Plans for more congressional action related to the coronavirus are completely up in the air as expected negotiations on an interim measure to provide $250 billion more for the CARES Act Paycheck Protection Program (PPP) are stalled, the expected return of most lawmakers to Washington is weeks away, and high-profile governors are calling for a half-trillion dollars in additional state aid.

Republican congressional leaders wanted to move an interim measure addressing PPP funding only on an expedited basis beginning with a unanimous consent approval in the Senate but ran into opposition from Democrats, who want changes to the program, more food assistance money, $100 billion more for health care needs, and $150 billion for state & local governments. A Washington Post reporter tweeted yesterday that House Speaker Nancy Pelosi (D-CA) told her members that Democrats have tried to negotiate with Republicans, but that no negotiations were happening.

Speaker Pelosi told members in a letter the morning of April 14 "we continue to fight for an interim emergency response package followed by a CARES 2 package that will deliver more desperately-needed resources to all suffering from the crisis. We cannot accept Leader McConnell's proposals that would only perpetuate the flaws that are threatening the survival of the most vulnerable small businesses and would do nothing to aid desperate hospitals and state and local governments."

Senate Majority Leader Mitch McConnell (R-KY) and House Republican leader Kevin McCarthy (R-CA) said over the weekend "we will continue to seek a clean PPP funding increase." That is the preferred approach of the President, and some Administration officials have said the program could run out of money this week. The April 14 Washington Post reported a Small Business Administration spokesman as saying because lenders control the disbursal of funds, it isn't possible to say how much money has been distributed, and data on the issue may not be available anytime soon.

The Senate and House are holding pro forma sessions and could act if a deal is reached. The next Senate pro forma session is set for Thursday, April 16, at 3 p.m.

Democratic efforts to get priorities that were expected to be addressed in a $1 trillion-plus fourth congressional bill now into an interim measure make plans for the next broad measure, and interplay between that and the interim measure, unclear. The timetable for action is also uncertain as lawmakers don't plan a return to regular session imminently. House Majority Leader Steny Hoyer (D-MD) released a statement April 13 saying, "absent an emergency, the House is not expected to meet prior to Monday, May 4, 2020," but leaving open the possibility that critical legislation could bring members back sooner.

One area of critical legislative action will be funding for the states. Two high-profile governors, National Governors Association Chair Maryland Governor Larry Hogan and NGA Vice Chair New York Governor Andrew Cuomo, have said, "Congress must appropriate an additional $500 billion specifically for all states and territories to meet the states' budgetary shortfalls that have resulted from this unprecedented public health crisis."

There are confrontational postures between the President and governors over who decides when states and their economies reopen, and between the President and Speaker Pelosi and other lawmakers over plans for reopening the country and what must be in place to do so. Pelosi and Senate Democratic leader Chuck Schumer (D-NY) said in a statement April 13 that there is still not enough testing available to realistically allow a reopening. Politico reported that Speaker Pelosi told members that they must push the President for honest assessments regarding reopening the economy because "the more misrepresentations he puts out there, the more it obscures the truth." Some Democratic members are calling for Congress to assemble a national plan for reopening.

Implementation issues

Treasury/SBA FAQs on the PPP have been updated, with changes including new Questions #22-25 on issues like lender criteria; affiliation rules for franchises, hotels and restaurants; and whether the information that lenders are required to collect from PPP applicants regarding every owner who has a 20% or greater ownership stake in the applicant business satisfies a lender's obligation to collect beneficial ownership information.

The IRS announced that taxpayers may file by fax Form 1139 (refunds for corporations) and Form 1045 (refunds for individuals, estates, and trusts) beginning on April 17, 2020, and until further notice. The faxed forms will be processed in the order of receipt. Taxpayers may fax these forms only to claim refunds under the net operating loss (NOL) and alternative minimum tax (AMT) credit acceleration provisions of the CARES Act. Previously, the returns had to be paper-filed.

IRS Revenue Procedure 2020-26 provides guidance relating to the tax qualification of certain securitization vehicles that hold mortgage loans for which borrowers have participated in forbearance programs arising from COVID-19. The revenue procedure also provides guidance for certain real estate mortgage investment conduits (REMICs) that acquire mortgage loans for which borrowers have participated in forbearance programs arising from the COVID-19 emergency.

Treasury released eligibility guidance for CARES Act funding to state, local, and tribal governments and said additional guidance on eligible uses of fund disbursements by governments will be posted as it becomes available.

EY Alerts and other resources are here.

The global EY Tax COVID-19 Response Tracker has been updated through April 8.

EY Webcasts this week include:

• Tuesday, April 14. Tax in a disrupted market, latest tax considerations and strategies in a disrupted market, 1:00 p.m. ET. This webcast, the third in the series, and the second part of the webcast broadcasted on 31 March, will dive deeper into tax issues resulting from the economic impact of COVID-19 and other global factors on multinational companies. Register.
• Friday, April 17. Tax in the time of COVID-19, 12:00 p.m. ET. Register.

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