A bipartisan bill awaiting action in the Senate after easily passing the House would crack down on a troubled pandemic-era tax credit in a way that may affect financial advisors.
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It could also impose a "heavy burden that's being placed on the advisors" who may have recommended the credit, according to Niles Elber, a Member in the Washington, D.C. office of law firm Caplin & Drysdale who represents businesses and other taxpayers before the IRS. The bill may define them as a "promoter" subject to penalties up to the greater of $200,000 or 75% of the income they received from the taxpayer for a faulty claim and a fine of $1,000 for each failure to comply with due diligence requirements, a House summary of the legislation showed.
"It's a significant bump up, and so you're getting a combination of, 'OK, we're not going to be paying any more claims,' and 'We're bumping up these two penalties,'" Elber said in an interview.
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