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June 28, 2020

Americas Tax Policy: This Week in Tax Policy News for June 26

This week (June 29-July 3)

Congress: The Senate is adjourned until 3 pm on Monday June 29. The first vote of the week will take place at 5:30 pm on the motion to proceed to S. 4049, the National Defense Authorization Act.

Infrastructure: The House is set to vote as soon as June 30 on a $1.5 trillion infrastructure proposal (The Moving Forward Act, H.R. 2) that includes a Ways and Means portion that addresses financing issues like permanently reinstating Build America Bonds, reinstating advanced refunding, and increasing and expanding the issuance of Private Activity Bonds. The foundation of the package is the nearly $500 billion/5 years surface transportation portion approved by the House Transportation & Infrastructure Committee June 18. The bill does not include revenue-raising provisions and House Majority Leader Steny Hoyer (D-MD) June 22 confirmed suggestions from other Democrats that White House buy-in is needed on any revenue offsets. "We're going to pass it without one," he said.

Health care: The House is also set to vote next week on a bill to shore up the ACA, the Patient Protection and Affordable Care Enhancement Act (H.R. 1425), that seeks to lower health insurance premiums with strengthened and expanded affordability assistance, including expanding eligibility for premium tax credits beyond 400% of the federal poverty line and increasing the size of tax credits for all income brackets.

SFC filing season hearing: IRS Commissioner Chuck Rettig appears before the Senate Finance Committee June 30 (at 10:15 AM) on the "2020 Filing Season and IRS COVID-19 Recovery."

Las week (June 22-26)

Coronavirus (COVID-19): The Administration continued to look ahead to a next coronavirus response bill, with Bloomberg reporting Treasury Secretary Steven Mnuchin saying at an event June 23 that a stimulus package could be passed by the end of July; and National Economic Council Director Larry Kudlow as saying additional direct payments to individuals are "on the table" and that any tourism tax credit would likely target low-income individuals. President Trump said June 22 that stimulus checks will be included, and the next package overall will be "very generous." Secretary Mnuchin also said he won't rule out an extension of the July 15 filing deadline. "It's something I'm thinking about," he said. "As of now, we're not intending on doing that, but it is something we may consider," and "we'll look carefully as we approach this July date." The June 24 Washington Post reported Republicans are split on the issue of additional checks, "creating a rift in conservative circles that could have significant consequences for the stimulus package," and advocated in an editorial that "stimulus checks should take a back seat to help for the unemployed." The June 22 Wall Street Journal reported on tension between GOP senators who want more coronavirus response legislation and conservatives wary of further spending, noting that "Republicans have postponed deliberations until mid-July," just weeks before expanded unemployment benefits expire, and citing fourth-ranking Senate Republican Roy Blunt (R-MO) as saying "the White House's strong conviction" that there needs to be another bill could help things along. The story noted that Republican lawmakers are "looking at business tax breaks for retaining workers, a back-to-work bonus for employees and accelerated use of tax credits for corporations," and observed that the "next phase of the congressional negotiations will shape the final months of the election campaign." 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."

New proposals keep coming out:

  • On June 22, Senator Martha McSally (R-AZ) introduced S. 4031, to establish a temporary nonrefundable personal tax credit for travel, hospitality and entertainment expenses.
  • Also June 22, Senators James Lankford (R-OK) and Jeanne Shaheen (D-NH) introduced S. 4032 to increase the CARES Act $300 charitable deduction, regardless of whether taxpayers itemize their deductions, to 1/3 of the standard deduction: to up to $4,000 for individuals and $8,000 for married couples for the rest of 2020.
  • On June 25, House Ways and Means Committee Chairman Richard Neal (D-MA) and others introduced the Child Care for Economic Recovery Act (H.R. 7327) to enhance the child and dependent care tax credit, among other provisions.

BEPS 2.0: The June 17 letter from French Finance Minister Bruno Le Maire and his counterparts from the UK, Italy, and Spain responding to 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 has come to light. The letter said nations have "worked in good faith and intensively" and US positions are "strongly reflected in the current Unified approach." The officials said the pandemic has "accelerated a fundamental transformation in consumption habits and increased the use of digital services," translating to revenue for digital-based businesses at the expense of others. They said it is "feasible to concretely deliver a solution to a 2020 timetable." OECD officials have noted the US wants to shift the project to 2021. "Building on the outcomes of technical work already advanced at the OECD, we believe that a phased approach, initially focused on automated digital services, would considerably ease the task of achieving a consensus-based solution and make a political agreement within reach this year," the letter said, adding that US retaliation "against national fiscal policy decisions" wouldn't be good for anyone, economically or otherwise. Among other things, Secretary Mnuchin's letter rejected the phased approach because it ring fences high tech companies, most of which are headquartered in the United States.

