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July 28, 2020

What to Expect in Washington (July 28)

Senate Republicans July 27 released a series of bills comprising their Health, Economic Assistance, Liability Protection and Schools ("HEALS") Act proposal for the next coronavirus bill, including on tax, health, and liability protection components. The proposal is a counteroffer to the $3 trillion House-passed HEROES Act and allows for more specific bipartisan negotiations that resume today, with lawmakers facing a July 31 expiration of expanded unemployment benefits. Senate Majority Leader Mitch McConnell (R-KY) has said reaching a deal could take weeks, and Speaker Nancy Pelosi (D-CA) has said the House won't leave town without enacting a bill, leaving the August 3 scheduled start of the House recess in doubt.

The Senate bill includes $16 billion in grants to states for testing, contact tracing, and surveillance compared to $75 billion in the House-passed HEROES Act, and doesn't include any funding for state and local governments, compared to at least $875 billion in the House bill. Senate Republicans did not propose rental or food assistance that Democrats have called for.

Liability protections in the Senate bill would protect people, schools, businesses, etc. from coronavirus exposure claims; health care providers against claims for coronavirus-related treatment, diagnosis, or care; and employers from liability under federal laws like OSHA. The House bill moves in the other direction, requiring an OSHA standard to protect health care and other workers from occupational risks of COVID-19.

Tax provisions in the Senate bill include creating uniform rules for assessing state and local income taxes on remote and mobile workers affected by government shutdown orders due to the pandemic, through 2024: setting a 30-day threshold before a state, other than an employee's resident state, can assert taxing rights over an employee's income, which for 2020 is extended to 90 days if the work is being performed outside the resident state as a result of COVID-19. Also, for 2020, employers may treat wages of employees as earned at their pre-pandemic work location (instead of a remote location), unless the employer elects to treat the wages as earned in the remote location. Below is a brief summary of tax provisions.



House HEROES Act

Senate HEALS Act

Expanded unemployment benefits

$600 through July 31

$600 through January 31, 2021

$200 August 1-September 30, then 70% of lost wages through December 31

Direct payments

1st round: $1,200 per individual, $500 for each qualifying dependent

2nd round: $1,200 per individual, plus $1,200 per dependent up to 3

2nd round: $1,200 per individual, $500 for each qualifying dependent

'Mobile Workforce'



30-day threshold before state can assert taxing rights through 2024; 90 days if the work is being performed outside the resident state as a result of COVID-19 for 2020

Safe and healthy workplace tax credit



Refundable tax credit against payroll taxes for 50% of testing, cleaning, PPE costs, up to $1,000 for each of first 500 employees, $750 for 500-1,000, $500 over 1,000

Employee Retention Tax Credit (refundable payroll credit)

For business that lose 50% of gross receipts compared to the same quarter in 2019, 50% of wages per-employee up to $10,000/year

80% of wages per employee up to $15,000/quarter ($45,000/year)

Gross receipts eligibility dropped to 25%; 65% of per-employee wages up to $10,000/quarter ($30,000/year)

Work Opportunity Tax Credit (WOTC)

40% of first $6,000 qualified first-year wages


For unemployed who gain employment before January 1, 2021, 50% of first $10,000 in qualified first-year wages

A separate bill from Senator Lindsey Graham (R-SC) would provide a 30% credit against equipment costs associated with personal protective equipment (PPE) manufacturing and allow intangible property used in connection with the production of PPE to be brought back to the US without taxable gain. Another bill not included in the Finance Committee tax package, by Senator Tim Scott (R-SC), would provide a full deduction for business meals prior to January 1, 2021.

Health provisions in the package call for testing improvements and permit providers to delay repaying Advanced Medicare payments until January 2021. The legislation would retain the telehealth regulatory flexibilities, including payment rates, made available during the public health emergency through the length of the public health emergency, or December 31, 2021, whichever is later. It also requires Medicare Payment Advisory Commission report to Congress on the impact of telehealth flexibilities on access, quality, and cost by July 1, 2021.

How and when Senate Republicans and House Democrats resolve differences in their bills and enact a bipartisan compromise is unclear. Senator Graham has predicted that half of Republican senators will oppose any additional coronavirus relief over cost concerns, meaning Senator McConnell will have to win the support of a significant number of Democrats. During a news conference, Speaker Pelosi and Senate Democratic leader Chuck Schumer (D-NY) criticized the multi-bill Senate GOP approach and the amount of time it took them to assemble it but said they would review the package and hopefully reach a deal soon.

In the 'brighter horizons' category, two coronavirus vaccines began the last phase of testing with 30,000-person trials, which NIH Dr. Anthony Fauci said is the fastest the US has ever moved toward a vaccine.

Election — The New York Times is the latest to focus on former national security adviser Susan Rice as a top contender for presumptive Democratic presidential candidate Joe Biden's running mate pick, saying she "would bring clear strengths to a ticket and administration, reinforcing Mr. Biden's message of sober and seasoned leadership" but noting her inexperience in campaigning.

The global EY Tax COVID-19 Response Tracker is updated through July 26.

Today, July 28 (at 4:00 p.m. ET), is the EY Webcast, 'Teleworker tax implications for COVID-19 and beyond.' In their response to the COVID-19 pandemic, states and localities issued stay-at-home orders and guidelines for social distancing that dramatically increased the number of employees working from home. During this crisis, telework arrangements provide an essential job safety net to workers while COVID-19 containment efforts are underway. To help you identify the tax implications of telework arrangements, we have brought together our EY employment and business tax professionals to discuss these issues. Register for this Thought Center Webcast.


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
   • Ray Beeman (
   • Gary Gasper (
   • Heather Meade (
   • Kurt Ritterpusch (