Treasury Secretary Steven Mnuchin was back on Capitol Hill yesterday (June 10) and expressed support for another legislative stimulus package to offer pandemic relief, saying, "We're open-minded, but we absolutely believe small businesses — and by the way, many big businesses in certain industries — are absolutely going to need more help," and "there is still significant damage in parts of the economy. … We will have a significant amount of unemployment, and we're going to need to look at doing something there."

During a Small Business & Entrepreneurship hearing on the Paycheck Protection Program (PPP), Secretary Mnuchin said the administration is "going to use all of our fiscal tools to work with Congress" to "restore this economy to where it was. … I definitely think we are going to need another bipartisan legislation to put more money into the economy." In questions from Susan Collins (R-ME), Mnuchin said any bill should include help for travel, retail and leisure businesses, and possibly more cash for American families. "Whatever we do going forward needs to be much more targeted particularly to the industries and small businesses that are having the most difficulty in reopening as a result of Covid-19," he said, specifying restaurants and hotels as in need of further support.

Secretary Mnuchin further said he did not support the idea of including capital gains tax cuts in a next stimulus bill. "It's something we've discussed," he said. "My opinion right now is that the Fed facilities have unlocked the capital markets. There's a lot of liquidity for investment. … That's something we'll look at, but I think we're much more targeted at getting back to work."

Tax Notes reported that high-ranking GOP Senator John Cornyn (R-TX) is trying to win Senate approval as soon as today of the Small Business Expense Protection Act of 2020 (S. 3612) to allow businesses to claim a deduction on expenses incurred while using PPP loan money, and is "chipping away at these holds" from lawmakers with objections.

A New York Times story on the debate regarding extending the $600 per week unemployment benefit expansion that expires July 31 said some moderate Democrats agree with Republicans that the add-on is a disincentive for some to return to work, at least in some states. "It doesn't work in West Virginia," said Senator Joe Manchin (D-WV) of the additional benefit that concerns some small business owners in his state. "In some areas, such as New York, California, all that, it's probably nothing, more attractive for them to go back to work because of the money. So it's just a difference of cultures where we're living."

Election

A CNN article discusses presumptive Democratic presidential nominee Joe Biden's call for increasing the corporate tax rate to 28% and other proposals given improved prospects for Democrats to take control of Washington in 2021, and how other areas, like trade, could be more business-friendly than under the current Administration.

Today's Washington Post included a story saying, "A raft of fresh polling nationally and in battleground states shows Trump losing ground to presumptive Democratic nominee Joe Biden, a precipitous slide that has triggered deep distress within the GOP about the incumbent's judgment and instincts, as well as fears that voters could sweep the party out of power completely on Election Day."

Regulation

Out this morning are IRS proposed regulations reflecting statutory changes limiting IRC Section 1031 to exchanges of real property. The TCJA amended IRC Section 1031 to limit its application to exchanges of real property for exchanges completed after December 31, 2017.

Yesterday, the IRS published (Notice 2020-47) its annual request for the public to submit recommendations for items to be included in the next Priority Guidance Plan, which covers the period from July 1, 2020, through June 30, 2021. To be considered for the 2020–2021 Priority Guidance Plan, recommendations should be submitted to the IRS by Wednesday, July 22, 2020.

EY Alerts and other resources are here.

The global EY Tax COVID-19 Response Tracker has been updated through June 9.

EY tax COVID-19 Webcasts include, on Friday, June 12 at 12:00 p.m. ET, Tax in the time of COVID-19. This week's panelists will explore: (i) what's happening in Congress and with the economy; (ii) what's new with the states; (iii) IRS developments — what's open(ing); and (iv) any breaking developments. Register

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