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The Senate is planning to begin consideration of the budget reconciliation bill (H.R. 1319) reflecting President Biden’s $1.9 trillion “American Rescue Plan” COVID relief plan today, with a substitute amendment for the House bill to comply with reconciliation rules. (Today’s Senate vote will be on the motion to proceed.) There are 20 hours of debate during which amendments will be considered, then a “vote-a-rama” of rapid-fire votes on amendments offered after debate time ends, maybe over Thursday night. No Republicans are expected to support the bill and, as reported by Politico, are mulling dragging out the vote-a-rama to highlight their opposition. “There are people talking about trying to set up a schedule and having it go on and on,” said Sen. Rand Paul (R-KY).

Some recent developments regarding the bill include:

• multiemployer pension provisions, COBRA subsidies, and advanceable Child Tax Credit payments were ruled compliant with budget reconciliation rules and can stay in the bill;
• there has been increased attention on a House addition to lower the third-party network transactions information reporting threshold under IRC Section 6050W from $20,000 to $600;
• an enrollment correction passed by the House March 1 dropped from the bill provisions addressing expedited review of COBRA claims and COVID workers’ compensation for postal employees; and
• transportation projects in the districts of Speaker Nancy Pelosi (D-CA) and Rep. Elise Stefanik (R-NY) were dropped from the package due to reconciliation rule violations.

Moderate Senator Jon Tester (D-MT) was widely cited as saying he expected changes to the House bill, though relatively modest. Changes are possible on issues including:

• unemployment insurance, with Senator Joe Manchin (D-WV) wanting the $400 weekly add-on in the bill dropped to $300, while Senators like Finance Chairman Ron Wyden (D-OR) want pandemic UI programs extended past the August 29 date in the House bill, through September;
• Roll Call reported Senator Angus King (I-ME) as saying he wanted “guardrails” on the state aid to ensure states don’t use federal funding to replace state money they would be spending anyway, and others want some of the funding redirected toward broadband investment;
• the House ignored calls for tighter income limitations on $1,400 recovery rebates, and the Wall Street Journal reported some Democrats like Jeanne Shaheen (D-NH) want the payments cut off at lower income levels; and
• Senate Budget Chairman Bernie Sanders (I-VT) says he will call for a vote on the minimum wage, despite it being not in order to the bill, to show where members stand on the issue.

Looking forward, Senator Sanders has said he will force multiple votes on the minimum wage increase, some Democrats are not going to drop the issue despite the absence of a consensus route for enacting an increase (some want the Parliamentarian overruled to pass it under reconciliation, some do not), and that could cause future disruption. “The simmering tension is unlikely to derail the [COVID] plan, which is packed with longtime Democratic priorities including enhanced federal jobless aid, direct payments to Americans, and hundreds of billions of dollars for states, cities and tribal governments suffering fiscal shortfalls,” the New York Times reported. “But the liberal angst over the measure, coming little more than a month after Mr. Biden took office, foreshadows larger fights to come over the rest of his agenda, and a difficult road ahead for Democrats in navigating the divide.”

Asked about some members believing the COVID relief bill is the best opportunity to address the minimum wage, Speaker Pelosi said during the Democratic issues conference yesterday, “We’ll have other reconciliations… this American Rescue Plan is spectacular. It has so much in it to put vaccinations in the arms of the American people, money in the pockets of our families, children in school, workers in jobs. This is excellent. So, let’s not be diverted into thinking of what’s not in it, but let’s respect it for what is in it and it’s spectacular.” The conference continues today with sessions on health care, immigration, and the climate crisis, and an address by President Biden. The President encouraged Democratic senators, during a virtual meeting yesterday, to pass the COVID relief bill quickly.

Build Back Better – On the next major bill Democrats want to act on after the American Rescue Plan, the New York Times reported, “Biden administration officials have not decided whether to push infrastructure as a stand-alone bill or as part of a broader package… Conservative lawmakers and powerful business groups in Washington are already making clear that no infrastructure program will draw bipartisan support unless it is slimmer than what many progressives are proposing and includes no tax increases on corporations or the rich.”

Senators Wyden, Sanders, and others are calling for automatic economic stabilizers in the next bill (Wyden has advocated this going back to spring 2020). “We urge you to include recurring direct payments and automatic unemployment insurance extensions tied to economic conditions in your Build Back Better long-term economic plan,” they said in a letter.

Tax – The Treasury Department announced March 2: “Jose Murillo is returning to the Treasury Department after spending eleven years as a partner at Ernst & Young LLP. Most recently, Murillo was the Director of the International Tax and Transaction Services practice in EY’s National Tax Department in Washington, D.C. In that role, Murillo helped execute EY’s international tax strategy and advised many of EY’s largest clients on a variety of US international tax matters. Previously, Murillo served at the Treasury Department in the Office of the International Tax Counsel in the Bush-Cheney and Obama-Biden Administrations. Prior to that, Murillo spent 10 years in EY’s international tax groups in Houston and Washington, D.C.”

The IRS has issued guidance (Notice 2021-20) on the employee retention credit, which was enacted under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and amended by the Consolidated Appropriations Act, 2021. The guidance applies to qualified wages paid after March 12, 2020, through the end of calendar year 2020. Future guidance will address modifications applicable to quarters in 2021.

Nominations – The Senate Finance Committee will vote at 10 a.m. today on the nominations of:

• Adewale O. Adeyemo to be Treasury Deputy Secretary
• Xavier Becerra to be Health and Human Services Secretary
• Katherine Tai to be USTR

Neera Tanden withdrew her nomination for OMB Director amid uncertain support in the Senate.

The Senate Banking Committee March 2 held a hearing on the nominations of Gary Gensler as chairman of the Securities and Exchange Commission (SEC) and Rohit Chopra to be Director of the Consumer Financial Protection Bureau (CFPB).

Health – President Biden said March 2, “We’ll continue to use the Defense Production Act to expedite critical materials in vaccine production, such as equipment, machinery, and supplies... We’re now on track to have enough vaccine supply for every adult in America by the end of May.”

On Friday, March 5 (12:00 p.m. ET), is the EY Webcast Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments. The coronavirus (COVID-19) and the resulting economic crisis have made reacting to tax developments more complicated and more difficult. To determine what information your company needs to know now, join our panelists for a series of conversations about operating the tax function in this time of crisis and change. Panelists will provide updates on: (i) US economy and tax policy; (ii) Breaking developments; and (iii) What’s happening at the IRS. Register.

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