Congressional Democratic leaders and President Trump continued to lay out proposals for the next bill (#4) to respond to the coronavirus crisis, with areas of focus including infrastructure investment and tax changes that would roll back some Tax Cuts & Jobs Act (TCJA) limitations. Other Republican leaders signaled that plans for additional action were too broad and moving too fast.

In a tweet April 1, President Trump said: "Congress must pass the old, and very strongly proven, deductibility by businesses on restaurants and entertainment. This will bring restaurants, and everything related, back - and stronger than ever. Move quickly, they will all be saved!" The President has previously said he would ask Treasury Secretary Steven Mnuchin to look into reversing a provision of the 2017 TCJA that limited the deduction. House Speaker Nancy Pelosi (D-CA) has called for retroactively rolling back the TCJA $10,000 annual limit on the state and local tax deduction.

President Trump has also called for infrastructure investment that Democratic leaders continue to advocate. Speaker Pelosi told reporters April 1 that the next coronavirus stimulus should include at least $760 billion over five years for water projects, broadband and transportation plus $10 billion for community health centers and more for housing and education, Bloomberg Government reported. That is the same level of investment House Democrats called for in a pre-crisis January proposal. "We need to invest in our infrastructure to address some of the critical impacts and vulnerabilities that have been laid bare by the coronavirus," the Speaker said. She is set for a press briefing at 10:45 a.m.

House Republican leader Kevin McCarthy (R-CA) continued to express wariness over a fourth package. "As the legislation from the first three phases is implemented, Republicans stand ready to work across the aisle to support the individuals and institutions that will need more help in the fight against the virus. But the American people cannot afford the distraction of continued attempts to force partisan objectives into our response," he said. A press conference call led by Rep. McCarthy and including Ways and Means Committee Ranking Member Kevin Brady (R-TX) and others is scheduled for 11:30 a.m.

Senate Majority Leader Mitch McConnell (R-KY) also continued to express opposition to Democratic plans for a phase 4 bill, saying in a Washington Post interview that Speaker Pelosi's comments have been premature and, "She needs to stand down on the notion that we're going to go along with taking advantage of the crisis to do things that are unrelated to the crisis." Leader McConnell raised the issue of how to pay for infrastructure investment, which has always been an impediment to moving forward on the issue. "We just passed a $2 trillion bill, and it would take a lot of convincing to convince me that we should do transportation in a way that's not credibly paid for after what we just passed last week," he said.

On MSNBC April 1, Senate Democratic leader Chuck Schumer (D-NY) said a next congressional bill "can probably be more forward-looking at the economy and if we're going to do infrastructure — because there's nothing better than getting the infrastructure going and going in a big, strong way — we need it big, we need it bold and we need it futuristic, which means green. There's traditional infrastructure — roads, bridges, highways — we need that, but we also need new green infrastructure for the future." He suggested action on the next bill would still be three or four weeks from now and should include a 25% hazard pay increase for all frontline workers and additional unemployment benefits. "I believe we definitely need a fourth COVID bill and I think probably the end of April is about the right time," he said. The House and Senate are not expected to convene before April 20.

Implementation of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law No. 116-136) continues. Treasury and IRS announced on April 1 that Social Security beneficiaries who are not typically required to file tax returns will not need to file an abbreviated tax return to receive an Economic Impact Payment. Instead, payments will be automatically deposited into their bank accounts.

For reference, EY Alerts on CARES Act implications and more resources are available.

EY Webcasts this week include 'Tax in the time of COVID-19' — Tax implications and opportunities stemming from the CARES Act, on Friday, April 3 from 1-2 p.m. Register here.

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