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February 7, 2021

Americas Tax Policy: This Week in Tax Policy News for February 5

This week (February 8-12)

Congress: The House and Senate will be in session. The Senate is conducting an impeachment trial.

Ways & Means markup: The House Ways & Means Committee is planning a multiday markup of COVID relief/stimulus legislation February 10-12. Punchbowl News reported, "The panel will work during normal business hours, 10 a.m. to 6 p.m., so Republicans cannot accuse Democrats of trying to rush something through in the dark of night."

OMB: on Wednesday, February 10 (at 10:00 a.m.), the Senate Budget Committee will hold a hearing on the nomination of Neera Tanden to be Director of the Office of Management and Budget.

Last week (February 1-5)

Budget unlocks reconciliation: A COVID relief/stimulus bill is set to move through Congress over the next month or so, possibly with only the support of Democrats. The Senate early February 5 approved the FY2021 budget resolution (S. Con. Res. 5) after an overnight session, unlocking the budget reconciliation process for President Biden's $1.9 trillion COVID relief/stimulus plan and allowing it to potentially, like the resolution itself, pass the Senate with 50 votes plus the tie-breaking vote of Vice President Kamala Harris. The House passed the Senate version and plans to begin writing the reconciliation legislation, including during a multiday mark-up at the Ways & Means Committee February 10-12. "With this budget resolution, we have taken a giant step to save lives and livelihoods," House Speaker Nancy Pelosi (D-CA) said February 5 prior to a meeting at the White House with President Biden. "Next week, we will be writing the legislation to create a path to final passage for the Biden American Rescue Plan, so that we can finish our work before the end of February." The Speaker told reporters she wants the House to send a measure to the Senate within two weeks. Democrats hope to have the COVID relief/stimulus legislation enacted before the mid-March expiration of pandemic unemployment programs. Key provisions under the Biden plan are $400 billion to combat the pandemic, $350 billion in state and local funding, $1,400 direct payments, and a $400/week UI add-on and extension of pandemic unemployment programs through September. The President said the $1,400 amount is non-negotiable, but income thresholds for qualification are. Tax provisions are limited to childcare credit, Earned Income Tax Credit (EITC), and Child Tax Credit expansions. Ways & Means Committee Chairman Richard Neal (D-MA) released a statement after the meeting saying in part, "From shoring up pension plans that have been jeopardized due to the pandemic to expanding tax credits to combat child poverty to sending more direct assistance to those who need it most, we are hard at work on the relief Americans deserve." About half of the proposed package falls under the jurisdiction of the tax-writing committees — the reconciliation instructions call for deficit increase proposals of $941 billion for Ways & Means, and $1.3 trillion for the Senate Finance Committee.

Senate amendments: Passage of the budget resolution followed the traditional "vote-a-rama" series of consecutive roll call votes on amendments offered after debate time expired, and in this case lasted about 15 hours. None of the amendments are binding, though they express the views of senators. Senator John Thune's (R-SD) modified "mobile workforce" amendment on the authority of States and jurisdictions to tax certain income of employees for employment duties performed in other States or jurisdictions was adopted by voice vote. Some of the amendments were TCJA-focused. Senator Chuck Grassley's (R-IA) amendment to block any increase in or elimination of the $10,000 limitation on the state and local tax (SALT) deduction if it is projected to result in a windfall for high-income individuals failed, as did Senate Finance Committee Ranking Member Mike Crapo's (R-ID) amendment calling for permanency of TCJA provisions for individuals and small businesses.

NOL concerns: Some House and Senate Democrats including Rep. Lloyd Doggett (D-TX) and Senators Sheldon Whitehouse (D-RI) and Sherrod Brown (D-OH) reprised their call to roll back CARES Act NOL provisions: repealing Section 2304 of the CARES Act, which removed a limit that prevented owners of pass-through businesses from using active business losses to offset nonbusiness income in excess of $500,000, such as capital gains income; and limiting the ability to carryback losses to businesses experiencing losses during the pandemic by allowing only losses from 2020 and 2019 to be carried back. Politico reported, "Business advocacy groups are quickly mobilizing to ensure their member companies keep tax refunds Congress made them eligible for less than a year ago. A few dozen organizations are circulating a draft letter of opposition they'll send soon to congressional leaders, in an attempt to pressure them against unraveling the tax benefit in the next Covid aid package."

Organizing resolution: The Senate February 3 approved an organizing resolution for the 117th Congress modeled after the agreement reached in 2001, the last time there was a 50-50 split. The development allowed Democrats to formally take control of committees, which are split with equal numbers of Democrats and Republicans. The agreement provides a procedure for bringing measures subject to a tie in committee to the Senate floor, and Senate Majority Leader Chuck Schumer (D-NY) said he intends to avoid relying on the "filling the amendment tree" practice that essentially shuts the other party out of offering and receiving votes on amendments. The Finance Committee will have 14 members on each side, including new members Senators Elizabeth Warren (D-MA) and John Barrasso (R-WY).

