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August 30, 2020

Americas Tax Policy: This Week in Tax Policy News for August 28

This Week (August 31-September 4)

Congress: The House and Senate are out of session but could be brought back at any time to vote on coronavirus relief legislation if a deal emerges.

Election: House Ways and Means Committee Chairman Richard Neal (D-MA) is facing a challenge from progressive Holyoke Mayor Alex Morse in the Democratic primary September 1. Asked about the matter August 27, Speaker Pelosi said, "Richie Neal is the Chairman of the Ways and Means Committee, and as such, he has been a strong advocate for our country, the people of our country, the state of Massachusetts, and his district." Neal has been criticized for not advocating progressive priorities like a Green New Deal, and Speaker Pelosi said, "in terms of the climate … he has placed in the Moving Forward legislation - our infrastructure bill - tax credits, using the tax code to save the environment in such a way - read it. Read it. I'd just ask you to read it because it takes us to new heights in terms of how you use the tax code to support renewable energy in a way that saves our planet."

Last Week (August 24-28)

The big picture: The Republican National Convention highlighted contrasts over tax policy that feature prominently in the election, with President Trump and several other speakers warning that Democratic nominee Joe Biden plans massive tax increases while Republicans want more tax relief. Administration negotiators and congressional Democrat leaders had a check-in call over a next coronavirus relief bill but remained gridlocked over the size of the package — the Administration supports $1.3 trillion, and Democrats want at least $2.2 trillion — and issues like unemployment benefits and state and local government funding. The presidential race gets top billing in the election season but the battle over control of the Senate is very consequential in terms of the outlook for legislative action on taxes and other issues over the next several years.

Republican convention: President Trump accepted the Republican nomination August 27 and cited contrasts between himself and Joe Biden on crime, taxes, and a host of other issues. Of Biden, the President said: "He has pledged a $4 trillion tax hike on almost all American families, which will totally collapse our rapidly improving economy. And, once again, record stock markets that we have right now will also collapse. That means your 401(k)s. That means all of the stocks that you have. On the other hand, just as I did in my first term, I will cut taxes even further for hardworking moms and dads. I will not raise taxes. I will cut them, and very substantially. And we will also provide tax credits to bring jobs out of China back to America. And we will impose tariffs on any company that leaves America to produce jobs overseas." In his convention speech August 26, Vice President Pence said, "We passed the largest tax cut and reform in American history … Where President Trump cut taxes, Joe Biden wants to raise taxes by nearly $4 trillion."

Coronavirus (COVID-19): Prospects for a coronavirus deal between the Administration and Democratic congressional leaders remained unclear and the terms of the negotiations haven't changed much, with the two sides nearly $1 trillion apart on the overall size of the package and how much to devote to certain components. Following an August 27 call with White House Chief of Staff Mark Meadows, House Speaker Nancy Pelosi (D-CA) issued a statement saying in part: "In order to meet in the middle, we have now said we would be willing to go to $2.2 trillion to meet the needs of the American people. This is not about dollars, this is about values. These investments will not only help crush the virus, they will also help bolster the economy. The Administration's continued failure to acknowledge the funding levels that experts, scientists and the American people know is needed leaves our nation at a tragic impasse." Chief of Staff Meadows suggested a day earlier that the President could take additional executive action on issues like airline furloughs, and the Washington Post reported him as saying he is not optimistic about deal prior to the expiration of government funding September 30, which is seen as a potential action-forcing deadline if a deal isn't reached sooner. "I think the speaker is going to hold out until the end of September and try to get what she wants in the funding for the government … " he said. Meadows said August 28 that President Trump is willing to support a $1.3 trillion package. Senate Majority Leader Mitch McConnell (R-KY) was also uncertain over prospects for a deal, saying in Kentucky this week, "Regretfully we are in a much more partisan place unfortunately then we were in March and April. I can't tell you today that we are going to reach an agreement on another rescue package but here's what I do think, I think we need another one. I think the country needs another one."

There is some increasing pressure for a deal. Biden advisers Janet Yellen, the former Fed chair, and Jared Bernstein published an op-ed in the New York Times August 24 saying, "If senators still fail to resolve stalled negotiations when they return after Labor Day, millions of needy Americans will suffer — and the overall economy could degrade from its current slow rebound in growth to no growth at all." An editorial in the August 24 Washington Post called for a coronavirus relief compromise given an uptick in unemployment claims, said the basis of Treasury Secretary Steven Mnuchin's opposition to a $2 trillion bill isn't clear other than perhaps a reaction to Republican deficit hawks, and that a package at that level "would enable enough growth over the next two years to make up the gap in national output that would otherwise occur."

Senate elections: During his convention speech, Senator McConnell said of Democrats, "They want to tax your job out of existence and then send you a government check for unemployment." He said, "The stakes have never been higher, which is why I'm asking you to support Republican Senate candidates across the country," and that the chamber has served as a "firewall against Nancy Pelosi's agenda." Republicans hold a 53-47 majority. Democrats would need a 3-seat gain for control of the Senate if Biden wins (the VP breaks the tie if 50-50) or 4-seat gain if President Trump is reelected, and there are 7 Republican incumbents whose races are rated "toss-up" or "lean D" by the Cook Political Report, plus Democrat Doug Jones' (D-AL) tough re-election race. An August 28 New York Times analysis observed that the battle for control of the Senate took a back seat during both the Republican and Democratic conventions, saying aside from Leader McConnell's remarks, "vulnerable Republican senators battling to hang on to their party's majority were almost absent from the stage." A Washington Post analysis said some GOP senators up for re-election are "not Trumpian enough for [the] president's backers, [but] too loyal for other voters," and that members like Thom Tillis (R-NC) and Martha McSally (R-AZ) are not faring as well as President Trump in statewide polls. An editorial in the August 27 Wall Street Journal said, "Senate control will decide if change in 2021 is centrist or radical" and that a Democratic sweep in the election could set up a "policy transformation" even if they don't have 60 votes in the Senate. "Democrats can pass a tax increase with a mere 51 votes under current budget rules, but killing the filibuster opens the door to all sorts of long dormant progressive priorities," the editorial said.

Payroll tax deferral: Businesses are awaiting IRS regulations on 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. The New York Times reported that the delay in the regulations is related to a debate between the White House and Treasury: "The White House, which is eager to push through a tax cut before the November election, wants the Treasury guidance to ensure that companies, not workers, are held liable for paying the employee portion of the tax when the tax holiday ends."

Regulations watch: Review of final Base Erosion and Anti-Abuse Tax (BEAT) regulations has been completed 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, 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 (REG-124737-19)

Proposed rules, August 27, 2020

October 26, 2020


"As the only leader in Washington not from either New York or California, I consider it my responsibility to look out for Middle America. This election is incredibly consequential for Middle America. President Trump knows he inherited the first generation of Americans who couldn't promise their children a better life than their own. He's made it his mission of this administration to change that. I know because I work beside him every day. Today's Democrat Party doesn't want to improve life for Middle America. They prefer that all of us in flyover country keep quiet and let them decide how we should live our lives. They want to tell you when you can go to work, when your kids can go to school." - Senate Majority Leader Mitch McConnell (R-KY), August 27


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