Tax News Update    Email this document    Print this document  

March 21, 2021

Americas Tax Policy: This Week in Tax Policy News for March 19

This week (March 22-26)

Congress: House committees are holding virtual hearings this week but there is no floor business for the next three weeks. The Senate is back in on Monday and will vote on Marty Walsh to be Labor Secretary. Majority Leader Chuck Schumer (D-NY) has taken procedural steps (i.e., filing cloture) to set up action on:

  • the nomination of Adewale Adeyemo to be Deputy Secretary of the Treasury
  • the House-passed PPP Extension Act of 2021 (H.R. 1799) to extend the PPP application deadline from March 31 to May 31 and require the SBA to process applications by June 30.

SFC international hearing: On Thursday, March 25 (9:30 a.m.), the Senate Finance Committee will hold a hearing on the impacts of US international tax policy on American jobs. Witnesses:

  • Kimberly Clausing, Ph.D., Deputy Assistant Secretary (Tax Analysis), U.S. Department of the Treasury
  • Pam Olson, Former Assistant Secretary for Tax Policy, U.S. Department of the Treasury
  • Chye-Ching Huang, Executive Director, the Tax Law Center, New York University School of Law
  • James R. Hines Jr., Ph.D., Richard A. Musgrave Collegiate Professor of Economics and L. Hart Wright Collegiate Professor of Law, University of Michigan

Senate Budget hearing: On Thursday, March 25 (11:00 a.m.), the Senate Budget Committee will hold a hearing, "Ending a Rigged Tax Code: The Need to Make the Wealthiest People and Largest Corporations Pay their Fair Share of Taxes." Witnesses:

  • Maya MacGuineas, President, Committee for a Responsible Federal Budget
  • Amy Hanauer, Executive Director, Institute on Taxation and Economic Policy
  • Gabriel Zucman, Associate Professor of Economics University of California, Berkeley
  • Abigail Disney, Chief Executive Officer & Co-Founder, Fork Films Chair & Co-Founder, Level Forward

CARES hearing at Banking: The Senate Banking Committee will hold a hearing , "The Quarterly CARES Act Report to Congress," with Secretary Yellen and Fed Chairman Powell on Wednesday, March 24 (10:00 a.m.)

Infrastructure: It could be something of an infrastructure week in the House. The House Ways & Means Committee will hold a "Members' Day" hearing on Tuesday, March 23 (10:00 a.m.), and press reports suggested infrastructure will be the focus. Transportation & Infrastructure is hosting Secretary Buttigieg March 25 (11:00 a.m.) for a hearing on "The Administration's Priorities for Transportation Infrastructure."

Last week (March 15-19)

Build Back Better: The White House hasn't made any announcements about the forthcoming Build Back Better infrastructure-plus plan — on scope, processing, or potential for tax increases — that is expected to be a major focus for much of the rest of 2021. The House and Senate will be out for a holiday district/state work period March 29-April 9, meaning the President's expected address to Congress to detail the plan won't happen until at least mid-April. Members are weighing in with the Administration and speculation continues:

  • Politico March 17: White House Chief of Staff Ron Klain told progressive members of Congress at a White House meeting that options are being explored for the forthcoming Build Back Better plan, including breaking it up into as many as three bills, with some moving in a bipartisan manner and others through reconciliation. Congressional Progressive Caucus Chair Rep. Pramila Jayapal (D-WA) said she pressed for a commitment that the President's plan will go beyond transportation and address climate change, health care, and family benefits.
  • Punchbowl News March 19: "Top Democrats expect Congress will pass a number of infrastructure and public works bills through the summer and potentially into the fall." The report said the big plan will be laid out, likely with a corporate tax increase; Congress will first try to pass smaller bills over spring and summer; and a final vote on a large bill is eyed for end-of-summer or early fall. "The idea is to create a political drumbeat for infrastructure and public-works related legislation bookended by the announcement of the large-scale bill at the front end and its passage on the back end," it said.
  • Bloomberg March 15: According to unnamed sources, tax proposals currently planned or under consideration for the plan are raising the corporate tax rate to 28% from 21%, pass-through changes, raising the top individual income tax rate, expanding reach of the estate tax, and a higher capital-gains tax rate for individuals earning at least $1 million annually.

