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Uncertainty over when the House will return to session isn't keeping the Ways and Means Committee from talks over a potential tax package for the CARES 2/COVID 4 next congressional bill that could take shape in coming weeks. The full Committee and Treasury Secretary Steven Mnuchin held a phone meeting yesterday during which members expressed concerns about implementation of the CARES Act and priorities for future legislation, following which the Democratic and Republican sides released statements reflecting the broader partisan divide over additional state and local government funding.

Ways and Means Committee Chairman Richard Neal (D-MA) said Democrats' concerns aired over the call included: "extremely small businesses' access to PPP money; the quick deadline for certain economic impact payment recipients with dependents to provide their updated information to the IRS; and the need for cities and states to receive federal funds and flexibility with that assistance." Bloomberg Tax reported that Chairman Neal urged Secretary Mnuchin to expand the Employee Retention Credit amid questions about how the benefit will apply.

The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19, and IRS posted 94 FAQs on several topics related to the credit last evening.

During an earlier U.S. Conference of Mayors video discussion, Chairman Neal said Democrats will insist that the next package include direct assistance to state and local governments and that he expects to provide details of the plan within the next week. The Chairman also said Secretary Mnuchin told him that the Administration is "still in" on infrastructure, though the issue has become a flashpoint with Senate Republican leaders resistant to providing for such investment in the next coronavirus bill. Neal said he would want to include Build America Bonds and private activity bonds as part of an infrastructure effort.

On CNBC yesterday, House Speaker Nancy Pelosi (D-CA) said she would like the forthcoming bill to have funding for broadband infrastructure, "always-on, high-speed, all over America. Because kids now, even if they have a laptop, they can't even go to a library or a school or a cafe or anyplace in order to have access to the network. … That digital divide is now becoming a digital chasm, and we have to really address that."

Ways and Means Republicans argued in a statement that Congress has already provided more than $765 billion to state and local governments in areas like Unemployment Insurance and health funding that are outside of the $150 billion fund specifically set up to cover costs incurred due to the health emergency.

On a related note, Labor Department figures released this morning put the six-week unemployment claim total at more than 30 million. Also, the Federal Reserve Board announced an expansion of the Main Street Lending Program.

The state funding and proposals for a liability shield are the most high-profile standoff issues now. Speaker Pelosi said there will be no next bill without additional state and local funding, and Senate Majority Leader Mitch McConnell (R-KY) said that while such funding will probably be provided, there must be restrictions on how it is spent. Republicans, including McConnell and President Trump, are concerned that such money could be used to fix pre-crisis financial mismanagement, including pension shortfalls. Conversely, Senator McConnell said on Fox News April 28, "We can't pass another bill unless we have liability protection," referring to the aim shared by the White House to prevent coronavirus-related lawsuits against employers. The Hill newspaper reported that Speaker Pelosi during a press call April 29 cited the need to protect workers and said Democrats "would not be inclined to be supporting any immunity from liability."

In an op-ed in the New York Times by Steven Rattner, former counselor to the Treasury secretary in the Obama administration during the last financial crisis (in a role informally referred to as "car czar") said: "more rescue programs are inevitable" as the Paycheck Protection Program (PPP) is likely to be insufficient; infrastructure investment is needed to create jobs; and Congress needs to improve the design and administration of relief given rollout challenges for the PPP and inclusion in the CARES Act of corporate tax provisions.

Voting & reconvening

Beyond the substance, there is the matter of when and how Congress can legislate. The top editorial in today's Washington Post said that, with the health risks that prompted House leaders to back away from plans to reconvene the chamber next week probably not receding anytime soon, "it is more urgent than ever that Congress figure out a way to govern from afar." Republicans have resisted remote/proxy voting proposals, though Democratic leaders have suggested that they may proceed regardless; any such rules change would probably require the chamber to reconvene for a vote anyway. The Senate plans to return to session next week.

The debate comes amid reports of concerns about the virus being present in the Capitol complex, with Roll Call yesterday reporting that construction workers there tested positive without lawmakers being explicitly notified before last week's vote on an interim funding bill, and that there have been cases among the Capitol police force. Speaker Pelosi cited the wide range of employees required for the House to be in session in the decision to hold off.

Senator McConnell has said necessary precautions can be taken for the chamber to operate beginning next week, but Politico described the plan as a "gamble" considering that Republicans plan to hold in-person party lunches and Democratic concerns that, with the expected focus on judicial nominations, there is no pressing business worth the risk. "I have some colleagues that are seriously considering not returning because there's nothing on the agenda yet that requires us to be there," Senator Chris Coons (D-DE) said.

IRS has released Revenue Procedure 2020-29, which allows taxpayers to electronically submit requests for private letter rulings and other legal advice. It also allows for electronic signatures on the required documents.

EY Alerts and other resources are here.

The global EY Tax COVID-19 Response Tracker has been updated through April 28.

EY Webcasts this week include:

Thursday, April 30 | BorderCrossings … BEPS 2.0 in the context of COVID-19 1:00 p.m. ET Register

Friday, May 1 | Tax in the time of COVID-19 12:00 p.m. ET — We are living in a time of unprecedented uncertainty. To determine what your company needs to know now, join our panelists for a conversation about operating the tax function in this uncertain time. This week's panelists will provide updates on: (i) Legislative activity and the state of the US economy; (ii) The Coronavirus Aid, Relief, and Economic Security Act's employee retention credit; (iii) IRS filing and compliance guidance; and (iv) Any breaking developments. Register

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