Tax News Update    Email this document    Print this document  

March 8, 2021

Senate passes COVID relief bill after overnight session

After an overnight session, the Senate on Saturday, March 6, by a vote of 50-49, passed the budget reconciliation bill (H.R. 1319) reflecting President Biden's $1.9 trillion "American Rescue Plan" COVID-19 relief package, which includes provisions on taxes, health care, unemployment benefits, direct payments, state and local funding and other issues. (Senator Dan Sullivan (R-AK) was absent from the Senate, meaning the tie-breaking vote of Vice President Harris was not needed.) House Majority Leader Steny Hoyer (D-MD) announced that the House will vote on the Senate-passed bill on Tuesday, March 9. Leaders are trying to meet a March 14 deadline for enactment, when enhanced unemployment benefits from the last pandemic relief bill are set to expire.

On an issue that ground Senate business to a halt for several hours, agreement among Democrats was reached on an amendment by Senate Finance Committee Chairman Ron Wyden (D-OR) to extend pandemic unemployment benefits through September 6, rather than August 29 under the base bill; extend the weekly add-on at $300/week rather than $400; provide that the first $10,200 of UI benefits are not taxable, but only for households with incomes below $150,000; and pay for the changes by extending the TCJA's Section 461(l) excess business loss provisions for an additional year, through 2026 rather than 2025. The amendment was approved 50-49.

That amendment superseded an amendment by Senator Rob Portman (R-OH) to reduce the add-on to $300 and shorten duration of the programs to July 18, which also passed on a 50-49 vote, with Senator Joe Manchin (D-WV) voting for both the Portman and the Wyden amendments. Prior to this vote, late on Friday night, Senate Republican leader Mitch McConnell (R-KY) offered a motion to adjourn until 10 a.m. Saturday morning, which was defeated on a 49-50 vote.

The Senate adopted by a 51-48 vote Senator Maggie Hassan's (D-NH) amendment requiring schools receiving relief funds to develop and make publicly available plans to return to in-person learning. Another amendment, by Senator Marco Rubio (R-FL), requiring that schools be open 50% of the time for 50% of students in order to receive funding under the bill was rejected 48-51.

Notable amendment votes also included Senator Bernie Sanders' (I-VT) amendment on raising the minimum wage to $15/hour, which was defeated on a 42-58 vote (60 votes were needed). In the vote that was held open for nearly 12 hours while lawmakers negotiated changes to the unemployment provisions, Angus King (I-ME) and Democratic Sens. Carper (DE), Chris Coons (DE), Hassan, Manchin, Jeanne Shaheen (NH), Kyrsten Sinema (AZ) and Jon Tester (MT) voted with Republicans against Sanders' amendment.

Among other votes, the Senate:

  • defeated on a 49-50 vote Senator Chuck Grassley's (R-IA) amendment to commit the bill to the Finance Committee with instructions to protect taxpayers with regard to the provisions on multiemployer pensions;
  • defeated on a 47-51 vote Senator Rand Paul's (R-KY) amendment to strike Paycheck Protection Program provisions relating to nonprofit entities;
  • defeated on a 48-51 vote a motion to waive the Budget Act for Senator Susan Collins' (R-ME) substitute amendment for a $650 billion alternative COVID relief plan;
  • defeated on a 48-50 vote EPW Ranking Member Shelley Moore Capito's (R-WV) amendment to commit the bill to the Finance Committee with instructions to reallocate some of the $350 billion in state and local funding to a surface transportation reauthorization bill;
  • defeated on a 49-50 vote an amendment by Senator Tim Scott (R-SC) to reduce funding for states that have an active investigation into nursing homes for underreported coronavirus deaths; and
  • defeated on a 49-50 vote an amendment by Senator Mike Lee (R-UT) to limit the expansion of premium assistance for households above 500% of the federal poverty line.

The Senate's substitute amendment, offered on Thursday, made changes to the House bill, including:

  • an expansion of the scope of IRC Section 162(m) deduction limits on executive compensation, to deny the deduction for compensation in excess of $1 million for the eight highest paid employees, plus the CEO and CFO, at publicly traded companies, effective for tax years after 2026;
  • expanding the employee retention tax credit (ERTC) to "recovery startup businesses" (average annual gross receipts under $1 million);
  • increasing to 100% the proposed subsidies of insurance premiums for workers eligible for COBRA after they lost their jobs or had their hours reduced, through September 30 (subsidies were 85% under the House-passed bill);
  • tightening the income limitations for $1,400 recovery rebate direct payments to cut them off above $80,000 of income for individuals and $160,000 for couples; and
  • excluding from gross income student loan debt forgiven from 2021 through 2025.

The bill continues to include tax provisions like extension of the ERTC through December 31 and repeal of the Section 864(f) worldwide interest expense allocation election. Text of the substitute amendment is available here.


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
   • Ray Beeman (
   • Gary Gasper (
   • Heather Meade (
   • Kurt Ritterpusch (