Corporate tax: President Biden is expected to detail his Build Back Better plan in an address to Congress this month, and Treasury Secretary Janet Yellen has suggested a corporate tax rate increase to 28% could be part of the infrastructure-plus plan. The President alluded to the plan prior to the February 5 meeting with House committee leaders, telling members, "Thank you for last night, yesterday, and what you're going to be doing on this Recovery Act. And I can hardly wait to sit down with Peter DeFazio to work on infrastructure. This is the next big piece." This plan could also move under reconciliation using another budget resolution, for FY2022. (As an aside, Bloomberg Government reported this week that "Democrats plan to use a House rule that treats a vote to adopt a budget resolution as a vote to suspend the debt ceiling for the entirety of the fiscal year.")

Regarding a corporate tax increase, Senate Finance Committee Chairman Ron Wyden (D-OR) said during a February 4 Bloomberg Tax event, "Our new president has framed this as something in the 20s and let's see what my colleagues on the Finance Committee are going to think of that." Asked what aspects of the tax code are most ripe for change, Chairman Wyden said, "Right up at the top of the list are the tax breaks for doing business overseas. There's an offshoring incentive, the whole GILTI regime … still makes it more attractive to business overseas than in the United States. Those international provisions really need to be overhauled." He previously said he is working on a framework for corporate taxes.

Individual tax: Regarding the top individual tax rate, Chairman Wyden said a number of his Finance colleagues will be focused on "bumping that up." A CNBC article on what to expect with Democrats in control and Senator Warren on the Committee noted her advocacy for a wealth tax and Chairman Wyden's proposal for mark-to-market taxation of capital gains. It said: "At first, the committee will focus on the messaging needed to facilitate tax reform — including an emphasis on how the rich got richer during the Covid-19 crisis. 'You've got to be able to lay that foundation,' Wyden said. 'You've got to be able to describe how people who are very, very wealthy billionaires … how is it that they can make these huge sums' during the pandemic, he added." Senator Warren tweeted: "My first order of business on the @SenateFinance Committee — the committee that leads tax and revenue policy in the Senate — will be to introduce legislation for a #WealthTax on fortunes above $50 million. It is time to make the ultra-rich pay their fair share."

Treasury: The Treasury Department February 3 announced the appointment of new members of key staff, including some from academia who have written and testified on corporate and international tax issues.

  • Kimberly Clausing, Deputy Assistant Secretary for Tax Analysis, Office of Tax Policy — In a paper a year ago, Clausing proposed increasing the corporate rate, changing the global intangible low-taxed income (GILTI) minimum tax, and repealing the foreign-derived intangible income (FDII) deduction.
  • Itai Grinberg, Deputy Assistant Secretary for Multilateral Tax Office of Tax Policy — Grinberg previously served in the Office of International Tax Counsel at the Department of the Treasury and as Counsel to the President's Advisory Panel on Federal Tax Reform in 2005. He has written about the BEPS 2.0 project, including a June 2020 Tax Notes report, "Design of Scope Limitations for OECD Pillar 1 Work." Both Clausing and Grinberg testified before the Finance Committee just before enactment of the Tax Cuts & Jobs Act.
  • Rebecca Kysar, Counselor to the Assistant Secretary, Office of Tax Policy — Kysar testified at a House Ways & Means Committee hearing on corporate taxes a year ago and was critical of Treasury guidance on GILTI and the base erosion and anti-abuse tax (BEAT). She also co-wrote a 2019 New York Times op-ed, "The Big Problem with Wealth Taxes," arguing that the constitutionality of such proposals is "doubtful at best."
  • Tom West, Deputy Assistant Secretary for Domestic Business Tax, Office of Tax Policy — Previously, West served at the Treasury Department during the Obama-Biden Administration, spending 5 years in the Office of Tax Policy as Tax Legislative Counsel, managing the implementation of domestic tax.

GREEN Act: House Ways and Means Select Revenue Measures Subcommittee Mike Thompson (D-CA) and the entire Democratic membership of the Committee February 4 reintroduced the Growing Renewable Energy and Efficiency Now (GREEN) Act, which was first introduced in June 2020 and subsequently approved by the House as part of a broader infrastructure measure. According to a summary, the bill:

  • Builds on current successful tax incentives that promote the deployment of green energy technologies, while providing new incentives for activities that reduce greenhouse gas emissions,
  • Encourages residential investments in green energy and energy efficiency,
  • Expands incentives for energy efficiency and conservation in homes and buildings, with updated standards,
  • Supports widespread adoption of zero-emission cars, vans, and buses through tax credits for purchasing vehicles, and supporting deployment of publicly accessible electric vehicle charging infrastructure,
  • Invests in the green workforce by providing tax credits for advanced manufacturing facilities and mechanical insulation installations,
  • Advances environmental justice using tax credits for research and other academic programs, and
  • Prices greenhouse gas emissions.

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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