Congressional leaders and the Trump administration are still laying out their expectations for the next congressional bill (#4) to respond to the crisis on the heels of record unemployment numbers, and implementation of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. Law No. 116-136) continued with guidance on the small business loan program and announcement of a House oversight panel.

During an April 2 press teleconference, House Speaker Nancy Pelosi (D-CA) continued to list priorities for a next bill, including: OSHA protections for frontline workers; infrastructure investment, including broadband and water infrastructure; additional aid to states; pension relief; food assistance; and free COVID-19 treatment. Speaker Pelosi signaled it is unclear when Capitol Hill will return to normal, saying of the by-phone press conference, "I don't know how much longer it will be before we'll be together, but this may be the modus operandi — how we operate — between now and the next few weeks." Congress is not expected to reconvene before April 20.

On infrastructure, the Speaker noted that Ways and Means Committee Chairman Richard Neal (D-MA) has been in discussions with Treasury Secretary Steven Mnuchin, and the timetable has been accelerated because of needs related to: clean water; broadband to address telemedicine and other needs; community health centers; and getting people to work, products to market, etc. "And so, these provisions are directly related to the coronavirus crisis that we face," she said.

The Wall Street Journal reported that President Trump's calls this week, in a news conference and on Twitter, to allow businesses to fully deduct the cost of meals and entertainment followed a phone call from top-name chefs asking for the change, which since has "gained little momentum in Congress." One official said the Administration is considering expanding the deduction beyond what existed before 2017, when the Tax Cuts & Jobs Act (TCJA) eliminated the deduction for entertainment and kept the deduction for meals at 50%. The report cited chefs as anecdotally saying business fell following the TCJA, which by also lowering the corporate tax rate made deductions less valuable; and others as expressing concern that a full deduction wouldn't do much for restaurants that don't attract corporate diners.

A separate Wall Street Journal story on how the congressional agenda has been impacted by the crisis cited Reps. Dan Kildee (D-MI), a Ways and Means member, and Greg Walden (R-OR), the top Republican on Energy & Commerce, as saying action on surprise medical billing could be part of the next bill. While some Republicans want to see the effects of the CARES Act before determining the shape of the next bill, others see the need for major investment. "I think the bolder we go, the more confidence and the stronger the response will be from the economy — turning what was otherwise lemons into lemonade," Rep. Tom Reed (R-NY) said in the article.

CARES Act implementation

During an April 2 Administration news conference, Secretary Mnuchin promoted CARES Act benefits: encouraging businesses to pursue the Paycheck Protection Program; reporting that the first economic impact payments will be direct deposited into taxpayers' account within two weeks; and saying that the Employee Retention Credit is "up and running," providing a 50% credit for the first $10,000 of wages to an employee. "That's $5,000 per person. And for everyone who's kept someone, you can immediately get that money, you can deduct it from what you owe the IRS immediately," the Secretary said.

He also said the Administration is taking applications from the airlines, from the cargo companies and from national security companies for targeted CARES Act benefits. Asked whether unemployment numbers increase the urgency of doing a "phase four" response bill, Secretary Mnuchin said, "we're going through something that we've never done before, where the government has shut down big parts of the economy because of health reasons."

Speaker Pelosi April 2 announced the formation of a bipartisan oversight panel — the House Select Committee on the Coronavirus Crisis, to be chaired by Majority Whip Jim Clyburn (D-SC) — "to ensure that the over $2 trillion that Congress has dedicated to this battle — and any additional funds Congress provides in future legislation — are spent wisely and effectively." During the Administration news conference, Secretary Mnuchin cited the bipartisan desire for oversight and transparency, but President Trump said, "conducting these partisan investigations in the middle of a pandemic is a really big waste of vital resources, time, attention."

A Small Business Administration interim final rule released late April 2 announced the implementation of the CARES Act "Paycheck Protection Program." Forms related to the program are also available.

In response to COVID-19 and remote working environments, the IRS notified its employees in a memo that they may accept digital signatures and images of signatures and can receive documents by email in specified situations. IRS employees may accept images of signatures (scanned or photographed) and digital signatures on certain documents related to the determination or collection of tax liability through tiff, jpg, jpeg, pdf, Microsoft Office suite or Zip files.

An EY Alert on the digital signatures issue and other Alerts and resources are available.

The global EY Tax COVID-19 Response Tracker has been updated through April 2.

An EY Webcast, 'Tax in the time of COVID-19' — Tax implications and opportunities stemming from the CARES Act, is today, April 3, from 1-2 p.m. Register here.

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