Asked during a March 16 news conference about Budget Committee Chairman Bernie Sanders' (I-VT) intent to move an infrastructure bill via reconciliation, Senate Republican Leader Mitch McConnell (R-KY) said: "the Trojan horse will be called infrastructure, but inside the Trojan horse will be all the tax increases" being talked about. "They want to raise taxes across the board, and the only way I think they could pull that off would be through a reconciliation process. They have one more of those available to them, and my suspicion is they will try to jam everything they can enter into that bill and call it an infrastructure bill … " he said.

Tax increases generally: President Biden said on ABC March 17, "If you take a look at the corporate tax rate under Trump, if you raise the tax rate back up to what we thought it should be, it was at 35%, they brought it down to 21%. Bring it to 28%. That raises $800 billion." He acknowledged there may be no Republican support for that, "but I'll get the Democratic votes for a tax increase." President Biden also said returning the top individual rate to 39.6% would raise $230 billion. He has made similar comments in the past, but it's notable that he is still raising these proposals. Probably after the address to Congress, possibly in May, the President is expected to propose his FY2022 budget — likely including a Treasury green book detailing tax proposals — following which congressional Democrats may begin work on the congressional FY2022 budget resolution that will unlock a second round of budget reconciliation legislation.

Child tax credit: Law360 March 19 reported House Budget Committee Chairman John Yarmuth (D-KY) as saying a future effort to make permanent the American Rescue Plan Act's (ARPA) one-year $109.5 billion child tax credit expansion could be proposed to be paid for with corporate tax increases. "I think we could get every Democratic vote for that," he said. The article noted that if a permanency proposal should be brought up under budget reconciliation, tax increases would be necessary to satisfy the requirement that deficits not be increased beyond the 10-year budget window. House Ways & Means Chairman Richard Neal (D-MA), who said March 9 he had "some thoughts about how we're going to expand it and make it permanent" that he would soon share, stressed that no decision had been made on any business tax hikes to cover the cost of a permanent extension. Any revenue-raising offsets, if needed, would be vetted and selected in consultation with Biden and Treasury Secretary Janet Yellen, he said. "The President wants to make the Child Tax Credit permanent … " White House Press Secretary Jen Psaki said March 16. "But we just have to find a vehicle, and we're having those discussions with Congress." Psaki noted that Senator Mitt Romney (R-UT) has a proposal on the issue and Law360 cited Senate Finance Committee Ranking Member Mike Crapo (R-ID) as saying there could be bipartisan agreement but he would have deep concerns about using corporate tax increases to pay for the proposal.

Supply chain hearing: The Senate Finance Committee's March 16 hearing, "Made in America: Effect of the U.S. Tax Code on Domestic Manufacturing," mostly focused on the how the year-end TCJA cliffs to amortize section 174 R&D expenses and change the treatment of interest deductibility under section 163(j) will hurt manufacturers, and the role of manufacturing tax incentives like a proposal for a reconstituted section 48C credit. Witnesses agreed the changes to require 5-year R&D amortization (rather than expensing) and drop depreciation and amortization from the interest deductibility calculation (EBIT vs. EBITDA) are problematic, and the hearing served to bring those issues from the background to the foreground and demonstrate the bipartisan interest in preventing them from taking hold. Chairman Ron Wyden (D-OR) said it will be critical to look at changes to the 2017 tax law; that improving supply chains and creating jobs is a "premier issue" for bringing the parties together; and that he would work with Republicans on a package to make US companies more competitive. Additionally, various supply chain issues exposed by the pandemic were discussed, and Republican members warned against a corporate tax rate increase that Democrats may propose to pay for infrastructure. The hearing also showed how eager members were to talk about the issues, with 20 members questioning witnesses over three hours.

