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August 23, 2020

Americas Tax Policy: This Week in Tax Policy News for August 21

This week (August 24-28)

Congress: The House is scheduled to vote on Saturday, August 22, on a bill to: prohibit the U.S. Postal Service from implementing or approving changes in operations or levels of service before the last day of the COVID-19 public health emergency or January 31, 2021, whichever is later; set certain policies regarding election mail; and provide an additional $25 billion in funding.

The Republican National Convention is August 24-27.

Last week (August 17-21)

The big picture: The Democratic National Convention and upcoming Republican National Convention, plus the focus on U.S. Postal Service funding and operations ahead of the election, took attention away from negotiations (or lack thereof) over a next coronavirus relief package. Administration negotiators and congressional Democrat leaders remained gridlocked over the size of the package — the Administration supports $1 trillion or a little more, and Democrats have wanted at least $2 trillion — and issues like unemployment benefits and state and local government funding. The convention demonstrated broad themes more than policy details, but the contrast in the tax positions of the two parties is a focus ahead of the election: Republicans warn that a Biden presidency will mean trillions of dollars in tax increases, and Democrats say that the GOP-authored Tax Cuts & Jobs Act (TCJA) primarily delivered benefits to corporations and wealthy individuals, and thus tax increases are justified. Meanwhile, there are still questions over how businesses should proceed regarding President Trump's memorandum on payroll tax deferral, as IRS guidance implementing the deferral is still being developed.

Democratic convention: Joe Biden accepted the Democratic nomination August 20 and cited contrasts between President Trump and himself on issues like handling of the coronavirus and health and tax policy: "This president, if he's re-elected, you know what will happen. Cases and deaths will remain far too high. More mom and pop businesses will close their doors, and this time for good. Working families will struggle to get by. And yet the wealthiest 1% will get tens of billions of dollars in new tax breaks. And the assault on the Affordable Care Act will continue until it's destroyed … " He also addressed the basic format of his tax increase proposals, which have been presented not as a standalone package but as revenue sources for other priorities. "We can and we will deal with climate change. It's not only a crisis, it's an enormous opportunity, an opportunity for America to lead the world in clean energy and create millions of new good-paying jobs in the process," Biden said. "And we can pay for these investments by ending loopholes — unnecessary loopholes, and the President's $1.3 trillion tax giveaway to the wealthiest 1%, and the biggest, most profitable corporations, some of which do not pay any tax at all, because we don't need a tax code that rewards wealth more than it rewards work." The same night, President Trump, who has criticized Biden's trillions in proposed tax increases, said on Fox News that if Biden is elected, "your taxes will be doubled, tripled, and quadrupled. Your jobs will be gone. I mean, you're going to have a depression if that happens." In her convention speech August 19, Senator Elizabeth Warren (D-MA) touched on a major theme of Democratic tax policy going back several years, saying "Joe's plan to 'Build Back Better' includes making the wealthy pay their fair share, holding corporations accountable … " The outlook for how soon in a potential Biden presidency tax increases will be tapped to pay for other costly policy priorities has been clouded by the coronavirus pandemic and the associated economic uncertainty. Whether Biden seeks higher taxes immediately if elected is "going to be very dependent on economic conditions," said Jared Bernstein, Biden's economist when he was vice president and now a senior adviser, Politico reported. Biden's ability to act on his agenda will also largely depend on whether Democrats can win the Senate and control both chambers of Congress next year. Senator Warren in particular is among those discussed as potential members of a Biden cabinet if he wins the presidency, in a role such as Treasury Secretary. A WCEY Alert on the post-2020 tax outlook is linked below, as is a Politico article on cabinet picks.

Payroll tax deferral: One major question regarding the August 8 memorandum to defer payroll taxes from September 1 through the end of the year for those with under roughly $104,000 in annual income is if/how/when the tax will ultimately be forgiven, which President Trump said he intends. National Economic Council Director Larry Kudlow said August 19 that the Administration is looking into allowing back taxes to be repaid over a period of as long as 8 years, Politico reported. "As far as the payback is concerned, you know you could stretch that out over a long period of time, so the payback won't be immediate and no one will be burdened," Kudlow told reporters. "You've got a lot of elbow room to get around that issue." An August 18 letter to Congress and the Administration from the U.S. Chamber of Commerce, and signed by other organizations, said many companies will likely decline to implement the payroll tax deferral as they consider it "unfair to employees to make a decision that would force a big tax bill on them next year." The letter expressed hope that Congress and the Administration can "come together on a path that supports workers instead." The National Payroll Tax Consortium in an August 20 statement expressed concern that "sufficient time is not available to implement an option to defer employee Social Security tax by September 1," and said, "programming changes are substantial."

Democrats continued to criticize the President's proposed payroll tax deferral as a threat to Social Security. "He's proposing to eliminate a tax that pays for almost half the Social Security without any way of making up for that lost revenue, resulting in cuts," Biden said August 20. A majority of House Democrats were set to warn President Trump in a letter to drop the proposed deferral and termination due to the threat to Social Security.

