September 18, 2024

Manchin, Romney, Tillis, Introduce Bipartisan Legislation To Repeal Covid-Era Tax Credits

Washington, DC – Today, U.S. Senators Joe Manchin (I-WV), Mitt Romney (R-UT), and Thom Tills (R-NC) introduced the Employee Retention Tax Credit (ERTC) Repeal Act. This bipartisan legislation would halt the processing of ERTC claims filed after January 31, 2024, and increase penalties on fraud. The ERTC has been highly susceptible to fraudulent schemes—costing taxpayers nearly 200% more than anticipated and adding an estimated $230 billion to the national debt through Fiscal Year 2023. By eliminating the ERTC, the Senators’ bill would save taxpayers an estimated $79 billion over 10 years.

“Congress established the ERTC during the onset of the COVID-19 pandemic to encourage businesses to retain employees during such unprecedented circumstances. As President Biden formally ended the COVID-19 Public Health Emergency in May 2023, it’s time for the IRS to move on, too. I’m proud to join the bipartisan ERTC Repeal Act, which would end the ERTC for claims submitted after January 31, 2024—cutting down on the staggering and unexpected costs of this program—and would enhance anti-fraud measures for claims still being processed,” said Senator Manchin.

“In a rare moment of widespread agreement in Washington, almost all members of Congress agree that we should eliminate the ERTC—which has been pervaded by fraud and cost nearly 200% more than originally projected,” said Senator Romney. “Stealing from the government is stealing from hardworking taxpayers. Instead of repurposing ERTC funds for future spending programs, we should eliminate this plagued credit now to lower our national debt.”

“Repealing the ERTC is a critical step towards addressing America’s debt crisis,” said Senator Tillis. “It’s past time to eliminate this fraud-ridden pandemic-era policy so we can concentrate on getting our fiscal house in order.”

The ERTC was created by the CARES Act and furthered expanded by the Consolidated Appropriations Act of 2021 and the American Rescue Plan. It is a refundable credit available to qualifying businesses who paid wages to employees during the COVID-19 pandemic.

Estimates suggest the credit has added $230 billion to the deficit through Fiscal Year 2023 and could eventually cost up to $550 billion. Further, in June 2024, the IRS announced that between 10% and 20% of claims showed “clear signs of being erroneous” while another 60% to 70% showed an “unacceptable risk” of being improper. Unless Congress acts, applications for the credit are available until April 15, 2025.

The full text of the legislation is available here.