Republican Congressman David Schweikert, working alongside Reps. Mike Kelly (R-PA), Glenn Grothman (R-WI), and Jared Golden (D-ME) introduced the Employee Retention Tax Credit Repeal Act on Tuesday. The bipartisan legislation is designed to streamline lower-risk returns from small businesses for more rapid processing by prohibiting the IRS from processing COVID-19 Employee Retention Tax Credit (ERTC) claims filed after January 31, 2024. The bill also drastically increases the penalties on businesses and individuals defrauding the government.
According to a press release from Schweikert’s office, the ERTC was initially created to enable “Main Street” businesses to keep furloughed staff employed during the COVID-19 pandemic. “However, legitimate returns from small businesses desperately needing support were crowded out by perverse promoters looking to take advantage of an emergency program, landing ERTC on the IRS’s ‘Dirty Dozen’ list in 2023.”
In a July statement, IRS Commissioner Danny Werfel warned that the law, as written, presented “more and more questionable claims,” noting that, “The further we get from the pandemic, we believe the percentage of legitimate claims coming in is declining.” The Congressman’s office noted that Werfel asked for Congress to help with this situation and to assist the U.S. Department of the Treasury to “address fraud and error.”
“The ERTC Repeal Act would enable the return to fiscal sanity and end a program riddled with fraud that could cost up to seven times more—up to $550 billion—than initially estimated if allowed to continue. By eliminating the ERTC program, this bill would save taxpayers an estimated $79 billion over ten years. “
🚨 The bipartisan Employee Retention Tax Credit Repeal Act was introduced this week by @SenatorRomney (R-UT), @SenThomTillis (R-NC), and @Sen_JoeManchin (I-WV). In response to massive cost overruns and fraud associated with the pandemic-era Employee Retention Credit (ERC), the… pic.twitter.com/kdzSyBhHqL
Schweikert explained, “We’ve all heard from the number of small businesses in our district waiting for their claims to be processed. A 1.4 million return backlog still exists, and moving the deadline up, rather than waiting until April 2025, will enable the IRS to go after the bad actors seeking to take advantage of taxpayers while approving legitimate claims faster and delivering long-overdue refunds to small businesses. Congress would be perpetuating a moral hazard if this level of fraud were allowed to go unpunished. It’s past time fiscal responsibility prevails, and we act on behalf of future generations who will be shouldered with a more than $35 trillion national debt.”
Per the release, the ERTC Repeal Act would advance the sunset date of the original program, and in addition to prohibiting processing of claims submitted after January 31, 2024, it would:
Increase penalties for promoters from $1,000 to $10,000 for individuals and $200,000 for business promoters;
Impose a $1,000 penalty for failure to comply with due diligence requirements; and
Extend the statute of limitations period on assessments to six years.
According to the text of the bill, any businesses promoting the ERTC may also be subject to “75 percent of the gross income derived (or to be derived) by such promoter with respect to the aid, assistance, or advice.”
A corresponding Senate Measure spearheaded by Senators Tom Tillis (R-NC), Mitt Romney (R-UT), and Joe Manchin (D-WV) was announced September 18th.
“Repealing the ERTC is a critical step towards addressing America’s debt crisis,” Tillis said in a statement. “It’s past time to eliminate this fraud-ridden pandemic-era policy so we can concentrate on getting our fiscal house in order.”
According to the Senate findings, the ERTC added approximately $230 billion to the U.S. deficit through Fiscal Year 2023 and was projected to ballon to as much as $550 billion. The IRS also announced in June 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.
Under existing law, the credit will persist until April 25, 2025.
President Joe Biden’s time in the White House is mercifully coming to an end. He is now officially a lame duck with six months to go.
Biden was a victim here of a corrupt Democratic machine that — along with a complicit media — thought they could pull off a grand election-year deceit, despite his failing cognitive abilities. The Democratic establishment and a compliant media convinced millions of primary voters that Biden was of sound mind and ready to serve four more years. This lust for power put America in danger.
How could they be so unpatriotic?
So, where will Biden stand in the history books? He was not a failed president because of his declining cognitive abilities. It was his policies that wrecked America.
It is hard to point to a single policy that he got right. On the economy, he was catastrophically bad.
The trillions of dollars of debt he rung up bought nothing. He sent inflation to the highest levels in almost forty years.
