June 25, 2020
What to expect in Washington (June 25)
Grim news on the virus front, as nearly 37,000 infections were reported amid a surge in the South and West, "the largest one-day total since the start of the pandemic and more than two months after the previous high," the New York Times reported. A separate story said a heavy reliance on mail-in ballots amid a swelling pandemic and 'cliffhanger' elections on Tuesday night in Kentucky and New York presage the potential for a delay in determining the winner of the presidential race following election day (November 3).
Several news outlets observed that the virus news sent stocks down and hampered business re-openings. And the situation refocused attention on the issue of nationwide versus state-by-state response. Speaker Nancy Pelosi (D-CA) highlighted the House-passed HEROES Act, which would increase the federal role in testing plus tracing, treating and isolating that are "the tools to stop the spread of this disease."
The Wall Street Journal said it's a mistake to think "a single top-down, Washington plan will crush the virus;" acknowledged "states, the feds and private businesses will need more testing;" and surmised "Americans will have to learn to cope with the virus, which means trial and error and more individual responsibility."
Attention remains focused on bipartisan negotiations for a next response bill on the horizon, expected to begin in mid-July. The HEROES Act addresses the multiemployer pension crisis and Senator Rob Portman (R-OH) said on the floor that while the House approach is a non-starter it shares "the same basic structure" as an approach put forward by Republicans and "there's an opportunity here for us to come together."
A CNN report on all aspects of the brewing next bill said, "If Congress doesn't enact another stimulus measure, as much as $1 trillion in spending will disappear from the economy in the third quarter," which could be devastating and, in the words of an unnamed Republican senator, "political malpractice."
On June 24, Senator Dick Durbin (D-IL) and Rep. Lloyd Doggett (D-TX) introduced the American Assistance for American Companies Act (S. 4067, H.R. 7309) to provide that inverted corporations cannot benefit from federal COVID-19 financial assistance under the CARES Act.
The House will vote today (June 25) on a Democratic police reform bill, the George Floyd Justice in Policing Act of 2020 (H.R. 7120), using a single rule for consideration of six bills to limit floor votes. Democrats yesterday blocked further Senate consideration of the Republican JUSTICE Act (S. 3985) that they view as inadequate, but it could be brought back up later. The White House issued a statement opposing the House bill and the parties are gridlocked on the issue.
Speaker Pelosi unveiled a bill to shore up the Affordable Care Act (ACA), the Patient Protection and Affordable Care Enhancement Act (H.R. 1425), which the Ways & Means Committee said: "makes health care more affordable by lowering health insurance premiums with strengthened and expanded affordability assistance. Specifically, the legislation expands eligibility for premium tax credits beyond 400% of the federal poverty line and increases the size of tax credits for all income brackets." The bill is also intended to serve as a contrast to continued GOP efforts to dismantle the ACA. A vote is expected next week.
In the wake of Treasury Secretary Steven Mnuchin's call 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, Pascal Saint-Amans, the head of the tax policy center at the OECD, reiterated June 24 that the talks are still alive: "The U.S. has said … they are engaged, they want a solution, but we should shift it to 2021, or at least [until] after the election." Tax Notes reported the comments from a webinar and suggested more details might emerge after G-20 finance ministers meet in July. "What is for sure is that … we keep working, we're alive, we are not on life support," Saint-Amans said. "COVID has not done too much harm yet on this, but we recognize the difficulties."
A New York Times story out this morning discusses Senator Tammy Duckworth (D-IL) as a Biden VP pick contender, saying her policy chops, House and Senate experience, and background "could prove a boon in places around the country that resemble Southern Illinois, firmly Trump territory but where she too has prevailed. 'I can push back against Trump in a way others can't,'" she said.
The June 24 IRS regulations (TD 9899) regarding the qualified business income (QBI) deduction under IRC Section 199A finalized proposed regulations issued in January 2019 (REG-134652-18) and provide guidance on (1) the treatment of previously suspended losses included in QBI; and (2) determining the IRC Section 199A deduction for taxpayers holding interests in regulated investment companies (RICs), split-interest trusts and charitable remainder trusts.
The global EY Tax COVID-19 Response Tracker has been updated through June 23.
EY Webcasts this week include, Friday, June 26, at 12:00 p.m. ET, Tax in the time of COVID-19: Preparing for potential future tax changes. This week's panelists will provide updates on: (i) the legislative and economic landscape — what's happening now and what may be around the corner; (ii) what's on the horizon for the Tax Cuts and Jobs Act; (iii) how companies should prepare for potential future tax changes; and (iv) any IRS and breaking developments. Register.