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President Biden signed the American Rescue Plan Act (H.R. 1319) into law yesterday and holds a ceremony today. The bill includes provisions on taxes, health care, unemployment benefits, direct payments, state and local funding and other issues. The latest round of direct payments could hit bank accounts this weekend, Press Secretary Jen Psaki said yesterday. An EY Tax Alert on tax provisions that affect employers has more details.

In a primetime address, the President said all adults will be eligible to receive a COVID vaccine by May 1 and the Administration will try to improve on the current pace of 2 million shots per day. He also touched on the shared grief of the past year: “It’s the details of life that matter most, and we’ve missed those details … all the things that needed to happen but didn’t.”

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...”

Tax - On March 11, Rep. Lloyd Doggett (D-TX) and Senators Sheldon Whitehouse (D-RI), Elizabeth Warren (D-MA) and others 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.

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.)

Next major bill – 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.

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 proposed by Democrats in the last Congress 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. Recurrent topics during the hearing were advance refunding bonds (which were repealed by the TCJA) and the detrimental effect of sequestration on BABs.

The Washington Post reported Senator Joe Manchin (D-WV) calling on Democratic leaders to reach out to top Republicans on the next bill and noting his high regard for Senators Thune and Blunt: “Just make that effort.” Senate Democratic Whip Dick Durbin (D-IL) said, “I think what Joe [Manchin] is looking for is Republican buy-in, participation. And I’m all for that. If there’s one bill that should do it, it’d be infrastructure,” said. Reported in the Post and elsewhere is that Manchin is wary of using budget reconciliation for infrastructure, but Budget Committee Chairman Bernie Sanders (I-VT) is inclined to use the process 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 addition to reconciliation, a way around the 60-vote Senate threshold is filibuster repeal, which a New York Times editorial called for: “If America is to be governed competently and fairly — if it is to be governed at all — the filibuster must go.’

Some recent bills introduced - 

March 9

• Sen. Lankford, S. 618 – modify and extend the deduction for charitable contributions for individuals not itemizing deductions.
• Sen. Fischer/Rep. Balderson, S. 620/H.R. 1677 – direct HHS, the Medicare Payment Advisory Commission, and the Medicaid and CHIP Payment and Access Commission to conduct studies and report to Congress on actions taken to expand access to telehealth services under the Medicare, Medicaid, and CHIP programs during the COVID–19 emergency.
• 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. 

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