The average family lost $2,000 of income after inflation during his reign. More people died of COVID during his presidency than Trump’s — despite the availability of the vaccine.
Interest rates rose. Biden declared war on American energy. He put America back into the Paris Climate Accord—and the rest of the world went on using more fossil fuels than ever. By impeding U.S. oil and gas production and pipelines he played into the hands of our enemies — China and Iran.
Gas prices rose. Small business confidence sagged. Poverty rates rose.
Then there was the sheer incompetence. The bungled Afghanistan withdrawal was a national security disaster. The border became a broken dam with millions seeking to illegally enter the country. The government spent $7.5 billion on electric vehicle chargers and only a handful got built.
Biden gave away hundreds of billions of dollars for an illegal and immoral student loan forgiveness program. He put regulators in charge of key agencies even though — or because — they hate business. A majority of his appointees had no business experience. It showed.
When he departs the White House in the months ahead he will leave the nation poorer, weaker, more divided, more in debt, more vulnerable, and less respected than when he entered office.
This was a man who pledged to unite the country and did just the opposite. He deserves to go down in history as one of the five worst presidents of the 20th and 21st century.
Here is my list starting with the worst: 1) Woodrow Wilson; 2) Herbert Hoover: 3) Jimmy Carter; 4) Joe Biden; 5) Barack Obama.
Now the Democrats want to run Vice President Kamala Harris, who was on board with every Biden policy and helped oversee the worst border catastrophe in modern history.
Just when you thought things could not get any worse.
Stephen Moore is a contributor to The Daily Caller News Foundation, visiting fellow at the Heritage Foundation, and a co-founder of the Committee to Unleash Prosperity.
Two House Republicans and one Democrat from Arizona wrote to IRS Commissioner Daniel Werfel asking the agency to reconsider its decision to subject the Arizona Families Tax Rebate Program to federal income taxation.
Representatives David Schweikert, R-Ariz., Juan Ciscomani, R-Ariz., and Greg Stanton, D-Ariz., sent the letter Wednesday.
“We urge the IRS to reconsider its determination and provide expedited relief to compliant Arizonan taxpayers who have already filed their 2023 tax returns,” the three wrote.
More than 700,000 Arizona taxpayers were eligible to receive a one-time tax rebate as the state continues to recover from historic inflation levels that placed severe financial strain on families across the state, according to the representatives’ news release.
“The country is poorer now than it was three years ago, and Arizonans are no different, facing the brunt of financial pressure with supermarket prices now nearly 25% higher than in January 2020, for example,” the letter says. “State officials acted in good faith with the reasonably available information to provide more than 700,000 households with much-needed relief from price increases on everyday goods and services.”
Tax rebates enacted by 21 states were determined to be tax exempt in guidance issued by the IRS in February 2023, Schweikert, Ciscomani, and Stanton wrote. Though Arizona’s tax rebate wasn’t signed into law for another three months, the IRS extended its decision to make the rebate taxable past the period when the state issued payments, according to the letter.
“In December 2023, the IRS relayed its decision orally through a video meeting, providing no written explanation until February 15, 2024, eighteen days after the start of tax season, and only in response to a letter from the Arizona Attorney General challenging the decision,” the letter says.
Arizona taxpayers are estimated to owe $20.8 million in extra federal taxes due to the IRS’ inconsistent rationale in failing to specify the factual and legal basis for the 21 states’ rebates and payments that were deemed nontaxable in 2022, according to the representatives.
“The inconsistency and delay in communication have resulted in undue financial strain on Arizonans,” the letter says.
Elizabeth Troutman is a reporter for AZ Free News. You can send her news tips using this link.
Arizona’s Attorney General is taking the Internal Revenue Service to court.
Last week, Democrat Attorney General Kris Mayes issued a press release to announce that “the State of Arizona has sued the IRS to prevent it from taxing the state-issued Arizona Families Tax Rebate.”
The federal government's decision to tax the Arizona Families Tax Rebate is unfair and unlawful. I will do everything I can to ensure Arizonans receive tax relief as intended. https://t.co/rZh2kGZbpbpic.twitter.com/c1tsbXVlCy
Mayes’ lawsuit was filed in the U.S. District Court of Arizona.
