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October 25, 2020

Americas Tax Policy: This Week in Tax Policy News for October 23

This week (October 26-30)

Congress: The Senate is set to vote on the confirmation of Judge Amy Coney Barrett to the Supreme Court.

Last week (October 19-23)

Campaign tax plans: A major question if Democratic presidential nominee and former VP Joe Biden wins the presidential election is when and how he would seek to increase the statutory corporate income tax rate to 28% and act on other tax increase proposals discussed in his campaign documents, especially given his September comments that a corporate rate increase would be a 'day one' agenda item to provide revenue for spending priorities. The Washington Post October 22 suggested Biden would likely not include tax increases in any stimulus measure but would use them as offsets for permanent policy priorities: "Biden is not likely to pursue tax hikes as part of short-term stimulus programs designed to help the nation's economic recovery, according to two people familiar with the campaign's thinking. However, the former vice president would likely aim to include his tax increases if Congress approves his proposed permanent spending plans, such as expansions in child care, health care or education, these people said. The people, who spoke on the condition of anonymity to share internal deliberations, stressed that planning was fluid and subject to changes based on economic conditions, as well as the makeup of Congress should Biden win. A Biden campaign aide confirmed that his commitment to paying for spending priorities did not include short-term stimulus measures." Tax was not a major focus of the second and final debate on October 22, but President Trump did say, "I'm cutting taxes and he wants to raise everybody's taxes and he wants to put new regulations on everything. He will kill it. If he gets in, you will have a depression the likes of which you've never seen. Your 401Ks will go to hell and it'll be a very, very sad day for this country." He also highlighted the Opportunity Zone program under the Tax Cuts & Jobs Act (TCJA).

President Trump tweeted October 21: "The Radical Biden-Harris Agenda is projected to slash the typical American's income by $6,500 per year. They will raise TAXES by $4 TRILLION DOLLARS — triggering a mass exodus of jobs out of America and into foreign countries."

Coronavirus relief: On coronavirus relief and stimulus legislation, Speaker Nancy Pelosi (D-CA) and Treasury Secretary Steven Mnuchin have reported progress toward a deal but have yet to finalize an agreement and both sides have signaled there may be insufficient time for enactment prior to the election. Speaker Pelosi said during a news conference October 22 "they still haven't completely signed off on it, but I think we're just about there," but also that there is no agreement yet on the major issues of state and local funding and liability protections. She previously said that a timeline requiring most of the details to be settled this week "is really to have it for Election Day … We could still continue the negotiation. It might not be finished by Election Day." Secretary Mnuchin said October 23 that the Speaker is dug in on certain issues and significant differences remain. The Washington Post October 20 reported Senate Majority Leader Mitch McConnell (R-KY) as telling his members that he advised the White House not to strike a deal with Speaker Pelosi, who he accused of not negotiating in good faith. There are also questions of whether there is enough time for the Senate to vote on a potential coronavirus deal before the election. The Wall Street Journal said "resistance in the GOP-controlled Senate, in addition to the timeline posed by the Nov. 3 elections, less than two weeks away … left many on Capitol Hill resigned to the reality that any deal would almost certainly not be considered until after the election at the earliest, and potentially not until next year. 'It's about three or four minutes to midnight on the clock here,' said Senate Appropriations Committee Chairman Richard Shelby (R., Ala.)." Second-ranking Senate Republican John Thune (R-SD), long known as an astute observer of what to expect in Congress, said October 19, "I think we're going to have a hard time finding 13 votes for anything." President Trump said he wanted a bill larger than $2.2 trillion, but that he suspects Democrats don't want a deal because an impasse will be beneficial to them in the election.

Speaker Pelosi continued to raise the issue of expanding tax credits for lower-income families, saying October 20: "We want a Child Tax Credit for the poorest kids in America. They want to retain … a net operating loss benefit for the wealthiest people in our country. And we are saying, 'How do we reconcile that?'" Some tax-related language was reportedly being exchanged by the tax-writing committees, with Democrats apparently willing to address provisions including the Employee Retention Tax Credit, the Work Opportunity Tax Credit (WOTC), the Safe and Healthy Workplace reopening tax credit proposal, 'mobile workforce'-type state and local tax certainty, and FSA flexibility. Roll Call reported, "House Democrats are offering several concessions to Republicans on pandemic-related tax items, including a temporary fix to the thorny problem of how teleworkers and others who work in multiple states during the pandemic should be taxed." Of course, enactment of any tax provisions depends on reaching a broader agreement.

Extenders: Following up on an October 13 Roll Call story saying CARES Act aviation tax suspensions through December and temporary beverage tax provisions especially could compel action in a lame-duck session on tax provisions expiring at year end, Politico reported October 19: "Other provisions that expire at the end of the year include the so-called CFC look-through and a range of incentives for clean energy provisions or energy efficiency. Heather Meade, a principal at Washington Council Ernst & Young, noted that a credit that defrays the cost of health insurance would also cause more damage if it was restored retroactively, much like the alcohol excise taxes. And with the atmosphere on Capitol Hill potentially quite tense when lawmakers come back after the election, extenders advocates hope that message — that now is an especially bad time to be leaving people and companies in the lurch — resonates, even as they acknowledge it's no sure thing."

R&D bill: On October 21, Senators Maggie Hassan (D-NH) and Todd Young (R-IN), both members of the Senate Finance Committee, introduced the American Innovation and Jobs Act (S. 4822) to enhance tax benefits for research activities. The bill would reverse the TCJA changes under Section 174 for amortization of R&D expense beginning in 2022, and instead "ensure that companies can continue to fully deduct R&D investments each year." It would also double the refundable R&D tax credit and extend it to more small businesses.

BEPS 2.0: See EY Global Tax Alerts, "OECD releases BEPS 2.0 Pillar One Blueprint and invites public comments" and "OECD releases BEPS 2.0 Pillar Two Blueprint and invites public comments."

Regulations watch: Politico reported October 23 that Treasury is pushing to finish up regulations related to the TCJA by the end of the year, citing an unnamed official.

Under review by the Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA): a final rule, "Exception From Passive Income Under Section 1297 for Certain Foreign Insurance Companies [TCJA];" and proposed rule, "Exception to Passive Income Characterization of Certain Insurance Companies With Respect to Passive Foreign Investment Companies [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


Consolidated Net Operating Losses (TD 9927)

Final rules, October 23, 2020


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

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



Contact Information
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