Tax News Update    Email this document    Print this document  

March 14, 2021

Americas Tax Policy: This Week in Tax Policy News for March 12

This Week (March 15 - 19)

Congress: The House and Senate will be in session. Senate business could include a vote on the nomination of Katherine Tai to be U.S. Trade Representative.

Relief bill: On Monday March 15, VP Harris visits Las Vegas to talk about the benefits of the American Rescue Plan Act. On Tuesday, the President will travel to Delaware County, PA. Biden and Harris will both go to Atlanta on Friday, March 19.

Supply chain: The Senate Finance Committee has noticed a hearing , "Made in America: Effect of the U.S. Tax Code on Domestic Manufacturing," for Tuesday, March 16 (10:00 a.m.) Witnesses represent corporations, the National Association of Manufacturers, and United Steelworkers, plus Michelle Hanlon of MIT. (Among other publications, Hanlon coauthored a paper "Tax Avoidance and Multinational Firm Behavior" and an op-ed critical of Senator Warren's (D-MA) Real Corporate Profits tax of 7% on book income above $100 million .)

Filing season: The House Ways and Means Oversight Subcommittee will hold a 2021 Filing Season hearing with the IRS Commissioner on Thursday, March 18 (2:00 p.m.)

Trade: The Department of State announced March 10 that Secretary of State Anthony Blinken and White House National Security Advisor Jake Sullivan would meet with their Chinese counterparts, Director of the Office of the Central Commission for Foreign Affairs Yang Jiechi and State Councilor Wang Yi, next Thursday in Alaska to discuss "a range of issues" regarding the troubled U.S.-Chinese relationship. This will be the first in-person meeting between U.S. and Chinese diplomats since last June. In testimony before the House Foreign Affairs Committee this week, Secretary Blinken indicated his intention to press the Chinese on a number of trade issues and human rights topics. Biden administration officials, however, did not expect the Trump administration's Phase One China trade deal to be discussed in a meaningful way. "We are coming to these discussions clear-eyed about China's unsettling track record of failure to uphold its commitments," the State Department said in a statement. "We will use these discussions to reassert our global leadership and manage a relationship that is competitive when it should be, collaborative when it can be, and adversarial when it must be." In a related development, The Washington Post reported March 10 that Senate Majority Leader Chuck Schumer (D-NY) was "working on legislation that seeks to counter China's rising global power and proposes funding aimed at bolstering U.S. manufacturing and supply chains, among other measures."

Last Week (March 8-12)

COVID relief bill: On March 11, President Biden signed into law the $1.9 trillion American Rescue Plan Act (H.R. 1319), which includes modifications but not drastic changes to the pandemic relief plan he originally outlined in January. The president's action came a day after the House cleared the bill on a vote of 220-211, with one Democrat voting against the bill along with all Republicans. The Senate passed the bill March 6 after a marathon all-night session, 50-49, also with no Republicans in support. The bill includes provisions on taxes, health care, unemployment benefits, direct payments, state and local funding and other issues. The minimum wage increase was taken out of the bill and provisions on tax issues like worldwide interest, 6050W reporting, excess business loss, and 162(m) executive compensation were included along the way.

Direct payments

$1,400 for each taxpayer and dependent, cut off at $80,000/individuals, $160,000/couples


Extension of pandemic programs through September 6, $300/week add-on, first $10,200 not taxable for households with incomes below $150,000

Employee Retention Tax Credit

Extended from June 30 through the end of 2021, structured as a refundable payroll tax credit against the hospital insurance tax, and expanded to "recovery startup businesses" (average annual gross receipts under $1 million)

Executive compensation

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

Worldwide interest

Repeal of the Section 864(f) worldwide interest expense allocation election

Excess business loss

Extension of TCJA's 461(l) disallowance of excess business loss an additional year, through 2026


Reduction in 6050W third-party network transactions reporting threshold from $20,000 to $600

Child tax credit

Refundable and advanceable child tax credit expansion to $3,000 per child ($3,600 under 6) that

will take the form of IRS payments

Dependent care credit

Increases maximum credit rate to 50% and amount of eligible child and dependent care expenses such maximum credit is $4,000 for one qualifying individual and $8,000 for two or more


Increases eligibility for workers without children such that maximum credit is $1,502

