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January 24, 2021

Americas Tax Policy: This Week in Tax Policy News for January 22

This week (January 25-29)

Congress: The House and Senate will be in session. The Senate will vote on Janet Yellen's Treasury Secretary nomination on Monday, January 25.

According to a January 22 letter from House Speaker Nancy Pelosi (D-CA) to her members, "Monday, January 25, will be a momentous and solemn day, as the House sadly transmits the Article of Impeachment for Donald Trump to the Senate."

Last week (January 18-22)

Yellen clears SFC: Following President Biden's inauguration this week, the major tax news was a January 22nd unanimous 26-0 vote in the Senate Finance Committee to approve the nomination of Janet Yellen as Treasury Secretary. Earlier in the week, Yellen testified at a Finance Committee nomination hearing during which she provided some insight into the approach Biden plans to take on a variety of tax issues. Yellen called for action on Biden's $1.9 trillion stimulus proposal, saying "with interest rates at historic lows, the smartest thing we can do is act big," and said that tax increases will wait: "the focus now is not on tax increases, it's on programs to help us through the pandemic." She also suggested that the Administration will pursue changes to TCJA international provisions, possibly in coordination with the OECD BEPS 2.0 project, and that she is committed to trying to develop global solutions as part of the project. In her own words:

  • TCJA: "On the 2017 tax cuts, the president has said that eventually as part of a larger package that would include significant spending and investment proposals — not now, while the pandemic is really depressing the economy — that he would want to repeal parts of the 2017 tax cuts that benefited the highest income Americans and large companies … But he's been very clear that he does not support a complete repeal of the 2017 tax law."
  • International tax: "A provision in that [2017] law had the unfortunate byproduct of rewarding companies for moving their operations offshore, and the president would reverse that."
  • OECD BEPS 2.0: "We look forward to actively working with other countries through the OECD negotiations on taxes on multinational corporations to try to stop what has been a destructive global race to the bottom on corporate taxation. And in that context, we would ensure the competitiveness of American corporations even with a somewhat higher corporate tax … It's necessary for US companies to be globally competitive and that's why these OECD negotiations are so important. It would enable us to collect a fair share from corporations while maintaining the competitiveness of our businesses and diminish the incentives that American companies now have to offshore activities. That's certainly something we don't want to reward."
  • Tax as a revenue source: "The Biden program of Build Back Better — investing in people, investing in infrastructure, investing in research and development, in manufacturing and things that will create good jobs and make our economy more productive — we need to think about taxes in the context of the package that aims to do those things. And to the extent that financing is required for these very valuable investments, I believe it should come in a fair way … Although the corporate tax cuts, I think, did improve the competitiveness of American businesses and [President] Biden is not proposing to raise the corporate tax to the level before that act, it's very important that corporations and wealthy individuals pay their fair share. And the proposals that he will make will be in the context of an overall package that's very beneficial to the economy."

Focus on international: During the hearing, Senator Rob Portman (R-OH) said Biden's proposals to increase the corporate rate and double the global intangible low-taxed income (GILTI) rate from 10.5 to 21% are worrisome. "The OECD right now is considering a global minimum tax rate of 12.5%, so they're going the opposite way because they get it — this creates more jobs in their countries," he said, adding that he hopes Yellen will push back. Portman re-upped his concerns over GILTI during the January 22 executive session.

Several questions for the nomination hearing record focused on international tax, and Yellen's January 21 written responses include:

  • "The Biden-Harris Administration will pursue a comprehensive multinational agreement to update global tax rules in ways that establish effective minimum taxation rules, prevent global profit-shifting, and ensure that corporations pay their fair share. We will pursue in a manner that will maintain competitiveness and diminish the incentives that American companies now have to offshore activities."
  • "If confirmed, I will commit to vigorously engaging in a cooperative multilateral effort to address base erosion and profit shifting through the OECD/G20 process, and to working to address the tax challenges raised by the digitalization of the economy in that context."

Second step: Beyond the $1.9 trillion stimulus plan, Biden has said he will outline in a February address to Congress his Build Back Better plan for investment in infrastructure and manufacturing, innovation, research and development, and clean energy, and aides are reportedly preparing tax increase proposals that could accompany the plan. One of Yellen's written answers lays out plans for a corporate tax increase:

  • "During the presidential campaign, the President proposed raising the corporate tax rate to 28% — which is the midpoint of the pre-2017 level and the rate imposed after the tax act. At 28%, the corporate tax rate would be substantially below the level that had been in place for decades. The Biden agenda would couple this tax change with massive investment that would benefit American businesses of all stripes and improve our international competitiveness. This includes a sweeping plan to bolster America's infrastructure, ranging from surface transportation to broadband to airports and waterways. The plan would allow billions of dollars to worker training and college education, in addition to apprenticeship programs — all of which would raise the productivity of American workers. The Biden plan allocates hundreds of billions in research funds for renewable energy and other economic priorities, which ultimately make us more competitive on the world stage. Finally, President Biden has advanced a plan to quickly distribute vaccines to households while also providing a lifeline for the American economy. These critical actions will help businesses across the country, including those that are subject to the higher 28% corporate tax rate."

