The House and the Senate are in recess this week but are continuing to hold pro forma sessions. Both are scheduled to return to session next week, but at this point it is uncertain when they will reconvene amid safety concerns. Proxy voting and remote voting remain under consideration.

Major news outlets had reports over the weekend on the dynamics of the next round of congressional action to respond to the coronavirus, which boil down to partisan differences over the timing and contents of the package, most notably on additional funding for state and local governments. Senate Majority Leader Mitch McConnell (R-KY) is wary of the additional funding, and generally concerned that Congress will act too fast and spend too much money. Conversely, Democratic leaders want to act quickly on another package of $2 trillion or more and will not allow the bill to proceed unless there is additional state and local funding. It is unclear when the Paycheck Protection Program (PPP) for small business loans will need to be replenished, and that could be an action-forcing event.

“There will be a bill and it will be expensive. I look forward to doing it as soon as possible because jobs are at stake, protection of our people, the health and well-being of the American people are at stake, and the sooner we get this done, the better,” House Speaker Nancy Pelosi (D-CA) said in remarks to reporters released late April 24. She added, ”There will not be a bill without state and local” funding. The Speaker also listed worker-focused priorities for the next bill, including OSHA protections, “family medical leave, COBRA, health care special enrollment period, pension support, more for Unemployment Insurance and the rest.”

The President and his advisors appear cognizant that more action is needed and ready to negotiate. The April 25 Washington Post reported that the White House is “preparing to ask Congress to extend numerous tax breaks set to expire in 2022 under the tax law, particularly an expensing provision that allows businesses to offset the value of new investments from their taxes.” The CARES Act included revisions to Tax Cuts & Jobs Act provisions. The report quoted National Economic Council Director Larry Kudlow as saying, “It’s very important that, as we move toward the economic recovery stage, we keep in mind the importance of business incentives.” A liability shield for businesses is also under discussion.

A New York Times story reported on what lawmakers have yet to do. “Congressional leaders have not funded the significant scale-up in testing and tracing of Americans that experts say is necessary to give consumers and workers confidence to return to something resembling normal life while the virus still poses a deadly threat,” it said. “Nor have they settled on a strategy to keep aid flowing should the virus continue to suppress economic activity through the summer and beyond.” 

Senator McConnell expects to reconvene the Senate May 4, but Speaker Pelosi was less certain of that date, saying, “We’ll see.” She added, “Any decision that we have about when we come back rests with the Sergeant-at-Arms and the Capitol Physician. Hopefully, things will get better. Who knows? But we will be ready soon with our next bill...” The Speaker supports remote voting but said Republican leaders are not yet on board. Some members of the House progressive wing expressed frustration with the chamber being out of session, including Rep. Alexandria Ocasio-Cortez (D-NY), who was quoted as saying negotiations happen behind closed doors and members can’t message on developments and push the other side for change.

Speculation about a next round of legislation comes amid some limited plans for reopening parts of the country and economy and comments by some leaders that some normal recreation must be available. “You can’t tell people in a dense urban environmental all through the summer months: ‘We don’t have anything for you to do, stay in your apartment with the three kids,’” New York Governor Andrew Cuomo (D) said yesterday. Still, there were reminders that things will not soon return to normal. Coronavirus Response Coordinator Deborah Birx said on Meet the Press that “social distancing will be with us through the summer to really ensure that we protect one another as we move through these phases.”

Implementation

The IRS released an Employee Recall Statement over the weekend saying in part, “to serve the urgent tax administration needs of the American people during these times, the IRS has requested, but not required, several thousand employees to volunteer to return to work along with an offer for incentive pay.”

EY Alerts and other resources are here.

The global EY Tax COVID-19 Response Tracker has been updated through April 23.

EY Webcasts this week include:

Tuesday, April 28 | Global tax policy in response to COVID-19: An update for businesses 10:00 a.m. ET –Please join EY global tax professionals for the second in a series of discussions on the tax and economic policy actions governments around the globe are taking in response to the COVID-19 crisis. Topics will include: (i) the latest government tax policy responses to the pandemic; (ii) how these developments are impacting the global economy; (iii) implications for tax controversy; and (iv) steps businesses can take now. Register for this EY Webcast.

Tuesday, April 28 | Tax in a disrupted market 1:00 p.m. ET – This fifth webcast in the series will cover the tax implications related to recognizing losses amid the disruption caused by COVID-19. Our EY panelists will discuss liquidity considerations for built-in losses in stock and assets in the US and in offshore entities, and the international tax considerations related to loss corporations. Register for this Thought Center Webcast.

Thursday, April 30 | BorderCrossings . . . BEPS 2.0 in the context of COVID-19 1:00 p.m. ET – On this webcast, we will review the Secretariat proposal for Pillar One and the 31 January 2020 Statement released by the OECD. We will also consider the broader potential impact of COVID-19 on BEPS 2.0. Register for this Thought Center Webcast.

Friday, May 1 | Tax in the time of COVID-19 12:00 p.m. ET – 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. To determine what information your company needs to know now, join our panelists for a series of conversations about operating the tax function in this time of National Emergency created by the COVID-19 virus. Registration information is forthcoming.

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