Student loans

Excludes from gross income student loan debt forgiven from 2021 through 2025

What's next: Democrats are going to focus on the relief bill a little while longer — they want to communicate its benefits to voters, and President Biden and VP Harris are hitting the road next week to do so — and the address to Congress to detail the Build Back Better plan may not happen until April. Punchbowl reported WH Chief of Staff Ron Klain as saying, "we will go to the country and take a few weeks to explain the plan … I think shortly after that you will see him work with the Congress on a joint address." (Note, both the House and Senate will be out for a holiday district/state work period March 29-April 9.) After the President proposes his budget — which will likely include a Treasury green book detailing tax proposals — congressional Democrats may begin work on the congressional FY2022 budget resolution that is expected to provide for a second round of budget reconciliation legislation that could be focused on infrastructure, clean energy incentives, and other recovery measures, along with potential tax increases. A second reconciliation bill could allow for, like the relief bill, passage in the Senate by a simple majority rather than subject to the 60-vote filibuster threshold. The March 12 Wall Street Journal reported House Budget Committee Chairman John Yarmuth (D-KY) as saying he doesn't expect the Administration budget until late April or May, and noting there is currently no nominee to fill the role of Director of the Office of Management and Budget (OMB). Chairman Yarmuth said it will be difficult for Democrats, who currently can lose only 4 of their own members' votes and still pass bills if all Republicans are opposed, to agree to the same budget resolution for a variety of reasons. "We have members who don't want to vote for a big defense number. We have members who don't want to vote for a big deficit and both of those will be in there by necessity." (A bipartisan budget agreement set FY2020 and 2021 discretionary funding limits, but those limits will need to be revisited for purposes of a FY 2022 budget resolution.)

Treasury: On March 11, President Biden announced his intention to nominate Lily Batchelder as Assistant Secretary for Tax Policy. The announcement said in part, "From 2014 to 2015, she served as Deputy Director of the White House National Economic Council and Deputy Assistant to the President under President Obama. There, she was responsible for tax and budget issues, including tax reform, retirement policy, and low-income benefits. From 2010 to 2014, she served as Majority Chief Tax Counsel for the U.S. Senate Committee on Finance, where she led Chairman Baucus's work on tax issues … " Her publications include the January 28, 2020 Hamilton Project report, "Leveling the Playing Field between Inherited Income and Income from Work through an Inheritance Tax;" and a September 11, 2019 NYU paper on the relative advantages and disadvantages of "Taxing the Rich," including:

  • dramatically increasing the top tax rates on labor and other ordinary income,
  • taxing the wealthy on accrued gains as they arise and at ordinary rates,
  • a wealth tax on high-net-worth individuals, and
  • a financial transactions tax.

International tax bills: On March 11, Rep. Lloyd Doggett (D-TX) and Senators Sheldon Whitehouse (D-RI), Elizabeth Warren (D-MA) et al. introduced the No Tax Breaks for Outsourcing Act (H.R. 1785/S. 714) to:

  • eliminate the deductions for global intangible low-tax income (GILTI) and foreign-derived intangible income (FDII);
  • apply GILTI on a per-country basis;
  • end GILTI relief for foreign profits relating to qualified tangible property;
  • treat corporations worth $50 million or more and managed and controlled within the US as US entities;
  • disallow interest deductions for US subsidiaries of a multinational corporation where a disproportionate share of the worldwide group's debt is located in the US entity (anti-earnings stripping); and
  • eliminate the tax provision for foreign oil and gas extraction income.

Doggett and Whitehouse also introduced the Stop Tax Haven Abuse Act (H.R. 1786/S. 725) that includes changes to the Base Erosion and Anti-Abuse Tax (BEAT) to lower the applicability threshold to $100 million in gross receipts (as opposed to the current $500 million); end a BEAT exception for royalty payments; and eliminate the 3% base erosion percentage such that all payments are included when determining a company's BEAT liability. It would also eliminate oil and gas provisions related to extraction and foreign tax credits.

Child credit: House Ways & Means Chairman Richard Neal (D-MA) said regarding the relief bill's Child Tax Credit expansion during a news conference March 9, "I've already had some thoughts about how we're going to expand it and make it permanent. And I intend to share those in the near future."

Policy & process: The Build Back Better plan to soon be outlined by President Biden seems wide open in terms of what priorities it will include, if and to what extent it includes tax increases, and whether it can attract GOP support/move outside the budget reconciliation process. The Washington Post observed that "the White House so far has not said what Biden will turn to next as part of his legislative agenda;" Press Secretary Jen Psaki "declined to outline any components of a potential jobs and infrastructure package;" and "the White House has declined to say whether Biden would be open to the fast-track parliamentary measure used for coronavirus relief — called reconciliation — on infrastructure, with officials noting that the president hasn't even proposed a bill." Axios on Monday reported the following from an interview with Senator Joe Manchin (D-WV) regarding the next bill: "He talked up an array of tax increases, including raising the corporate tax rate from the current 21% to 25% 'at least,' and repealing 'a lot of' the Trump tax cuts for the wealthy."

