Tax News Update    Email this document    Print this document  

Bloomberg Tax reported that Senate Majority Leader Mitch McConnell's (R-KY) coronavirus response proposal set to be unveiled next week may include "tweaks to the employee retention tax credit, to make it easier to access and possibly to allow employers to claim the credit for employees who still are able to work but can't put in as many hours because of pandemic-related family reasons including child care." The report said the GOP proposal is set to include more direct payments and some approach to unemployment insurance (UI) but is unlikely to call for a payroll tax cut that President Trump continues to cite as a must-have. The President "believes it must be part of any phase four package," according to a spokesman.

Politico Playbook said Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows are likely to be on Capitol Hill in coming days for negotiations, talks will start in earnest after Republican senators are briefed during their Tuesday policy luncheon, and that liability protections that Senator McConnell has prioritized may provide protections for "schools, colleges, charities, local government entities and businesses that follow public health guidelines, and for front-line health workers," as well as protections from labor and employment laws for employers.

NBC News cited Senator McConnell as saying there is "going to be a heavy emphasis in the bill I'm going to unfold next week on education." The report, posted this morning, noted that chances are slim that Congress passes a next bill by the July 31 expiration of expanded UI benefits and that Senator McConnell "faces a difficult balancing act: He must appease conservatives wary of new spending, but he also must address the needs of politically vulnerable Republicans facing difficult re-election prospects who are eager to return home in August with accomplishments. And he needs 60 votes to advance the bill, which means at least seven Democrats must agree."

The White House is also emphasizing education, with press secretary Kayleigh McEnany saying yesterday "the President has said unmistakably that he wants schools to open. And I was just in the Oval talking to him about that. And when he says open, he means open in full — kids being able to attend each and every day."

During her regular news conference on July 16, Speaker Nancy Pelosi (D-CA) said of the $3 trillion HEROES Act passed by the House two months ago, "95% of what is in this package is what we have had in previous bills, so nobody is being asked to vote for something they haven't voted for before," and that Republican senators have approached her on specific proposals — "They know there's going to be a bill." She highlighted a strong OSHA standard to protect workers and assistance for renters as items Republicans have resisted, and said she favors extending the UI add-on amount of $600 but suggested some flexibility in that the package will be evaluated by the totality of what it provides, including through direct payments.

Also on July 16, Senate Democratic leader Chuck Schumer (D-NY) and others unveiled the $350 billion Economic Justice Act "to immediately help communities of color respond to the pandemic through a $135 billion investment in child care, mental health and primary care, and jobs, and to build wealth and health in these communities over the next five years by investing $215 billion as a down payment for infrastructure, a homeowner down payment tax credit, Medicaid expansion, and more."

Law360 reported Senate Finance Committee Chairman Chuck Grassley (R-IA) as saying the Lankford-Shaheen proposal (S. 4032) to increase the CARES Act $300 charitable deduction, regardless of whether taxpayers itemize their deductions, to 1/3 of the standard deduction up to $4,000 for individuals and $8,000 for married couples for the rest of 2020 is a potential component of the Senate GOP package. "I think it's getting some legs," he said.

On the topic of tax increases being part of the economic response to the coronavirus, either sooner or later, the New York Times reported that Representative Alexandria Ocasio-Cortez (D-NY) is part of a campaign to push Gov. Andrew Cuomo (D) to "tax billionaires who live in New York State and use the money to assist people hurt by the pandemic-fueled economic crisis," though he feels it may drive residents away.

Newly posted as under review by the Office of Management and Budget Office of Information and Regulatory Affairs (OIRA): a Final Rule on Limitation on Deduction for Dividends Received From Certain Foreign Corporations and Amounts Eligible for Section 954 Look-Through Exception [TCJA] and a Proposed Rule Coordinating Application of Certain Regulations Under Sections 245A and 951A [TCJA].

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

———————————————