I 
118TH CONGRESS 
2D SESSION 
H. R. 9738 
To increase the penalties applicable to persons facilitate fraud with respect 
to any COVID-related employee retention credit, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 20, 2024 
Mr. SCHWEIKERT introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To increase the penalties applicable to persons facilitate 
fraud with respect to any COVID-related employee reten-
tion credit, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. ENFORCEMENT PROVISIONS WITH RESPECT TO 
COVID-RELATED 
EMPLOYEE 
RETENTION 
CREDITS. 
(a) INCREASE IN ASSESSABLE PENALTY ON COVID– 
ERTC PROMOTERS FOR AIDING AND ABETTING UNDER-
STATEMENTS OF TAX LIABILITY.— 
(1) IN GENERAL.—If any COVID–ERTC pro-
moter is subject to penalty under section 6701(a) of 
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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 re-
spect to the aid, assistance, or advice referred 
to in section 6701(a)(1) of such Code with re-
spect 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 RE-
QUIREMENTS 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 pro-
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moter provided aid, assistance, or advice, if such promoter 
fails to comply with the due diligence requirements re-
ferred to in subsection (c)(1). 
(c) ASSESSABLE PENALTY FOR FAILURE TO COMPLY 
WITH DUE DILIGENCE REQUIREMENTS.— 
(1) IN
GENERAL.—Any COVID–ERTC pro-
moter which provides aid, assistance, or advice with 
respect to any COVID–ERTC document and which 
fails to comply with due diligence requirements im-
posed 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 dili-
gence 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 RE-
FUND.—Paragraph (1) shall not apply with respect 
to any COVID–ERTC document unless such docu-
ment constitutes, or relates to, a return or claim for 
refund. 
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(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 sub-
section, the term ‘‘Secretary’’ means the Secretary 
of the Treasury or the Secretary’s delegate. 
(d) ASSESSABLE PENALTIES FOR FAILURE TO DIS-
CLOSE 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 report-
able transaction) with respect to any COVID–ERTC 
promoter if such promoter provides any aid, assist-
ance, 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. 
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(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, as-
sistance, 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 per-
son 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 ex-
ceeds 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 assist-
ance or the preceding taxable year— 
(i) the aggregate gross receipts of 
such person for aid, assistance, and advice 
with respect to all COVID–ERTC docu-
ments exceeds 50 percent of the gross re-
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ceipts of such person for such taxable year, 
or 
(ii) both— 
(I) such aggregate gross receipts 
exceeds 20 percent of the gross re-
ceipts 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 profes-
sional 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 sec-
tion 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. 
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(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 ap-
plying 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, includ-
ing any document related to eligibility for, or the calcula-
tion 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 sec-
tion 3134 of the Internal Revenue Code of 1986, 
and 
(2) any credit, or advance payment, under sec-
tion 2301 of the CARES Act. 
(h) LIMITATION
ON
CREDIT
AND
REFUND
OF 
COVID-RELATED EMPLOYEE RETENTION TAX CRED-
ITS.—Notwithstanding section 6511 of the Internal Rev-
enue Code of 1986 or any other provision of law, no credit 
or refund of any COVID-related employee retention tax 
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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 AS-
SESSMENT.— 
(1) IN GENERAL.—Section 3134(l) of the Inter-
nal Revenue Code of 1986 is amended to read as fol-
lows: 
‘‘(l) EXTENSION OF LIMITATION ON ASSESSMENT.— 
‘‘(1) IN
GENERAL.—Notwithstanding section 
6501, the limitation on the time period for the as-
sessment 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 re-
spect 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 AC-
COUNT
IN
DETERMINING
IMPROPERLY
CLAIMED 
CREDIT.— 
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‘‘(A) IN GENERAL.—Notwithstanding sec-
tion 6511, in the case of an assessment attrib-
utable to a credit claimed under this section, 
the limitation on the time period for credit or 
refund of any amount attributable to a deduc-
tion for improperly claimed ERTC wages shall 
not expire before the time period for such as-
sessment 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 prop-
erly claimed.’’. 
(2) APPLICATION TO CARES ACT CREDIT.—Sec-
tion 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 lim-
itation on the time period for the assessment of any 
amount attributable to a credit claimed under this 
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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 prop-
erly claimed.’’. 
(j) EFFECTIVE DATES.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the provisions of this sec-
tion shall apply to aid, assistance, and advice pro-
vided after March 12, 2020. 
(2) DUE
DILIGENCE
REQUIREMENTS.—Sub-
sections (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 CRED-
ITS.—Subsection (h) shall apply to credits and re-
funds 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 REQUIRE-
MENTS TO DISCLOSE INFORMATION, MAINTAIN CLIENT 
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LISTS, ETC.—Any return under section 6111 of the Inter-
nal 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 docu-
ment 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 APPLICA-
TION
OF
KNOWLEDGE
REQUIREMENT
TO
PRE-EN-
ACTMENT
CONDUCT
OF
COVID–ERTC
PROMOTERS, 
ETC.—Subsection (b) shall not be construed to cre-
ate any inference with respect to the proper applica-
tion 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
INFORMA-
TION, MAINTAIN CLIENT LISTS, ETC.—Subsections 
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(d) and (k) shall not be construed to create any in-
ference 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 pro-
moter; 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 sub-
section (d) if such return or list would be so re-
quired 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). 
Æ 
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