Coronavirus (COVID-19): Prospects for a coronavirus deal between the Administration and Democratic congressional leaders remained unclear. Treasury Secretary Steven Mnuchin didn't indicate any movement toward a bipartisan deal in a CNBC interview August 18, saying Democrats "aren't willing to sit down and strike a reasonable deal." Both sides want an agreement, the expiration of government funding September 30 is viewed as a potential action-forcing deadline and, in addition to the desire to provide necessary relief, many members are concerned about campaigning for re-election without achieving a deal. In an August 21 letter to congressional leaders, members of the Blue Dog coalition of "fiscally-responsible and moderate Democrats," many of whom represent districts in swing states, called for negotiations that have essentially been stalled since August 7 to be restarted. "Although there are meaningful differences between the HEROES Act and the HEALS Act, there is also considerable common ground," the letter stated. "In an era of divided government, the reality is that only bipartisan solutions will deliver much-needed support, and that requires principled compromise by both parties." Ways & Means Committee member Rep. Stephanie Murphy (D-FL) is part of the group's leadership. Senate Republicans had been expected to unveil a "skinny" coronavirus bill that is a stripped-down version of their previous package of bills on the issue, addressing issues like unemployment benefits, the Paycheck Protection Program, and additional emergency appropriations for the health response to the virus, but nothing has been released thus far. The anticipated package would move in the opposite direction of a deal Democrats are seeking and would be intended to attract the support of more Senate Republicans, several of whom have resisted further relief over cost concerns. It wasn't clear if that support had been secured. "There's not much of a reason to put a bill together and vote for it unless there's majority support for it, which means almost all of the Republicans," said fourth-ranking Republican Senator Roy Blunt (R-MO) in the August 20 Wall Street Journal. "There's some eagerness on our part that we could lay down a bill that got people back to school, back to work, back to childcare. If 50 or more Republicans were for that, that would establish a helpful part of the discussions."

DRD rules: The IRS August 21 issued final rules on the limitation on the deduction for dividends received from certain foreign corporations and amounts eligible for the section 954 look-through exception, and proposed rules coordinating the extraordinary disposition rule under section 245A with the disqualified basis rule under section 951A.

Regulations watch: Final Base Erosion and Anti-Abuse Tax (BEAT) regulations are under review by the Office of Management and Budget Office of Information and Regulatory Affairs (OIRA).

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


Section 951A (Global Intangible Low-Taxed Income - GILTI) 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 (TD 9898)

Final rules, May 28, 2020


Deduction for Foreign-Derived Intangible Income (FDII) and GILTI (TD 9901)

Final rules, July 15, 2020


Guidance Under Sections 951A and 954 Regarding Income Subject to a High Rate of Foreign Tax (TD 9902)

Final rules, July 23, 2020


Limitation on Deduction for Business Interest Expense (TD 9905)

Final rules released July 28, 2020


Limitation on Deduction for Dividends Received from Certain Foreign Corporations and

Amounts Eligible for Section 954 Look-Through Exception (TD 9909)

Final rules set to be published August 27, 2020


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

Proposed rules, December 28, 2018

February 26, 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, 2020

August 3, 2020

Tax on Excess Tax-Exempt Organization Executive Compensation

Proposed rules, June 11, 2020

August 10, 2020

Statutory Limitations on Like-Kind Exchanges

Proposed rules, June 12, 2020

August 11, 2020

Qualified Transportation Fringe, Transportation and Commuting Expenses under Section 274

Proposed rules, June 23, 2020

August 24, 2020

Consolidated Net Operating Losses

Proposed rules, July 8, 2020

August 31, 2020

Guidance Under Section 954(b)(4) Regarding Income Subject to a High Rate of Foreign Tax (REG-127732-19)

Proposed rules, July 23, 2020

September 21, 2020

Limitation on Deduction for Business Interest Expense (REG-107911-18)

Proposed rules released July 28, 2020

60 days after date of filing for public inspection with the Federal Register

Carried interest (REG-107213-18)

Proposed rules, August 14, 2020

October 5, 2020

Coordination of Extraordinary Disposition and Disqualified Basis Rules

Proposed rules set to be published August 27, 2020

60 days after August 27, 2020


"I love a good plan, and Joe Biden has some really good plans — plans to bring back union jobs in manufacturing and create new union jobs in clean energy. Plans to increase Social Security benefits, cancel billions in student loan debt, and make our bankruptcy laws work for families instead of the creditors who cheat them. These plans reflect a central truth: our economic system has been rigged to give bailouts to billionaires and kick dirt in the face of everyone else. But we can build a thriving economy by investing in families and fixing what's broken." — Senator Elizabeth Warren (D-MA), August 19


Contact Information
For additional information concerning this Alert, please contact:
Michael Mundaca (
Cathy Koch (
Gary Gasper (
Ray Beeman (
Bob Carroll (
James Mackie (
Kurt Ritterpusch (