CEO pay: On March 17, Senators Sanders, Elizabeth Warren (D-MA), Ed Markey (D-MA), and Chris Van Hollen (D-MD), along with Reps. Barbara Lee (D-CA), and Rashida Tlaib (D-MI), introduced the Tax Excessive CEO Pay Act (S. 794/H.R. 1979), to increase the corporate tax on companies that pay top executives at least 50 times more than a median worker. Under the plan, which Sanders offered as a presidential candidate, the corporate tax rate would increase by 0.5% for companies reporting a ratio of 50-1, up to 5% for companies reporting a ratio of 500-1 or higher.

FTT: Senator Brian Schatz (D-HI), joined by Senators Warren, Van Hollen, and others, March 18 reintroduced the Wall Street Tax Act to impose a 0.1% tax on each sale of stocks, bonds, and derivatives, estimated to raise $752 billion/10 years. Sanders and Warren proposed financial transactions taxes in the presidential campaign, but Biden did not. Secretary Yellen expressed polite skepticism of a FTT February 22, saying, "That's something that one would have to examine closely, what impact it would have on ordinary retail customers who are active in the stock market. It could deter speculation, but it might also have negative impacts."

SALT marriage penalty: On March 17, Senator Susan Collins (R-ME) introduced a bill (S. 804) to eliminate the marriage penalty for purposes of limits on state and local property tax deductions. The amount of state and local taxes that both single and married filers may deduct from their annual income taxes is capped at $10,000; single filers and married filers are treated the same.

State & local restriction: Ways & Means Republicans March 18 announced that "Ohio's attorney general is suing the Biden administration over the new $1.9 trillion spending bill's unconstitutional attack on states' ability to set their own tax policies," and other AG's wrote to Treasury on the issue. State and local funding under the ARPA is restricted from being used to "offset a reduction in the net tax revenue of such State or territory resulting from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase." Senator Crapo March 15 introduced the State Fiscal Flexibility Act (S. 743) to eliminate the requirement. A Wall Street Journal editorial said, "Democrats didn't flip a single state legislative chamber or governor's mansion in the 2020 election … yet through their Covid bill Democrats are trying to partially nullify these election results by mandating that state governments cannot pass tax cuts as a condition of receiving aid."

Filing deadline: The Treasury Department and IRS announced that the federal income tax filing date for individuals for the 2020 tax year has been automatically extended to May 17, 2021. Individuals will also have until May 17, 2021, to pay their 2020 income tax liabilities, which would otherwise have been due on April 15, 2021, without penalties or interest. This relief does not apply to estimated tax payments due on April 15, 2021.

Treasury: March 18 Treasury staff announcements included UPenn's Natasha Sarin as Deputy Assistant Secretary for Microeconomics, Office of Economic Policy. She has co-written tax op-eds with former Treasury Secretary Larry Summers, including a 2019 piece discussing alternatives to a wealth tax and 70% top individual rate that some Democrats were calling for at the time. The piece suggested alternatives including addressing 1031 exchanges, eliminating stepped-up basis, broadening the estate tax base, increasing the statutory corporate tax rate to 25%, and imposing "a per-country corporate minimum tax rather than a global minimum tax." A 2020 Washington Post Summers/Sarin op-ed called for the Schedule M-3, which reconciles the differences between income reported to shareholders and income taxed, to be released by the IRS or for the SEC to compel disclosure for greater transparency.

Filibuster repeal: The Administration suggested some new openness to Senate filibuster changes amid concerns among progressives and others about Democrats' ability to move on their agenda — beginning with a minimum wage increase and extending to other issues — even with control of the presidency and both chambers of Congress. In an ABC interview, President Biden said he wanted to revert to the "talking filibuster" in the Senate and require opposing members to stay on the floor, rather than the current version that allows other business to be conducted while bills are being held up. Senator Joe Manchin (D-WV) recently suggested he is open to that idea but not the repeal of the filibuster's 60-vote threshold that others want in order to more easily move bills in the 50-50 Senate. During a March 18 MSNBC interview, Kate Bedingfield, White House Communications Director, said of calls for changes to the Senate filibuster, "What the president is not willing to do, Hallie, is to allow progress and to allow benefits to the American people to be held hostage in the process. And, so, there are going to be conversations … and he's open to hearing different ideas … He is interested in the conversations that are happening."

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 (