The House Democratic version of the CARES 2/COVID 4 coronavirus response bill could be released as soon as the next couple days, but leaders are weighing whether to vote on the measure or wait until a bipartisan product can emerge with Senate Republicans. Regarding a vote, "That would be an option that we have. And that's up to my caucus. … But I definitely will present that as an option," House Speaker Nancy Pelosi (D-CA) said May 6 on MSNBC.

In addition to priorities already enumerated for the Democratic bill — including additional state and local funding, mortgage/rent assistance, food assistance, unemployment benefits, stimulus payments, childcare assistance for frontline workers, multiemployer pension provisions, Medicaid increases, expansion of broadband access, etc. — Speaker Pelosi put an increased emphasis on addressing testing in the bill.

"We're all here working on … the next CARES 2 bill. It's about testing, tracing, treatment, and isolation … social distancing and the rest — right away, rapid and robust testing, so we can see and take a measure of what's there." The Washington Post reported May 7 on calls for testing within Congress itself. The Senate is currently in session, and the House could return as soon as next week. An editorial re-upped a call for remote voting, utilizing "technology that could spare Congress the need to operate so slowly, at so high a risk" especially when "the acute phase of the pandemic is far from over" in the Washington area.

Speaker Pelosi suggested the testing focus in part reflected frustration with the lack of a federal plan and other shortcomings she sees from the White House — "one day, they have a task force, the next day, they don't." There must be a plan that reaches everyone in the country, she said, so "when you're asking people to distance — social distance and the rest — they see it as part of a plan."

The Speaker weeks ago called for a next bill to be crafted in "four corners" bipartisan, bicameral negotiations, but Republicans have resisted due to concerns over the deficit and over Democratic priorities, and GOP leaders and the President have called for a pause before a next bill. On CNN on May 6, Senate Democratic leader Chuck Schumer (D-NY) said, "I am just appalled that Leader McConnell, Leader McCarthy and the president himself say, let's wait back and see what's happening, maybe we don't have to do anything. We have the biggest economic and health crisis we have had in decades."

He also expressed dismay that even in the crisis Republicans are sticking with their goal of repealing the Affordable Care Act. The President said May 6 in signing a proclamation in honor of National Nurses Day, "Obamacare is a disaster. … What we want to do is terminate it and give great healthcare."

Regarding an eventual next bill, the President has pitched a payroll tax cut and the Administration is mulling other tax proposals. The Wall Street Journal reported on May 7, "Lawmakers of both parties have been cool to the White House's proposals, which also include tax breaks on entertainment spending by businesses." Senate Majority Leader Mitch McConnell (R-KY) was noncommittal regarding a payroll tax cut, the report said, and instead emphasized a liability shield. The report quoted Senate Appropriations Committee Chairman Richard Shelby (R-AL) as one Republican concerned with "spending a lot of money" on the crisis.

There are also GOP alternatives to Democratic priorities. On Fox Business this morning, House Ways and Means Committee Ranking Republican Kevin Brady (R-TX) said "unemployment benefits can be turned into a return-to-work bonus" and workers can be allowed to keep up to two weeks of jobless benefits, as much as $1200, if they return to a job "to help that business get up on its feet, to help this U.S. economy recover."

Speaker Pelosi told a business group May 6 that the Democratic bill would propose more resources for the Paycheck Protection Program (PPP) for small business loans-to-grants, along with extending the loan period and eliminating the forgiveness requirement that 75% of loans be spent on payroll. "I don't even know why we have that in there," she said, as reported by Roll Call. On a related note, Senators including Finance Committee Chairman Chuck Grassley (R-IA) May 6 unveiled a bill to clarify that small businesses can deduct expenses paid with a forgiven PPP loan from their taxes.

Implementation

Treasury PPP FAQs have been updated to include new questions #43-45, providing: (1) the repayment date for the safe harbor for a business to have made the required certification that the "loan request [is] necessary to support … ongoing operations" in good faith has been extended from May 7 until May 14; (2) "for purposes of the PPP's 500 or fewer employee size standard, an applicant must count all of its employees and the employees of its U.S and foreign affiliates, absent a waiver of or an exception to the affiliation rule;" and (3) an employer that applied for a PPP loan, received payment, and repays the loan by May 14 will be treated as not receiving a covered loan for purposes of the Employee Retention Credit, and therefore eligible.

EY Alerts and other resources are here.

The global EY Tax COVID-19 Response Tracker has been updated through May 5.

The EY Webcast "Tax in the Time of COVID-19" is Friday, May 8, 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. After a review of the legislative and economic landscape, this week's panelists will explore: (i) global developments; (ii) more on the employee retention credit — what's new, what you've asked; (iii) the latest from the IRS; and (iv) breaking developments. Register

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