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Increased Penalties and Extended Audits for COVID Employee Retention Credit Fraud.

This bill significantly increases financial penalties for individuals and companies that promoted or facilitated fraudulent claims related to the COVID-19 Employee Retention Tax Credit (ERC). It imposes strict due diligence requirements on advisors and extends the time the IRS has to audit these claims to six years. The law also formalizes the deadline for filing new ERC claims, which was January 31, 2024, aiming to curb ongoing abuse.
Key points
Penalties for promoters aiding fraud are increased to the greater of $200,000 (or $10,000 for individuals) or 75% of their gross income from the fraudulent activity.
The IRS now has six years to audit and assess the correctness of any COVID-related Employee Retention Credit claims.
A strict deadline is set: no new ERC claims will be allowed or processed if filed after January 31, 2024.
Advisors must meet new due diligence requirements; failure to comply is treated as knowledge for aiding and abetting penalties.
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Additional Information
Print number: 118_HR_9738
Sponsor: Rep. Schweikert, David [R-AZ-1]
Process start date: 2024-09-20
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Summarized by: gemini-2.5-flash-preview-09-2025
Source data: api.congress.gov
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OFFICIAL LEGAL TITLE

To increase the penalties applicable to persons facilitate fraud with respect to any COVID-related employee retention credit, and for other purposes.

FREQUENTLY ASKED QUESTIONS

What is the official ID of this bill?

The official print number for this legislation is 118_HR_9738.

Which chamber initiated this legislation?

This legislation was initiated in the House of Representatives.

When did the legislative process begin?

The process officially started on 2024-09-20.

What are the main provisions?

Key points include:

  • Penalties for promoters aiding fraud are increased to the greater of $200,000 (or $10,000 for individuals) or 75% of their gross income from the fraudulent activity.
  • The IRS now has six years to audit and assess the correctness of any COVID-related Employee Retention Credit claims.
  • A strict deadline is set: no new ERC claims will be allowed or processed if filed after January 31, 2024.
  • Advisors must meet new due diligence requirements; failure to comply is treated as knowledge for aiding and abetting penalties.
What is the specific legal status?

The current status is Expired.

Where can I read the full text of this legislation?

The full official text is available at: View full text

Who is the primary sponsor?

The primary sponsor is Rep. Schweikert, David [R-AZ-1].

What is the latest detailed status?

The latest detailed status is: Referred to the House Committee on Ways and Means.

Is this summary verified?

Yes. This content was analyzed by AI and verified by the Lustra Judge System on 2025-12-26.

CATEGORIES

Taxes Courts and Law