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October 11, 2020

Americas Tax Policy: This Week in Tax Policy News for October 9

This week (October 12-16)

Congress: The Senate is scheduled to be out of session until October 19. The House is also out.

Taxpayer fairness hearing: On Tuesday, October 13 (at noon), the House Ways and Means Oversight Subcommittee will hold a hearing on "Taxpayer Fairness." Witnesses:

  • Ambassador Norm Eisen (ret.), Senior Fellow, Brookings Institution
  • Kathleen Clark, Esq., Professor of Law, Washington University in St. Louis, School of Law
  • Leandra Lederman, Esq., Professor of Law, Indiana University Maurer School of Law
  • Steven M. Rosenthal, Senior Fellow, Urban-Brookings Tax Policy Center
  • Andy S. Grewal, Professor & Joseph. F. Rosenfield Fellow in Law, The University of Iowa College of Law

Last week (October 4-9)

Coronavirus relief: This week, bipartisan negotiations over a next coronavirus relief/stimulus bill between the Administration and House Speaker Nancy Pelosi (D-CA) turned from focusing on a comprehensive approach, to discrete issues where progress could be made, and now back to a comprehensive approach, with no clear outlook on if and when a deal could come together. Surveying the situation, the New York Times reported October 8: "As tens of millions of Americans, schools and businesses watched the flurry of developments that could determine whether they would receive another infusion of desperately needed pandemic relief, confusion reigned in Washington about whether an elusive stimulus compromise was dead, alive, on life support or somewhere in between. What remained clear was that the political stakes, which have long imperiled a bipartisan bargain, have only heightened." In a Fox Business interview October 8, President Trump said, "I shut down talks two days ago because they weren't working out. Now they are starting to work out. We're starting to have some very productive talks." President Trump tweeted October 9: "Covid Relief Negotiations are moving along. Go Big!" The Administration has reportedly increased its offer to $1.8 trillion, including $300 billion in state and local government funding, compared to the $2.2 trillion sought by Speaker Pelosi. A Pelosi spokesman said on Twitter: "Of special concern, is the absence of an agreement on a strategic plan to crush the virus. For this and other provisions, we are still awaiting language from the Administration as negotiations on the overall funding amount continue." Always a big question mark regarding the long-elusive Administration-House Democratic deal is the Senate, where some Republicans have been reluctant to support a large coronavirus relief/stimulus bill; the consensus package offered by the Senate GOP was about $500 billion. "I just think the situation is kind of murky. And I think the murkiness is a result of the proximity to the election and everybody kind of trying to elbow for political advantage," Senate Majority Leader Mitch McConnell (R-KY) said in Kentucky October 9. "I'd like to see us rise above that like we did back in March and April, but I think that's unlikely in the next three weeks."

GOP TCJA bill: On October 9, House Ways and Means Committee Ranking Member Kevin Brady (R-TX) and House Republican Leader Kevin McCarthy (R-CA) released H.R. 11, the Commitment to American GROWTH Act, "to rebuild the greatest economy in a generation for our workers, families, and small businesses" by locking in key provisions of the Tax Cuts & Jobs Act (TCJA). Provisions include: making permanent full expensing and the earnings before interest, taxes, depreciation, and amortization (EBITDA) standard for the business interest limitation; repealing the requirement to amortize R&D costs beginning in 2022; doubling the R&D tax credit; (i.e., double the traditional credit of 20% to 40%, and ASC rate of 14% to 28%); and allowing companies to bring back their IP developed offshore without any immediate U.S. tax cost.

VP debate: During the October 7 debate between Vice President Pence and Democratic Vice Presidential nominee Senator Kamala Harris (D-CA) at the University of Utah, tax policy was a primary focus, including the question of whether a Biden/Harris ticket would repeal the entire TCJA. Senator Harris initially said the TCJA would be repealed, then focused on the proposal for no tax increases for those earning under $400,000 annually. Following are partial excerpts:

