On The Hill

 

Throughout this week, White House Chief of Staff Mark Meadows, House Speaker Nancy Pelosi (D-CA), Treasury Secretary Steve Mnuchin, and Senate Minority Leader Chuck Schumer (D-NY) held negotiations on the next COVID-19 relief package.

 

On Friday (Aug. 7), the group met for more negotiations. After the meeting, Mnuchin said “we did not make any progress today” and Schumer said “it was a disappointing meeting.” The sides remain far apart on numerous issues and prospects of a deal are bleak. Mnuchin said after the meeting he and Meadows will recommend Trump sign some Executive Orders (EO).

 

Of note, Schumer has pushed for a two year suspension of the state and local tax (SALT) deduction cap. Pelosi has called for decreasing the net operating loss (NOL) carryback allowance included in the CARES Act.

 

“We’d like to get rid of that. I don’t think we’ll have that chance. But when we address the issue of taxation in our country, we will do that in a way that is bipartisan, has sustainability, fairness and transparency,” said Pelosi. Neither proposal has gained traction in negotiations.^[1]

 

On Thursday (Aug. 6), Senate Majority Leader Mitch McConnell (R-KY) signaled Senators could return home until a deal is struck.

 

President Trump announced on Thursday (Aug. 6) that he is preparing “aggressive” executive action on COVID-19 stimulus if both sides daily to finalize a deal on emergency legislation. The EOs would address a payroll tax cut, eviction protections, unemployment extensions, and student loan repayment options.^[2]

 

 

 

The latest COVID-19 relief legislation introduced by Republicans last week would allow people who died in 2020 to receive the next round of stimulus checks and make them retroactively eligible for the first round of checks.

 

“It’s consistent with ordinary tax rules for tax benefits and tax filing obligations” for the deceased, said Michael Zona, a spokesperson for Senate Finance Chairman Chuck Grassley (R-IA). “In the year of death, one final regular tax return is due and all tax benefits are allowed regardless of when in the year the taxpayer died.”

 

The Internal Revenue Service (IRS) initially said deceased people were eligible for stimulus checks; the Treasury Department reversed that decision. If passed, this would be the third policy on checks going to the deceased in the past six months.^[3]

 

 

 

On Wednesday (Aug. 5), a Legislative Assistant to Sen. Tim Scott (R-SC) said on a webcast her boss “would love” a two-year extension to the current tax deferral deadline tied to Opportunity Zones (OZ). On the same webcast, Scott said he does not think the pandemic will hurt OZs and will help with economic recovery. The U.S. Conference of Mayors has also pushed for a longer tax deferral period.^[4]

 

 

 

This week, the White House began a review of final rules for the base erosion and anti-abuse tax (BEAT) created in the 2017 Tax Cuts and Jobs Act. The tax aims to discourage companies from transferring income offshore through excessive deductible payments. In response to the IRS proposed rules in December 2019, the U.S. Chamber of Commerce and various other groups have called to make it easier for businesses to decrease waived deductions in amended returns or during an audit.^[5]

 

 

 

On Monday (Aug. 3), a bipartisan group of eight senators asked the Treasury Department to allow carbon capture, utilization, and sequestration projects an additional year of eligibility to claim the 45Q tax credit.

 

The lawmakers noted due to the COVID-19 pandemic, the administration should allow “as much administrative flexibility as possible” to get projects off the ground.^[6]

 

“The impact of COVID-19 on the economy, combined with the fact the IRS has not finalized guidelines for using the 45Q tax credit after two years, has deterred many companies from making critical investments and starting construction on carbon capture, utilization and sequestration projects,” the letter, led by Sen. Kevin Cramer (R-ND), said.

 

The lawmakers submitted the letter to a docket seeking comment on proposed rules for implementing the 45Q tax credit. The comment period has now closed.

 

 

 

^[1]Ota, Alan. “NOL Flexibility Remains A Sticking Point In Virus Relief Bill.” 6 Aug. 2020.

 

^[2] Eckert, Toby. “Trump: Executive order to cut payroll taxes could come Friday.” 6 Aug. 2020. https://link.edgepilot.com/s/86a6f5ce/NjmLW8CmvE6dHqv0YAg4Xg?u=https://subscriber.politicopro.com/article/2020/08/trump-executive-order-to-cut-payroll-taxes-could-come-friday-3983224

 

^[3] Faler, Brian. “’It’s whiplash’: Dead people may yet get their stimulus checks.” Politico Pro, 5 Aug. 2020.

 

^[4] Lorenzo, Aaron. “Scott pushes longer capital gains deferral for Opportunity Zones.” Politico Pro 5 Aug. 2020.

 

^[5] Bulusu, Siri. “Trade Groups Awaiting Final Anti-Abuse Tax Rules (1).” Bloomberg Tax, 5 Aug. 2020.

 

^[6] Adragna, Anthony. “Senators seek more time for CCS projects to claim tax credit.” 4 Aug. 2020.