B) the date on which such return is treated as 
                filed under section 6501(b)(2), or
                    ``(C) the date on which the claim for credit or 
                refund with respect to such credit is made.
            ``(2) Deduction for wages taken into account in determining 
        improperly claimed credit.--
                    ``(A) In general.--Notwithstanding section 6511, in 
                the case of an assessment attributable to a credit 
                claimed under this section, the limitation on the time 
                period for credit or refund of any amount attributable 
                to a deduction for improperly claimed ERTC wages shall 
                not expire before the time period for such assessment 
                expires under paragraph (1).
                    ``(B) Improperly claimed ertc wages.--For purposes 
                of this paragraph, the term `improperly claimed ERTC 
                wages' means, with respect to an assessment 
                attributable to a credit claimed under this section, 
                the wages with respect to which a deduction would not 
                have been allowed if the portion of the credit to which 
                such assessment relates had been properly claimed.''.
            (2) Application to cares act credit.--Section 2301 of the 
        CARES Act is amended by adding at the end the following new 
        subsection:
    ``(o) Extension of Limitation on Assessment.--
            ``(1) In general.--Notwithstanding section 6501 of the 
        Internal Revenue Code of 1986, the limitation on the time 
        period for the assessment of any amount attributable to a 
        credit claimed under this section shall not expire before the 
        date that is 6 years after the latest of--
                    ``(A) the date on which the original return which 
                includes the calendar quarter with respect to which 
                such credit is determined is filed,
                    ``(B) the date on which such return is treated as 
                filed under section 6501(b)(2) of such Code, or
                    ``(C) the date on which the claim for credit or 
                refund with respect to such credit is made.
            ``(2) Deduction for wages taken into account in determining 
        improperly claimed credit.--
                    ``(A) In general.--Notwithstanding section 6511 of 
                such Code, in the case of an assessment attributable to 
                a credit claimed under this section, the limitation on 
                the time period for credit or refund of any amount 
                attributable to a deduction for improperly claimed ERTC 
                wages shall not expire before the time period for such 
                assessment expires under paragraph (1).
                    ``(B) Improperly claimed ertc wages.--For purposes 
                of this paragraph, the term `improperly claimed ERTC 
                wages' means, with respect to an assessment 
                attributable to a credit claimed under this section, 
                the wages with respect to which a deduction would not 
                have been allowed if the portion of the credit to which 
                such assessment relates had been properly claimed.''.
    (j) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the provisions of this section shall apply to aid, 
        assistance, and advice provided after March 12, 2020.
            (2) Due diligence requirements.--Subsections (b) and (c) 
        shall apply to aid, assistance, and advice provided after the 
        date of the enactment of this Act.
            (3) Limitation on credit and refund of covid-related 
        employee retention tax credits.--Subsection (h) shall apply to 
        credits and refunds allowed or made after January 31, 2024.
            (4) Amendments to extend limitation on assessment.--The 
        amendments made by subsection (i) shall apply to assessments 
        made after the date of the enactment of this Act.
    (k) Transition Rule With Respect to Requirements To Disclose 
Information, Maintain Client Lists, etc.--Any return under section 6111 
of the Internal Revenue Code of 1986, or list under section 6112 of 
such Code, required by reason of subsection (d) of this section to be 
filed or maintained, respectively, with respect to any aid, assistance, 
or advice provided by a COVID-ERTC promoter with respect to a COVID-
ERTC document before the date of the enactment of this Act, shall not 
be required to be so filed or maintained (with respect to such aid, 
assistance or advice) before the date which is 90 days after such date.
    (l) Provisions Not To Be Construed To Create Negative Inferences.--
            (1) No inference with respect to application of knowledge 
        requirement to pre-enactment conduct of covid-ertc promoters, 
        etc.--Subsection (b) shall not be construed to create any 
        inference with respect to the proper application of section 
        6701(a)(3) of the Internal Revenue Code of 1986 with respect to 
        any aid, assistance, or advice provided by any COVID-ERTC 
        promoter on or before the date of the enactment of this Act (or 
        with respect to any other aid, assistance, or advice to which 
        such subsection does not apply).
            (2) Requirements to disclose information, maintain client 
        lists, etc.--Subsections (d) and (k) shall not be construed to 
        create any inference with respect to whether any COVID-related 
        employee retention tax credit is (without regard to subsection 
        (d)) a listed transaction (or reportable transaction) with 
        respect to any COVID-ERTC promoter; and, for purposes of 
        subsection (j), a return or list shall not be treated as 
        required (with respect to such aid, assistance, or advice) by 
        reason of subsection (d) if such return or list would be so 
        required without regard to subsection (d).
    (m) Regulations.--The Secretary (as defined in subsection (c)(5)) 
shall issue such regulations or other guidance as may be necessary or 
appropriate to carry out the purposes of this section (and the 
amendments made by this section).
                                 <all>