  • Senator Harris: "Donald Trump … measures the strength of the economy based on rich people are doing. Which is why he passed a tax bill benefiting the top 1% and the biggest corporations of America, leading to a $2 trillion deficit that the American people are going to have to pay for. On day one, Joe Biden will repeal that tax bill. He'll get rid of it, and what he'll do with the money is invest it in the American people. And through a plan that is about investing in infrastructure … That's how Joe Biden thinks about the economy, which is about investing in the people of our country, as opposed to passing a tax bill which had the benefit of letting American corporations go offshore to do their business."
  • VP Pence: " … President Trump cut taxes across the board. Despite what Senator Harris says, the average American family of four had $2,000 in savings in taxes. And with the rise in wages that occurred, most predominately for blue-collar, hard-working Americans, the average household income for a family of four increased by $4,000 following President Trump's tax cuts. But America, you just heard Senator Harris tell you. On day one, Joe Biden's going to raise your taxes."
  • Senator Harris: "That's not what I said … Joe Biden has been very clear, he will not raise taxes on anybody who makes less than $400,000 a year."
  • VP Pence: "He said he's going to repeal the Trump tax cuts … Joe said twice in the debate last week that he's going to repeal the Trump tax cuts … that gave the average working family $2,000 in a tax break every single year … is he only going to repeal part of the Trump tax cuts?"

BEPS 2.0: Angel Gurría, OECD Secretary-General, launched a meeting of the Inclusive Framework on October 8-9 to discuss final blueprints for Pillar 1 and Pillar 2 of the BEPS 2.0 project, telling members that "key political decisions remain, and some further technical issues need to be resolved." The OECD reportedly will publish final blueprints for Pillar 1 and Pillar 2, along with an impact assessment, on October 12, according to an earlier statement by Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration. The blueprints are expected to be delivered to the G-20 finance ministers for their October 14 meeting. Public consultations on the pillar drafts are planned to begin in mid-October, according to the OECD tax director, with comments due before December 25, 2020.

Reuters reported on the status of the BEPS 2.0 project October 7.

WTO: The World Trade Organization this week narrowed down its list of candidates to be the next WTO Director General to two candidates, both women: Ngozi Okonjo-Iweala of Nigeria and Yoo Myung-hee of South Korea. Final consultations at the WTO will begin October 19 with a final announcement scheduled by November 7. Either candidate would be the first woman to lead the embattled organization.

Partnership withholding regulations: Treasury and IRS October 7 released final regulations (TD 9926) that provide guidance related to the withholding of tax and information reporting with respect to certain dispositions of interests in partnerships engaged in a trade or business within the United States. The final regulations affect certain foreign persons that recognize gain or loss from the sale or exchange of an interest in a partnership that is engaged in a trade or business within the United States, and persons that acquire those interests; and partnerships that, directly or indirectly, have foreign persons as partners.

Regulations watch: Under review by the Office of Management and Budget Office of Information and Regulatory Affairs (OIRA) is a final rule on Consolidated Net Operating Losses [TCJA].

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, September 14, 2020


Limitation on DRD from Certain Foreign Corporations, Amounts Eligible for Section 954 Look-Through Exception (TD 9909)

Final rules, August 27, 2020


Additional Rules Regarding Base Erosion and Anti-Abuse Tax (TD 9910)

Final rules, October 9, 2020


Gain or Loss of Foreign Persons from Sale or Exchange of Certain Partnership Interests (TD 9919)

Final rules released September 21, 2020


Additional First Year Depreciation Deduction (TD 9916)

Final rules released September 21, 2020


Ownership Attribution Under Section 958 (TD 9908)

Final rules, September 22, 2020


Determining the foreign tax credit, etc. (TD 9922)

Final rules released September 29, 2020


Meals and Entertainment Expenses (TD 9925)

Final rules October 9, 2020


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

Proposed rules, December 28, 2018

February 26, 2019

Determination of Section 4968 Excise Tax, Colleges & 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

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 on Hybrid Arrangements, Allocation of Deductions Attributable to Disqualified Payments, 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, September 14, 2020

November 2, 2020

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

Ownership Attribution Under Section 958 (REG-110059-20)

Proposed rules, September 22, 2020

November 20, 2020

Guidance related to the Foreign Tax Credit (REG-101657-20)

Proposed rules released September 29, 2020



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For additional information concerning this Alert, please contact:
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