22 April 2020 What to expect in Washington | Coronavirus response (April 22) The Senate yesterday approved a $484 billion bill providing additional funding for the Paycheck Protection Program (PPP) for small business loans, as well as for hospitals and testing needs, and the House is on track to approve the measure on Thursday. The action followed two weeks of bipartisan negotiations after Republicans first called for a clean funding bill as the PPP was running out of money. Now attention turns squarely toward a CARES 2/COVID 4 fourth major bill that Democratic leaders say is inevitable and "must be transformative and far-reaching," even as Senate Majority Leader Mitch McConnell (R-KY) has revived his concerns over the deficit impact of the $2.7 trillion in revenue already spent to respond to the coronavirus. The full WCEY Alert on the Paycheck Protection Program and Health Care Enhancement Act (H.R. 266) is here. The bill dedicates $60 billion of the new PPP money to underserved communities such as minority and rural businesses. A Wall Street Journal editorial pointed out that it does not change rules that require 75% of loans to be spent on payroll to the exclusion of other business needs and noted that "Congress wants Treasury to fix it but leaving it to the bureaucracy is buck-passing." A late holdup for the bill was a dispute over whether testing should be at the national level or state-driven, and it ultimately provided funding both for states and federal agencies and requires states to submit plans outlining how they will use the testing resources and HHS to submit reports to Congress on COVID-19 testing. Senate Democratic leader Chuck Schumer (D-NY) told members that the bill will enable Congress to hold the Administration accountable with the required reports on how it plans to increase testing capacity. The House is in pro forma session today and is expected to be in at 10:00 a.m. tomorrow, when approval of the Paycheck Protection Program and Health Care Enhancement Act is expected. House leaders are expecting an objection to moving any legislation on an expedited basis that will at least require bringing a quorum of members to Washington and possibly a roll call vote. The House may also vote on a proposal rolled out overnight to allow committees to conduct business remotely for 60 days and for remote proxy voting on the House floor on legislation related to the coronavirus crisis, though the outlook for this issue remained unclear. With regard to future legislation, a story in today's Washington Post about a White House plan to ease government regulations in response to the crisis and link the move to tax relief in messaging — tax cuts and deregulation have always been mainstays of the Trump administration — suggested that a payroll tax cut for workers may be one of the "big asks" in the next round of negotiations with Democrats. Other reports have noted that allowing employers to suspend worker payroll tax withholding has support among members across a wide political spectrum. The White House also remains interested in coronavirus liability waivers for employers and employees. President Trump tweeted yesterday that after he signs the interim bill "we will begin discussions on the next Legislative Initiative with fiscal relief … State/Local Governments for lost revenues from COVID 19, much needed Infrastructure Investments for Bridges, Tunnels, Broadband, Tax Incentives for Restaurants, Entertainment, Sports, and Payroll Tax Cuts to increase Economic Growth." Senator Schumer said in a floor statement that the next bill would need to be similar in size to the $2 trillion CARES Act. He also said that a commitment to additional state and local funding in forthcoming legislation was secured with the Administration, and President Trump has said such funding should be included in the next major bill. The Wall Street Journal reported Senator Schumer and House Speaker Nancy Pelosi (D-CA) as laying out priorities for the next bill that include funding for the U.S. Postal Service and housing assistance, and the New York Times reported their mentioning of hazard pay for front-line workers, worker protections, election security funds and food assistance. Both parties have expressed interest in infrastructure, though Speaker Pelosi has also said it may have to wait. Today's Wall Street Journal reported that boosting at least one element, broadband infrastructure, as more business and other activity is conducted online has support from both House Democrats and Senate Republicans, including Commerce Committee Chairman Roger Wicker (R-MS). Senator Marco Rubio (R-FL) published a New York Times op-ed on domestic supply chain issues, saying in part, "A sensible industrial policy will also mean creating federal incentives for productive investment in workers and equipment through tax policy and robust federal guarantees, while discouraging unproductive corporate behavior like stock buybacks." Yesterday, the IRS published frequently asked questions (FAQs) that provide relief for certain US business activities conducted by a nonresident alien or foreign corporation when the activities were only conducted in the US due to COVID-19-related travel disruptions (Travel Disruptions). IRS also posted "Payroll Support for Air Carriers and Contractors under the CARES Act Frequently Asked Questions." EY Alerts and other resources are here. The global EY Tax COVID-19 Response Tracker has been updated through April 21. EY Webcasts this week include, on Friday, April 24, at 12:00 p.m., "Tax in the time of COVID-19: How the pandemic is affecting the economy, compliance and transfer pricing."Events like the spread of the coronavirus (COVID-19) have made reacting to trade disputes and continued implementation of the Tax Cuts and Jobs Act much more difficult. This week's panelists will explore: (i) Legislative update and the state of the economy; (ii) What the economic downturn means for transfer pricing; (iii) NOL carrybacks: the significance of the IRS revoking Revenue Ruling 71-533 which addressed the special 10-year statute of limitations for claims for refund or credit related to foreign tax credits; and (iv) The latest compliance updates from the IRS. Register
Document ID: 2020-1068 | |||||