December 13, 2020
Americas Tax Policy: This Week in Tax Policy News for December 11
This Week (December 14 - 18)
Congress: The House and Senate are in session, likely facing a December 18 deadline for an omnibus appropriations bill that could carry additional coronavirus spending and some tax provisions.
Last Week (December 7 - 11)
Year-end legislation: There isn’t yet agreement among members of Congress and with the President on additional coronavirus spending – which could possibly carry other items including tax provisions – and there is no imminent deadline, not even the next planned expiration of government funding on December 18. “[W]e’ve been here after Christmas, you know,” House Speaker Nancy Pelosi (D-CA) said December 10, adding that the December 26 expiration of UI benefits would be the next key date if a deal isn’t reached sooner. The bipartisan Senate group that has been filling out details of the $908 billion plan first outlined December 1 settled on an approach to the Democratic priority of state and local government funding but hasn’t found a middle ground on liability protections advocated by Republicans. Majority Leader Mitch McConnell (R-KY) has signaled that he doesn’t see a path for agreement on the two issues and suggested they be dropped from the current discussions and that Congress process a bill only on areas of agreement. “What’s the way forward? We know the new administration’s going to be asking for another package. What I recommend is we set aside liability and set aside state and local and pass those things we can agree on, knowing full well we’ll be back at this after the first of the year,” Senator McConnell said December 8.
Tax: If a year-end package does come together, it may include tax provisions. Agreement on a broader coronavirus package will be required for any virus-related tax items to advance, and it’s likely that such a package would need to materialize for any other tax provisions, like the extension of expiring provisions, to move this year. The Wall Street Journal served up a story on craft beverage excise tax cuts enacted with the TCJA (and extended once since) that are set to expire at the end of the year and increase taxes on local breweries that have been battered economically by the pandemic. “Unlike quarterly income-tax payments, excise taxes are due as often as twice a month,” making it more difficult for Congress to let the cuts expire and renew them retroactively, it said. “The tax cuts enjoy broad bipartisan support because so many lawmakers now have breweries in their districts…” the report said. “But the fate of the tax cuts—along with dozens of other expiring tax provisions that affect a range of industries—remains uncertain and overshadowed by the broader fight over economic aid as the lame-duck congressional session enters its final days.”
A proposal to provide some state and local tax certainty for employers and employees relating to employees that have been working in 2020 in locations other than their normal place of work will face an uphill climb due to Senate Democratic leader Chuck Schumer’s (D-NY) resistance, Senator John Thune (R-SD), a sponsor of the proposal, said December 8. “[T]here ought to be a provision in this legislation that makes it clear that … people who are, frankly, working remotely and have tax consequences as a result of that don’t get hit with a big fat tax bill by some state. New York is a good case in point, and I would hope that we could get that done and I think we can if Senator Schumer… would back down and allow this to be included…”
The next Administration: President-elect Joe Biden plans to visit Georgia next week to campaign for Jon Ossoff and Raphael Warnock ahead of the January 5 Senate runoffs that will impact how he will proceed with his agenda next year. Democrats must win both to control the chamber and have Vice President-elect Kamala Harris break 50-50 ties. President Trump campaigned last weekend for Republican Sens. David Perdue and Kelly Loeffler.
Biden announced additional nominations December 10: Secretary Tom Vilsack, Secretary of Agriculture; Congresswoman Marcia Fudge, Secretary of Housing and Urban Development; Denis McDonough, Secretary of Veterans Affairs; Katherine Tai, United States Trade Representative; and Ambassador Susan Rice, Director of the Domestic Policy Council.
CBO options: The Congressional Budget Office released “Options for Reducing the Deficit: 2021 to 2030,” a periodic compendium of budget options from a variety of sources, including legislative proposals, various Administrations’ budget proposals, congressional staff, other government entities, and private groups.
Transportation regulations: IRS has issued final regulations (TD 9939) to implement changes that the Tax Cuts and Jobs Act made to IRC Section 274, effective for tax years beginning after December 31, 2017. The final regulations largely track the underlying proposed regulations on qualified transportation fringe, transportation and commuting expenses, which were issued in June 2020.
Retirement: During the December 9 Senate Finance subcommittee hearing on “Investigating Challenges to American Retirement Security,” full Committee Chairman Chuck Grassley (R-IA) said he plans to, in the coming days, introduce legislation that builds on the SECURE Act and the provisions of a Portman-Cardin bill as well as a House bill. Also, “we’ve been negotiating with our Democratic colleagues for more than a week to find a solution on the multiemployer pension and I’d still like to find a way to reach a deal,” he said.
Regulations watch: Under review by the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) is a final rule on “Section 451(b) Requirements [TCJA].”
Below is a timeline for guidance projects released by the IRS related to the TCJA.