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July 10, 2020

What to expect in Washington (July 10)

Treasury Secretary Steven Mnuchin said on CNBC yesterday that it will be a priority to pass the next coronavirus response legislation between July 20 and the end of the month, "as soon as the Senate gets back, we're going to sit down on a bipartisan basis" with Republicans and Democrats, and that the Administration supports another round of economic impact payments.

Secretary Mnuchin said no decision has been made regarding further US action over France's Digital Services Tax. The question came as USTR Robert Lighthizer said yesterday during an online event by the London-based Chatham House think tank, "We're going to announce that we're going to be taking certain sanctions against France, suspending them like they're suspending collection of the taxes right now." The US previously proposed tariffs on French goods before agreeing with France to a cooling-off period.

Republicans are discussing further limiting the next round of stimulus payments, perhaps to those earning under $40,000, to keep the cost down, the Washington Post reported.

House Speaker Nancy Pelosi (D-CA) yesterday took issue with Republicans trying to keep the cost of the next bill below $1 trillion. "A trillion dollars is: okay, that is an interesting starting point, but it doesn't come anywhere near," she said. The House-passed HEROES Act would provide $3 trillion.

NIH's Dr. Anthony Fauci said during an event sponsored by The Hill Newspaper yesterday that "we've got to do better" in controlling the virus, saying "in some of the Southern states, the states have not really followed those guidelines in some respects, and jumped over the benchmarks, and the points that needed to be checkpoints." In separate remarks to the FiveThirtyEight podcast, he continued to suggest the heterogeneous nature of the US poses challenges to virus suppression, saying, "You have to be having blindfolders on and covering your ears to think we don't live in a very divisive society from a political standpoint."


Presumptive Democratic presidential nominee Joe Biden yesterday announced a plan to invest $700 billion to boost US manufacturers: $400 billion in procurement that is intended to spur new demand for American products, materials and services; and $300 billion in R&D and breakthrough technologies, such as electric vehicles, lightweight materials, 5G and artificial intelligence.

The campaign document on the plan said "Biden will end incentives in the Trump tax giveaway that allow multinationals to dramatically lower taxes on income earned overseas and allow the largest, most profitable companies to pay no tax at all" and will tighten "anti-inversion rules that Obama-Biden put in place and which Trump has sought to weaken." It additionally said Biden would provide a Manufacturing Communities Tax Credit for renovations, and it called for eliminating tax incentives for pharmaceutical and other companies to move production overseas and establish new incentives for companies to make products here.

Infrastructure will be a focus next week, as Biden said, "I'll be laying out an updated blueprint of how we can build a modern, safe, sustainable infrastructure and the clean energy economy." The Atlanta Journal-Constitution reported that President Trump will visit Atlanta next week to tout his transportation agenda and announce a policy change designed to speed infrastructure projects.


Yesterday, the Treasury Department released final regulations (TD 9901) under IRC Section 250, which allows an annual deduction to a domestic corporation for its foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) inclusion. (See EY Breaking Tax News.)

IRS, HHS and the Labor Department this morning issued a notice of proposed rulemaking to provide greater flexibility for certain grandfathered health plans to make changes to certain types of cost-sharing requirements without causing a loss of grandfather status.

The European Commission will put forward a proposal for a digital tax in early 2021, with a view to introduce it "at the latest" by January 1, 2023, according to the latest proposal for the bloc's long-term budget presented by European Council President Charles Michel, Politico reported this morning.

The global EY Tax COVID-19 Response Tracker has been updated through July 6.

Today at 12:00 p.m. ET, is the EY Webcast, Tax in the time of COVID-19: Update on the Employee Retention Credit, net operating losses and IRS developments. This week's panelists will provide updates on: (i) the legislative and economic landscape; (ii) the Employee Retention Credit (including a review of the second set of FAQs released by the government); (iii) Net operating losses — what are companies doing and has the recent guidance helped?; and ((iv) any IRS and breaking developments. Register.


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