June 19, 2020
What to expect in Washington (June 19)
White House trade adviser Peter Navarro's comment a week ago that President Trump wants "something on the order of at least $2 trillion" in a next coronavirus response bill has been met with pushback from other Administration officials, demonstrating "widening White House fissures over how to handle the fragile economic recovery" as "jockeying over that package has intensified as ideological rivals within the administration vie to shape it," according to a story in the June 19 Washington Post. The story suggested differing views over not only what will be in the bill but who will negotiate for the President, with some Republicans concerned Treasury Secretary Steven Mnuchin gave away too much to Democrats in previous bills.
One proposal eyed for inclusion in a next round is second-ranking Senate Republican John Thune (R-SD) and Senator Sherrod Brown's (D-OH) updated version of their mobile workforce bill, newly called the Remote and Mobile Worker Relief Act (S. 3995), which was introduced yesterday with additional special waivers relating to the pandemic. Like the previous version, the new bill exempts employers from withholding state income tax and workers from filing returns in another state if they work there for 30 or fewer days a year, but newly provides that rules for determining worker presence won't apply for 2020 to take into consideration the effect that the pandemic has had on workers who are working from home in states different from their normal office locations, in addition to a 90-day threshold for healthcare workers.
Democrats used the House Ways and Means Select Revenue Measures Subcommittee hearing June 18 on COVID-19 tax relief to argue for their HEROES Act, particularly enhancements to the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC). Some witnesses said uncertainty over school in the fall, and related issues of teacher jobs and childcare, make clear the need for more relief. Republicans argued that previous relief directed at employers also benefits workers and discussed a bill (Reps. LaHood and Murphy) to provide a tax credit for office cleaning and a forthcoming proposal (Rep. Rice) to provide businesses a tax incentive for testing, PPE, and reconfiguring workplaces.
On June 18, Senators Roger Wicker (R-MS) and Kyrsten Sinema (D-AZ) introduced the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive (RESTAURANTS) Act of 2020 (S. 4012) to establish a $120 billion revitalization fund to help independent restaurants deal with the long-term structural challenges facing the industry because of COVID-19. Reps. Representatives Earl Blumenauer (D-OR) and Brian Fitzpatrick (R-PA) will sponsor the House version.
The Senate is adjourned until 3 p.m. on Monday, June 22, and will vote on a judicial nomination at 5:30 p.m. A procedural vote on S. 3985, the Senate GOP police reform bill, is expected later in the week.
Following news of Secretary Mnuchin's letter calling for a pause in OECD negotiations to develop a new regime for taxing local profits of global companies under Pillar 1 of the BEPS 2.0 project, which had reached an "impasse," French and EU officials asserted they will pursue digital services taxes (DSTs) if a multilateral deal is not reached.
Pascal Saint-Amans, head of the tax policy center at the OECD, who noted last month that technology companies were doing well in the crisis economy, told a French newspaper that the US backing away from the talks is "a very bad message. All the more so because digital companies have benefited, as a whole, from this health crisis." Politico circulated his comments, saying, "What is at stake is nothing less than achieving more tax justice." He also said it is hard to imagine concluding a multilateral agreement before the US presidential election, but "after the November election, anything is possible."
The House Transportation & Infrastructure Committee approved its nearly $500 billion/five years surface transportation bill after a two-day markup, and the package is to be the basis of the $1.5 trillion infrastructure proposal (The Moving Forward Act, H.R. 2) that is slated to come to the floor before the July 4 recess. The Ways and Means portion outlined June 18 addresses financing issues like permanently reinstating Build America Bonds and Advance Refunding Bonds and increasing and expanding the issuance of Private Activity Bonds. The fact sheet — legislative language hasn't been released — doesn't describe revenue provisions, which Chairman Richard Neal (D-MA) said must be negotiated with Republicans.
The current highway authorization expires September 30 and Senate Republicans have a smaller bill and have resisted efforts for a large infrastructure package.
Senator Amy Klobuchar (D-MN) withdrew herself from consideration to be Joe Biden's running mate, saying on MSNBC that she told him "I think this is a moment to put a woman of color on that ticket, and there are so many incredibly qualified women." Biden is aiming for August 1 to reach a decision.
IRS on retirement plans
IRS on June 19 released Notice 2020-50 to help retirement plan participants affected by the COVID-19 coronavirus take advantage of the CARES Act provisions providing enhanced access to plan distributions and plan loans. This includes expanding the categories of individuals eligible for these types of distributions and loans (referred to as "qualified individuals") and providing helpful guidance and examples on how qualified individuals will reflect the tax treatment of these distributions and loans on their federal income tax filings.
EY COVID-19 Alerts and other resources here.
The global EY Tax COVID-19 Response Tracker has been updated through June 17.