On The Hill

 

On Wednesday (Jun. 3), the Senate passed the Paycheck Protection Program Flexibility Act of 2020 by unanimous consent. The House passed the legislation 417-1 last week. The bill will give businesses 24 weeks to use the funds, only require 60 percent to be spent on payroll to qualify for full loan forgiveness, allow loan forgiveness recipients to defer their payroll taxes, and extend the timeframe to repay the loan. Notably, the legislation does not extend the timeframe to submit loan applications.^[1]

 

President Trump signed the bill into law on Friday, June 5.

 

Senate Small Business Chairman Marco Rubio (R-FL) and Sen. Susan Collins (R-ME) expressed concern with drafting errors in the law. They believe language in the bill referring to the 60 percent payroll requirement creates a “cliff” that could result in businesses losing partial loan forgiveness if they fall short of the requirement. Rubio said the Trump administration made a commitment to address the errors, but stated that Congress will need to fix the issue if the administration does not.^[2]

 

To view the bill, click here.

 

 

 

On Tuesday (Jun. 2), the Trump administration announced it will launch Section 301 trade investigations into nine countries and the European Union (EU) if they implement or maintain digital services taxes (DST). “We are prepared to take all appropriate action to defend our businesses and workers against any such discrimination” said U.S. Trade Representative (USTR) Robert Lighthizer.

 

The EU said it will implement a DST if negotiations at the Organization for Economic Cooperation and Development (OECD) fail to reach an agreement.^[3]

 

“I want to be very clear: We will not back down on the overhaul of the international tax system. We will keep taxing tech giants, be it with an international levy — which is what we want — or a national one,” said French Finance Minister Bruno Le Maire.^[4]

 

Finance ministers from France and Italy urged their counterparts to speed up OECD negotiations.

 

 

 

On Friday (Jun. 5), House Ways and Means Republicans put out a press release opposing a provision in the HEROES Act that would temporarily lift the cap on state and local tax (SALT) deductions. In the release, they stated that a repeal of the SALT cap would be a tax break for millionaires. The press release referred to comments made by Jason Furman, former economic advisor to President Obama, about the SALT cap repeal being a “complete waste of money.”

 

To view the press release, click here. 

 

 

 

On Thursday (Jun. 4), the IRS announced it will ease some requirements for the Opportunity Zone program due to the COVID-19 pandemic. The IRS will extend some deadlines as a part of the reduced requirements.^[5]

 

To view Notice 2020-39, click here.

 

To view the updated Qualified Opportunity Zones FAQs, click here.

 

At a webcast sponsored by Politico, Sen. Tim Scott (R-SC) suggested that Opportunity Zones should be used to promote certain industries to come back to the U.S. due to COVID-19. He mentioned personal protective equipment (PPE) manufacturers and the pharmaceutical industry as potential targets. Additionally, he discussed the possibility of a pilot program to encourage telework and telemedicine by expanding faster internet connections through Opportunity Zones.

 

Scott said he wants “to see if we’re able to help people have the access to the best doctors they can find through telemedicine and the ability to go to work through telework.”^[6]

 

 

 

On Wednesday (Jun. 3), House Ways and Means Ranking Member Kevin Brady (R-TX) said the tax credit for research and development should be doubled. Brady also called for canceling a provision in the Tax Cuts and Jobs Act (TCJA) that requires businesses to spread research and development credits over five years instead of one year starting in 2022.

 

Additionally, he said that the provision in the TCJA that allows for a full, immediate write off of business equipment purchases should be expanded to include property and structures, and be made permanent.^[7]

 

 

 

House Appropriations Chairwoman Nita Lowey (D-NY) said in a letter to fellow committee members that subcommittee and full committee markups on FY 2021 spending bills will occur the weeks of July 6 and July 13. Lowey expects the spending bills to make it to the floor the weeks of July 20 and July 27.

 

“Additional details, including the specific order of bills, will be sent later this month,” she said.^[8]

 

To view Lowey’s letter, click here.

 

 

 

On Friday (Jun. 5), President Trump and Senate Republicans indicated that an additional round of economic relief is necessary to help bolster economic recovery. In a press conference on Friday, the president pointed to the 2.2 million jobs added last month and stated that he is open to a payroll tax cut, more aid for the restaurant and entertainment industry, and more stimulus money.

 

“Further stimulus action will need to be targeted and focused on the economy and schools safely reopening,” a Senate GOP aide stated. “Democrats’ insistence in locking people in their homes without a plan, making them dependent on government assistance, is going to do permanent damage to the economy,“ the aide added.^[9]

 

House Democrats used the new jobs report as evidence for the need to pass the HEROES Act.

 

“Unemployment is still at levels unseen since the Great Depression, and state and local governments are rapidly shedding essential frontline workers,” Evan Hollander, a spokesperson for the House Appropriations Committee said.

 

 

 

This week, CHCG staff covered a number of webinars on ongoing tax policy issues. Executive summaries are linked below:

 

 

 

 

 

 

^[1]Warmbrodt, Zachary “Senate passses small business loan revamp, overcoming resistance.” Politico Pro, 3 June 2020.

 

^[2] Warmbrodt, Zachary. “Trump signs revamp of small business aid into law but problems loom.” Politico Pro, 5 June 2020.

 

^[3] Palmer, Doug. “USTR threatens tariffs for foreign digital services taxes.” Politico Pro, 2 June 2020.

 

^[4]Kayali, Laura. “France, Italy double down on digital tax amid U.S. threats.” Politico Pro, 3 June 2020.

 

^[5] Becker, Bernie. “IRS, citing Covid-19, backs off some Opportunity Zone requirements.” Politico Pro, 4 June 2020.

 

^[6]Faler, Brian. “Opportunity Zones should be used to promote certain industries, Scott says.” Politico Pro, 2 June 2020.

 

^[7]Lorenzo, Aaron. “Brady plugs doubling the R&D tax credit.” Politico Pro, 3 June 2020. https://subscriber.politicopro.com/article/2020/06/brady-plugs-doubling-the-r-d-tax-credit-3981158

 

^[8]Emma, Caitlin. “Lowey details July appropriations schedule for House.” Politico Pro, 4 June 2020.

 

^[9]Emma, Caitlin. “Trump, Senate GOP both eye targeted federal pandemic aid.” Politico Pro, June 5, 2020.