BACK TO THE ERTC: The IRS placed that moratorium on processing new employee retention credit claims in September and said it would run through at least the end of the year. That move came after an influx of businesses — not to mention television and radio commercials — started selling the credit to taxpayers, even when it wasn’t always clear those people would be eligible for the incentive. IRS chief Danny Werfel said just last week that the agency would be issuing further guidance on the credit soon, and the agency recently announced that it was in the process of sending out some 20,000 rejection letters for employee retention claims. But basically from the start of the moratorium, business advocates have argued that the IRS was focusing too much on the potential bad actors trying to claim the employee retention credit, and not enough on the still struggling businesses that could really use the extra help from the government. (Not only that: The national taxpayer advocate, an in-house watchdog, also has knocked the IRS’s oversight of the credit.) That problem has only gotten worse, the new coalition argues — the backlog of unprocessed employee retention claims has grown from around 600,000 when the IRS announced the moratorium to north of a million now. It’s worth asking: Why are so many businesses and nonprofits still seeking to claim a credit that Congress enacted almost four years ago, and covers wages paid to employees before the end of 2021? Jackson said that his group is still finding companies that didn’t know that they qualified for the credit. Most smaller businesses at the start of the pandemic relied on Paycheck Protection Program loans to stay afloat — and only later did Congress allow companies to take both a PPP loan and an employee retention credit. (This also helps explain why the cost of the employee retention credit has ballooned well beyond original projections.) Also worth asking: How will this coalition put pressure on the IRS — not exactly an agency known for being open to lobbying — to loosen up on approving claims? One of their methods would seem to be to nudge lawmakers to help make their case to the IRS. The group plans to produce a short video making its case, and to run targeted digital ads in the coming weeks. THE WORK CONTINUES: How much work Congress has left this year remains up in the air. But any talks over a tax bill will be happening behind the scenes and largely from afar until 2024. Even so, rank-and-file tax writers are still doing their best to influence any final tax package, which might need to come together pretty early in January if it’s going to happen. (Standard disclaimer: A tax bill very easily could not come together early next year, and not happen at all this Congress.) With that in mind, six House Ways and Means members, evenly split between Republicans and Democrats, wrote to their leaders on Friday asking that any tax vehicle include provisions that would expand low-income housing incentives. The six tax writers are sponsors of a bill to expand the low-income housing tax credit, and specifically called in their letter to bring back an increase in that incentive that expired at the end of 2021, to help relieve what they called an affordable housing crisis. They also seek to lower the amount that developers need to finance in a project through tax-exempt bonds to receive a certain amount of credits, an idea that Democrats also pushed in their Build Back Better agenda earlier in President Joe Biden’s tenure. “At a time of heightening division and negativity in our politics, this crisis transcends party because it affects everyone. With such a packed agenda for Congress heading into early 2024, we must act now before America’s affordable housing crisis gets any worse,” wrote the six lawmakers — Reps. Darin LaHood (R-Ill.), Suzan DelBene (D-Wash.), Brad Wenstrup (R-Ohio), Don Beyer (D-Va.), Claudia Tenney (R-N.Y.) and Jimmy Panetta (D-Calif.). So now what? One of the big questions about a tax bill, besides will it actually happen, is what might actually make the cut outside of the central features under discussion — those central features being the expanded Child Tax Credit sought by Democrats, and an expansion of business tax breaks that Republicans want. Larger incentives for low-income housing could add billions of dollars to a final price tag. But Friday’s letter from the six House Ways and Means members does underscore the bipartisan support for the low-income housing credit, which could be one point in its favor as negotiations continue. (Another point in its favor — one of the credit's biggest champions is Senate Finance Chair Ron Wyden.)
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