Democratic control and agenda: On Inauguration Day, three new Democratic senators were sworn in — Alex Padilla (D-CA), Jon Ossoff (D-GA), and Raphael Warnock (D-GA) — bringing the party ratio to 50 Democrats-50 Republicans, meaning Vice President Kamala Harris is the tiebreaking vote and Senator Chuck Schumer (D-NY) is the majority leader. With Democratic control in Washington cemented, the next question is how, and how soon, they can act on Biden's $1.9 trillion COVID/stimulus plan and the rest of his agenda. NEC Director Brian Deese — who January 22 said the economy is currently in a "precarious" moment that "requires decisive action to beat this pandemic and support the economic recovery that American families need" — is set to meet on Sunday, January 24, with a bipartisan group of centrist senators who jumpstarted COVID relief negotiations late in 2020. The path forward isn't clear, and the options are essentially:

  1. a big bipartisan bill;
  2. a partisan reconciliation bill;
  3. a smaller bipartisan bill possibly limited to vaccine distribution funding and $1,400 stimulus checks.

Regarding prospects for a bipartisan bill, centrist Republican Senators Mitt Romney (R-UT) and Lisa Murkowski (R-AK) were reported as expressing skepticism about quickly passing $1.9 trillion in COVID relief after just enacting $900 billion at the end of 2020, and Senators Bill Cassidy (R-LA) and Todd Young (R-IN) — both Finance Committee members — as suggesting the Biden plan is not sufficiently targeted. With regard to a reconciliation bill — which would require the support of all 50 Democratic senators plus VP Harris — key Senator Joe Manchin (D-WV) has expressed an aversion to acting through the budget reconciliation process, instead wanting a bipartisan approach; and a preference for employment-based assistance over stimulus checks, or at least ensuring checks are sufficiently targeted. Conversely, and consistent with the third option, some GOP senators have called for a just-checks bill to be enacted quickly, so as not to get bogged down by the remainder of the voluminous $1.9 trillion plan. Democrats will first try for bipartisan support and it's not clear how long they will wait before turning to reconciliation. Asked that question January 20, White House Press Secretary Jen Psaki said the Administration is "not taking any tools off the table for how the … House and Senate can get this urgent package done."

Sharing power: Senators Schumer and Mitch McConnell (R-KY) have yet to reach a power-sharing agreement over the mechanics of how the Senate will operate with a 50-50 Senate split. The lack of an organizing resolution that would contain rules for Senate operation will be an impediment to business in the Senate, and when and how the standoff will be resolved isn't clear. Senator McConnell wants the agreement to provide that the legislative filibuster will remain intact during the power-sharing for the next two years. As the Wall Street Journal observed, "Democrats say such demands don't belong in an organizing deal. But without one, Republicans technically remain in control of most Senate committees, despite now being the minority party." (Ending the filibuster could be considered Option #4 for moving legislation but isn't being eyed for the urgent matter of the $1.9 trillion stimulus bill.)

Personnel: The Tax Policy Center's Mark Mazur has been named Deputy Assistant Secretary of the Treasury for Tax Policy and is expected to serve in this position until Congress confirms Biden's Assistant Secretary for Tax Policy (the position he held in the Obama administration). House Ways & Means Committee Chairman Richard Neal (D-MA) announced that SRM Subcommittee Staff Director Aruna Kalyanam will join Treasury's Office of Legislative Affairs as Deputy Assistant Secretary for Tax and Budget. Treasury also announced some senior staff.

Executive actions: President Biden has signed several executive actions, and more are on the way. A regulatory freeze memo called for immediate withdrawal for review and approval of rules not yet published in the Federal Register. With respect to rules that have been published in the Federal Register, or rules that have been issued in any manner, but have not taken effect, agency heads are urged to consider postponing the rules' effective dates for 60 days from the date of the memo. Tax Notes reported, "The memo also includes language suggesting that the freeze applies to subregulatory guidance like revenue rulings, revenue procedures, notices, or FAQs that are substantive." An Executive Order for modernizing regulatory review includes a direction for the Office of Management and Budget to recommend "ways that [the Office of Information and Regulatory Affairs] can play a more proactive role in partnering with agencies to explore, promote, and undertake regulatory initiatives that are likely to yield significant benefits."

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, November 6


Additional First Year Depreciation Deduction (TD 9916)

Final rules, November 5, 2020


Ownership Attribution Under Section 958 (TD 9908)

Final rules, September 22, 2020


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

Final rules, November 12, 2020


Meals and Entertainment Expenses (TD 9925)

Final rules, October 9, 2020


Consolidated Net Operating Losses (TD 9927)

Final rules, October 23, 2020


Coordination of Extraordinary Disposition and Disqualified Basis Rules (TD 9934)

Final rules, December 1, 2020


Like-kind exchanges (TD 9935)

Final rules, December 2, 2020


Passive Foreign Investment Companies (TD 9936)

Final rules, January 15, 2020


Certain Employee Remuneration in Excess of $1,000,000 under Internal Revenue Code Section 162(m) (TD 9932)

Final rules, December 30, 2020


Section 451, timing of income inclusion under an accrual method of accounting (TD 9941)

Final rules, January 6, 2021


Business interest expense limitation under IRC Section 163(j) (TD 9943)

Final rules, January 19, 2021


Carried interest under Section 1061 (TD 9945)

Final rules, January 19, 2021


Section 45Q credit for carbon oxide sequestration (TD 9944)

Final rules, January 19, 2021


Guidance on Passive Foreign Investment Companies (REG-105474-18)

Proposed rules, July 11, 2019

September 9, 2019

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

Denial of Deduction for Certain Fines, Penalties, and Other Amounts (REG-104591-18)

Proposed rules, May 13, 2020

July 13, 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

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

Proposed rules, November 12, 2020

February 10, 2021

Passive Foreign Investment Companies and the Treatment of Qualified Improvement Property under the Alternative Depreciation System for Purposes of Sections 250(b) and 951A(d) (REG-111950-20)

Proposed rules, January 15, 2021

April 14, 2021


Contact Information
For additional information concerning this Alert, please contact:
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Bob Carroll (
James Mackie (
Kurt Ritterpusch (