The Post reported Senator Manchin as calling on Democratic leaders to reach out to top Republicans on the next bill and suggesting he is wary of using budget reconciliation for infrastructure, while Budget Committee Chairman Bernie Sanders (I-VT) is inclined to use it because, "I want to get it done." Senate Finance Chairman Ron Wyden (D-OR), whose committee will play a major role on financing and other aspects of an infrastructure bill, said, "You've got to be ready on both fronts … I'm going to do everything I possibly can — you've seen the president's remarks — to make this next round bipartisan. But if it becomes clear that there's just no real interest in that, then you've got to be ready to meet the needs of the public." In a March 12 news release, House Speaker Nancy Pelosi (D-CA) said, "I have called upon the Chairs of the Committees of Jurisdiction to work with their Republican counterparts to craft a big, bold and transformational infrastructure package."

Filibuster repeal: In addition to reconciliation, a way around the 60-vote Senate threshold is filibuster repeal. A March 7 New York Times analysis said Democrats "worry that voters would punish them more harshly in the 2022 midterm elections for failing to take advantage of their power to enact sweeping policy changes than for failing to work with Republicans and strike bipartisan deals." The analysis also said, "Anticipating the Republican recalcitrance to come, Democrats are increasingly coalescing around the idea of weakening or destroying the filibuster to deny Republicans their best weapon for thwarting the Democratic agenda," but acknowledged it would require the support of some moderates currently opposed. A March 11 NYT editorial said: "If America is to be governed competently and fairly — if it is to be governed at all — the filibuster must go."

SRM hearing: During the March 11 House Ways & Means Select Revenue Measures Subcommittee hearing on "Tax Tools to Help Local Governments," Chairman Mike Thompson (D-CA) noted that the Moving Forward infrastructure bill from the last Congress (passed by the House but not the then-GOP-controlled Senate) would bring back tax-exempt advanced refunding bonds, increase the threshold for bank-qualified bonds, and reinstate Build America Bonds (BABs), in addition to investing in green energy. Witness Elizabeth Reich, Chief Financial Officer of Dallas, said restoring and expanding the use of direct-pay bonds should not be a replacement for traditional tax-exempt bonds. Responding to a question from Rep. Gwen Moore (D-WI), Reich said Dallas issued several tax-exempt bond issues for purposes of advance refunding that resulted in a significant amount of savings for taxpayers, and she called for restoring advance refunding of tax-exempt bonds to provide resources that could be applied to infrastructure projects. (The TCJA repealed advance refunding bonds.) Rep. Don Beyer (D-VA) said advance refunding is a top issue raised in his district, and Reich said BABs can complement but not replace municipal bonds but, with direct pay bonds, there is a wider range of investors. Stacey Plaskett (D-VI) asked about interest in reviving BABs. Witness Kevin Boyce, a county commissioner in Ohio, said the sequestration of BABs (due to the Budget Control Act) put stress on state and local governments. Rep. Terri Sewell (D-AL), a former bond lawyer, said all tools need to be used to revitalize our infrastructure, and she is: fighting to restore advance refunding for tax-exempt municipal bonds; "leading the charge" on raising the cap on the amount of bank-qualified debt that local government and nonprofit issuers can utilize; and advocating for restoration of sequestration-proof direct-pay bonds to build on the success of BABs. Rep. Sewell announced she is planning to introduce comprehensive legislation on these types of issues in coming weeks. Some Republican members used the hearing to criticize the relief bill for its size and for including provisions that don't directly address COVID.

JCT: The Joint Committee on Taxation held an organizational meeting March 9 during which House Ways & Means Committee Ranking member Kevin Brady (R-TX) said it is important to act on TCJA technical corrections this year. JCT is seeking a 2% funding increase.

Recently introduced legislation of note:

March 9

  • Sen. Lankford, S. 618 — modify and extend the deduction for charitable contributions for individuals not itemizing deductions.
  • Sens. Manchin/Stabenow, S. 622 — enhance the qualifying advanced energy project credit.
  • Sen. Heinrich, S. 627 — tax credits for energy storage technologies.
  • Sen. Casey, S. 630 — increase WOTC for vocational rehabilitation referrals, SSI recipients, and SSDI recipients, expand the disabled access credit, and enhance the deduction for expenditures to remove architectural and transportation barriers to the handicapped and elderly.

March 10

  • Sen. Durbin, S. 685 — establish a carbon fee to reduce 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:
   • Michael Mundaca (
   • Cathy Koch (
   • Gary Gasper (
   • Ray Beeman (
   • Bob Carroll (
   • James Mackie (
   • Kurt Ritterpusch (