The legal issue at hand stems from the Arizona Legislature’s May 2023 passage of a “General Welfare Income Tax Rebate to offer financial relief to eligible taxpayers.” Few – if anyone – in the state expected this rebate to be taxable by the federal government, but that all changed earlier this year when a notice came from the IRS. The Arizona Attorney General’s Office confirmed that “the IRS did not confirm its decision in writing until late last week.”
In a statement that accompanied the release, Mayes said, “This lawsuit is about standing up for Arizona taxpayers. The federal government’s decision to tax these rebates is unfair and unlawful – and I will do everything I can to ensure the tax relief provided to Arizonans by their state government remains in the pockets of Arizona taxpayers, as intended.”
Mayes had previously sent a letter to the IRS Commissioner over the issue, arguing that “the full Tax Rebate should be excludable from federal tax under the general welfare exclusion,” and that “at a minimum, the Tax Rebate should be excluded from federal tax to the extent it does not exceed state taxes that were actually paid and that were not deducted from federal income.”
According to the State Attorney General’s Office, the legal challenge makes the following allegations:
Unlawful Taxation: The IRS’s decision to tax the rebates lacks legal basis and contradicts prior IRS guidance and precedents.
Arbitrary and Discriminatory: The decision by the IRS is arbitrary, capricious, and unfairly targets Arizona taxpayers.
Economic Impact and Violation of Taxpayers’ Rights: Taxing these rebates affects not only the individual taxpayers but also the broader economic well-being of Arizona, reducing the disposable income of taxpayers and state sales tax revenue.
Mayes’ public involvement in the matter over the IRS taxing these rebates appears to have followed that of Arizona Senate President Warren Petersen, who, in January, shared that he was “working diligently to come to a resolution that will protect the more than 700,000 recipients from having to give the federal government a portion of [the rebate] this tax season.”
🚨 FOR IMMEDIATE RELEASE: Senate President @votewarren Works to Prevent Biden's IRS from Taking Advantage of "Arizona Families Tax Rebate" Recipients ⬇️ pic.twitter.com/Y2B2JisOvy
Arizona’s Attorney General is standing with the state’s Senate President to protect the financial interests of families.
Last week, Attorney General Kris Mayes sent a letter to the IRS Commissioner, requesting the agency “reconsider its decision to tax the 2023 Arizona Families Tax Rebate.”
The IRS should reverse its stance on the Arizona Families Tax Rebate. Otherwise, my office will explore every legal option to keep these dollars in the pockets of Arizona taxpayers. My full letter to the IRS: https://t.co/izQoX66NqT
In a statement that accompanied her announcement, Mayes said, “The IRS should act promptly to reverse this decision and provide clear guidance to Arizona taxpayers as tax season nears. If they do not, my office is prepared to examine all legal avenues to ensure these dollars stay in the pockets of Arizona taxpayers.”
The news from the state Attorney General’s Office follows communication from Arizona Senate President Warren Petersen over this matter. Earlier this month, Petersen issued a press release to share that he was “working diligently to come to a resolution that will protect the more than 700,000 recipients from having to give the federal government a portion of [the rebate] this tax season.”
🚨 FOR IMMEDIATE RELEASE: Senate President @votewarren Works to Prevent Biden's IRS from Taking Advantage of "Arizona Families Tax Rebate" Recipients ⬇️ pic.twitter.com/Y2B2JisOvy
Petersen also thanked Mayes’ office for “reaching out to us on this matter,” though he cautioned that “litigation likely isn’t the best approach.”
In her letter to the IRS Commissioner, Mayes argued that “the full Tax Rebate should be excludable from federal tax under the general welfare exclusion,” and that “at a minimum, the Tax Rebate should be excluded from federal tax to the extent it does not exceed state taxes that were actually paid and that were not deducted from federal income.”
The state’s top cop pointed to past IRS guidance and states where the agency “determined to be excludable from federal tax in February 2023,” such as Alaska, California, Colorado, Delaware, Idaho, and Indiana. She added that different guidance from the IRS established other exclusions that benefited four states – Georgia, Massachusetts, South Carolina, and Virginia. In closing, Mayes wrote that “it would…be fundamentally arbitrary and inequitable to preclude Arizona and its taxpayers from relying on that guidance, particularly given the materially similar (and less restrictive) state programs that the IRS found to be nontaxable in whole or in part last year.”
Mayes asked for the IRS to reply to her letter “by return letter or through amended published guidance no later than February 6.”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