Pascal Saint-Amans, the head of the tax policy center at the OECD, reiterated June 24 the talks are still alive: "The US 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 June 23 Politico article cited European Commission Executive Vice President Margrethe Vestager, from Denmark, as saying the EU would "really, really prefer a global consensus" on digital tax, but will push ahead with a regional tax, "if we need to." The new tax is necessary, Vestager argued, due to the ease with which many large tech companies minimize their European taxes. That makes it "so difficult to defend the many, many, many businesses all over the world who pay their taxes," she said.

GREEN Act: On June 25, House Ways and Means Select Revenue Measures Subcommittee Chairman Mike Thompson (D-CA) and 47 co-sponsors introduced the Growing Renewable Energy and Efficiency Now (GREEN) Act (released as a draft in November 2019) aiming to tackle climate change through the tax code:

  • Building on current tax incentives that promote the deployment of green energy
  • Encouraging residential investments in green energy and energy efficiency,
  • Expanding incentives for energy efficiency and conservation in homes and buildings.

A similar package is in the $1.5 trillion Moving Forward Act (H.R. 2) infrastructure bill set for a House vote.

Tax gap: A June 22 Washington Post op-ed by former Treasury Secretary Larry Summers on the tax gap, or the difference between the amount of tax taxpayers should pay and the amount paid voluntarily and on time, said that increased IRS funding could help the agency crack down on underreporting of income, which accounts for 80% of the tax gap. The op-ed links to a Treasury Inspector General for Tax Administration report on the issue.

QBI rules: IRS final rules concerning the deduction for qualified business income (QBI) under IRC Section 199A released June 24 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.

Altera: On June 22, the Supreme Court issued an order declining the petition for certiorari in Altera v. Commissioner, 926 F.3d. 1061 (2019). Altera's petition asked the Supreme Court to review the Ninth Circuit Court of Appeals decision upholding a 2003 regulation that requires participants to include stock-based compensation costs in a cost-sharing arrangement. EY Tax Alert 2020-1626 has details.

Conservation easements: In News Release 2020-130 June 25, IRS announced a time-limited settlement offer to certain taxpayers with pending docketed Tax Court cases involving syndicated conservation easement transactions.

Fishing & archery: On June 23, IRS issued Notice 2020-48, which provides expanded disaster relief, in the form of postponing until October 31, 2020, certain Federal excise tax filing and payment deadlines, and associated interest, penalties, and additions to tax, for taxpayers who owe a federal excise tax for sales of sport fishing or archery equipment for the second quarter of 2020.

RMDs: Also June 23, in Notice N-20-51, IRS announced that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020.

ERTC FAQs: IRS updated Employer Retention Tax Credit FAQs #s 28, 30, 33-35, 46, 58, 88, 90, and 92.

OIRA regulations: Listed as under review by the Office of Management and Budget Office of Information and Regulatory Affairs (OIRA) are:

  • Final Rules Regarding the Business Interest Limitation Under IRC Section 163(j) [TCJA] and Proposed Rules on the Limitation on Deduction for Business Interest Expense [TCJA] (received June 15); and
  • Final Rules Regarding the Global Intangible Low-Taxed Income High Tax Exclusion [TCJA] and a related Proposed Rule Under IRC Section 954(b)(4) (Rules for High-Taxed Subpart F Income) and IRC Section 964 (Rules for Determining the Earnings and Profits of a Foreign Corporation) [TCJA] (received June 16);
  • Carried interest proposed rules Under IRC Section 1061 (received June 2); and
  • Final rules on the Domestic Production Activities Deduction for Specified Agricultural or Horticultural Cooperatives (received May 18).

Regulations watch: Below is a timeline for guidance projects released by the IRS related to the TCJA.


