April 1, 2022
What to expect in Washington (April 1)
A bipartisan group of senators has been working on a new COVID-19 relief package after House leaders pulled a $15.6 billion package from the omnibus bill earlier this month over disagreements about the offsets. Details of the new bill are still unclear, but reports indicate the package now includes about $10 billion in funding. The senators are still working out disagreements over funding offsets, but House Majority Leader Steny Hoyer (D-MD) March 30 said he is optimistic a new package will be passed before Congress leaves for Easter recess next week. The White House has warned without additional funds it will not be able to purchase more COVID-19 vaccines in the event of another wave and HHS’ Health Resources and Services Administration had announced that beginning March 22 it would stop accepting COVID-19 claims for testing, treatment, and vaccine administration for the uninsured due to insufficient funds.
On the Senate agenda for next week, the Judiciary Committee will vote on Judge Ketanji Brown Jackson to be a Supreme Court Justice. “The Senate is on track to have Judge Jackson confirmed by the end of this work period,” which is April 8, Majority Leader Chuck Schumer (D-NY) said this week. Punchbowl reported the House could vote next week to replenish the Restaurant Revitalization Fund.
Tax – In a second letter to Senate Finance Committee Republicans addressing their February 16 concerns related to the ‘BEPS 2.0’ global tax negotiations, the Treasury Department said the FY2023 Budget’s Undertaxed Profits Rule (UTPR) proposal is further evidence of the Administration’s commitment to implementing the international tax agreement. The proposal “would enforce the global minimum tax against foreign MNEs by denying U.S. tax deductions to low-taxed entities. It would do so to the extent an MNE is not paying an effective tax rate of at least 15 percent in each jurisdiction in which the MNE has profits,” Treasury said March 29. “Furthermore, the Greenbook’s UTPR proposal would apply a domestic minimum tax … that would ensure that if an in-scope U.S. company had an effective tax rate below 15 percent, the United States alone would collect the revenue on our own companies, thereby turning off any other country’s UTPRs.”
Finance Ranking Member Mike Crapo (R-ID) wasn’t satisfied with the letter. “Treasury’s response confirms that the Biden administration prioritized rhetoric over details when it negotiated the OECD agreement,” he said in Politico Morning Tax. “Treasury must go back to the negotiating table and get a better deal for America before it’s too late.”
An EY international tax Alert on the FY2023 budget is available here.
Competitiveness – House Speaker Nancy Pelosi (D-CA) said March 31 that once the two chambers complete the process of moving to conference on the House America COMPETES Act (H.R. 4521) and the Senate-passed USICA (S. 1260), negotiators will look to areas where they can find complete agreement and, on other matters, determine whether differences are big or small. “We’ve been working on that for months. So, we’re ready. We’re ready. Everybody wants to be on the conference, so we’ll just have to see what the size of that is.” She said, “The COMPETES Act is about America being independent and self-sufficient.”
Trade – During the House Ways & Means Committee hearing on the “Biden Administration’s 2022 Trade Policy Agenda” March 30, US Trade Representative Katherine Tai also put the focus on making the US more independent. She said, “I think that we’ve also demonstrated in our conversations with India, with Vietnam, and the Philippines, that there are ways to secure market access without a really large, comprehensive, traditional type of free trade agreement.” Ambassador Tai further said, “The problem that we are confronted with today after two years of COVID and” geopolitical events “is that this version of globalization that we are living in, has not taken us to a place where we feel more secure. In fact, I think we are feeling increasing senses of insecurity in terms of our supply chains, and our reliance on partners who we aren’t comfortable relying on. And so in our forward approach, our question is going to be always … how do we advance trade policies that are supportive of our workers and our economic stakeholders?”
Retirement – A story on the House-passed ‘SECURE 2.0’ retirement bill in The Hill Newspaper highlighted the increase in the required minimum distribution age from 72 to 75 and questioned the bill’s revenue offsets, which involve counting “money collected by the government through taxes on Roth retirement accounts earlier to make up for the lost revenue on traditional accounts in the 10-year budget window.”
Hearings - The House Ways & Means Committee has scheduled a hearing on the President’s FY2023 Budget with Health & Human Services Secretary Xavier Becerra, a former member of the Committee, for Tuesday, April 5 (at 2:00 p.m.).
The Senate Finance Committee has set a hearing on “The IRS, the President’s Fiscal Year 2023 Budget, and the 2022 Filing Season” for Thursday, April 7 (10:00 a.m.).
Today, April 1 (12:00 p.m.), is the EY Webcast, “Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments.” Register.