Federal Register Publication

Comment period end

Section 965 transition tax (TD 9846)

Final rules, February 5, 2019


Section 199A pass-through deduction (TD 9847)

Final rules, February 8, 2019


Section 956 inclusions for corporate US shareholders (TD 9859)

Final rules, May 23, 2019


Contributions in exchange for state or local tax credits (TD 9864)

Final rules, June 13, 2019


Guidance Related to Section 951A (Global Intangible Low-Taxed Income) and Related to Foreign Tax Credits (TD 9866)

Final rules, June 21, 2019


Bonus depreciation (TD 9874)

Final rules, September 24, 2019


Removal of Section 385 Documentation Regulations (TD 9880)

Final rules, November 4, 2019


Ownership Attribution for Purposes of Determining Whether a Person Is Related to a Controlled Foreign Corporation under section 954(d)(3) (TD 9883)

Final rules, November 19, 2019


Section 59A Base Erosion and Anti-Abuse Tax (TD 9885)

Final rules, December 6, 2019


Foreign Tax Credit (TD 9882)

Final rules, December 17, 2019


Investing in Qualified Opportunity Funds (TD 9889)

Final rules, January 13, 2020


Rules Regarding Certain Hybrid Arrangements (TD 9896)

Final rules, April 8, 2020


Treatment of Certain Interests in Corporations as Stock or Indebtedness (TD 9897)

Final rules, May 14, 2020


Guidance Under Section 6033 on Reporting Requirements of Exempt Organizations

Final rules, May 28, 2020


Section 163(j) Limitation on Deduction for Business Interest Expense (REG-106089-18)

Proposed rules, December 28, 2018

February 26, 2019

Deduction for Foreign-Derived Intangible Income and Global Intangible Low-Taxed Income (REG-104464-18)

Proposed rules, March 6, 2019

May 6, 2019

Limitation on Deduction for Dividends Received from Certain Foreign Corporations and Amounts Eligible for Section 954 Look-Through Exception (REG-106282-18)

Proposed and temporary regulations, June 18, 2019

September 16, 2019

GILTI regulations regarding gross income that is subject to a high rate of foreign tax (REG-101828-19)

Proposed rules, June 21, 2019

September 19, 2019

Determination of the Section 4968 Excise Tax Applicable to Certain Private Colleges and Universities (REG-106877-18)

Proposed rules, July 3, 2019

October 1, 2019

Guidance on Passive Foreign Investment Companies (REG-105474-18)

Proposed rules, July 11, 2019

September 9, 2019

Revenue recognition under IRC Section 451 (REG-104870-18, REG-104554-18)

Two sets of proposed rules, September 9, 2019

November 8, 2019

Bonus depreciation (REG-106808-19)

Proposed rules, September 24, 2019

November 25, 2019

Ownership attribution under Section 958 Including for purposes of determining status as CFC or US shareholder (REG-104223-18)

Proposed rules, October 2, 2019

December 2, 2019

Additional Rules Regarding Base Erosion and Anti-Abuse Tax (REG-112607-19)

Proposed rules, December 6, 2019

February 4, 2020

Allocation and Apportionment of Deductions and Foreign Taxes, etc. (REG-105495-19)

Proposed rules, December 17, 2019

February 18, 2020

Certain employee remuneration in excess of $1 million under Section 162(m) (REG-122180-18)

Proposed rules, December 20, 2019

February 18, 2020

Guidance Involving Hybrid Arrangements and the Allocation of Deductions Attributable to Certain Disqualified Payments Under Section 951A (Global Intangible Low-Taxed Income) (REG-106013-19)

Proposed rules, April 8, 2020

June 8, 2020

Unrelated Business Taxable Income Separately Computed for Each Trade or Business (REG-106864-18)

Proposed rules, April 24, 2020

June 23, 2020

Denial of Deduction for Certain Fines, Penalties, and Other Amounts (REG-104591-18)

Proposed rules, May 13, 2020

July 13, 2020

Credit for carbon oxide sequestration under section 45Q (REG-112339-19)

Proposed rules, June 2

August 3, 2020

Tax on Excess Tax-Exempt Organization Executive Compensation

Proposed rules, June 11

August 10, 2020

Statutory Limitations on Like-Kind Exchanges

Proposed rules, June 12

August 11, 2020

Qualified Transportation Fringe, Transportation and Commuting Expenses under Section 274

Proposed rules, June 23

August 24, 2020


"Digital giants, no matter where they are headquartered, will emerge from the current crisis more powerful and more profitable. These companies benefit from free access to the European market. It is fair and legitimate to expect that they pay their fair share of tax within countries where they create value and profit. Therefore, we believe that postponing our work and not addressing these challenges would constitute a collective failure. A political agreement on a multilateral stable solution would also alleviate the need for Governments to take action, in Europe, as well as in many other countries around the world." — June 17 letter from French Finance Minister Bruno Le Maire and his counterparts from the UK, Italy, and Spain


Contact Information
For additional information concerning this Alert, please contact:
Ernst & Young's Center for Tax Policy
Michael Mundaca (
Cathy Koch (
Gary Gasper (
Ray Beeman (
Bob Carroll (
James Mackie (
Kurt Ritterpusch (