On The Hill

 

On Wednesday (Sep. 16), House Democrats chose Rep. Cedric Richmond (D-LA) to fill the late John Lewis’s seat on the House Ways and Means Committee. Next week, the full House Democratic caucus is expected to ratify Richmond for the committee. Richmond also serves as a national co-chair on the Biden campaign.^[1]

 

 

 

On Wednesday (Sep. 16), a bipartisan group of senators introduced legislation that would provide tax relief to individuals and businesses impacted by natural disasters. The “Disaster Tax Relief Act of 2020,” removes penalties on the early withdrawal from retirement accounts, suspends the limits on deductions for certain charitable contributions, and provides an employee retention tax credit.

 

“Congress should pass this bill before the 2021 tax filing season begins so that families, farmers and businesses have enough time to use this relief for a swift recovery,” Senate Finance Chairman Chuck Grassley (R-IA) said.^[2]

 

 

 

On Tuesday (Sep. 15), PwC released a survey that found 70 percent of business executives believe corporate tax rates will increase to help pay for COVID-19 relief legislation, regardless of which party wins the presidency. Additionally, 95 percent of respondents said some type of additional fiscal action is needed to address the COVID-19 pandemic. PwC surveyed a total of 578 US corporate leaders from Aug. 28 to Sep. 3.^[3]

 

To view the survey, click here.

 

 

 

On Wednesday (Sep. 16), Federal Reserve Board Chairman Jerome Powell said a lack of fiscal support from Congress and the president could “scar and damage” the U.S. economy.

 

“If there’s no follow-up on that, if there isn’t additional support and there isn’t a job for some of those people who are from industries where it’s going to be very hard to find new work,” Powell said. “That will start to show up in economic activity. It’ll also show up in things like evictions and foreclosures and things that will scar and damage the economy,” he added.

 

The Fed has forecasted the unemployment rate will decline to a median of 7.6 percent by the end of the year. Powell said these forecasts were made with the assumption that another COVID-19 relief bill would be passed, but did not specifically state what the size of the potential package should be.^[4]

 

 

 

The Internal Revenue Service (IRS) has set up a webpage for marijuana business tax compliance. Those companies do not qualify for federal tax breaks, however, they do owe federal income taxes.^[5]

 

To view the IRS webpage, click here.

 

 

 

On Tuesday (Sep. 15), the IRS released final regulations for taxpayers who claim the rehabilitation credit. The 2017 Tax Cuts and Jobs Act (TCJA) amended the credit to allow taxpayers to claim the credit over a five year period.

 

To view the final regulations, click here.

 

On Monday (Sep. 14), the IRS announced final regulations for the business interest expense deduction limitation were published in the Federal Register. In response to questions, the IRS regulations clarified that taxpayers may rely on the final regulations for any taxable year beginning after December 31, 2017, provided that certain conditions are met.^[6]

 

To view the final regulations, click here.

 

On Friday (Sep. 18), the Treasury Department released final regulations that detail how a new “endowment tax” on some private universities will work. Included in the TCJA, was a 1.4 percent tax on universities with at least 500 full-time, tuition paying students and assets worth at least $500,000 per student.^[7]

 

To view the final regulations, click here.

 

 

 

According to a draft policy paper, EU finance ministers will call on their G-20 peers to “redouble efforts” for a global digital tax by the end of the year. G-20 ministers and central bankers will meet in mid-October. The Organization for Economic Cooperation and Development (OECD) is expected to release two blueprints on a global digital tax and global minimum corporate tax ahead of the October meeting.

 

French Finance Minister Bruno Le Maire has doubted the prospect of an OECD deal and called on the European Commission to propose an EU digital tax in early 2021. However, he has said he is open to a solution should the U.S. change its position at the OECD.

 

“If in the course of 2021, there is a new position from the U.S. administration,” then “we would accept this OECD solution,” Le Maire said Friday (Sep. 11).^[8]

 

 

 

^[1] Lorenzo, Aaron. “Richmond gets formal nod as newest Ways and Means member.” Politico Pro 16 Sep. 2020.

 

^[2] Jagoda, Naomi. “Senators offer disaster tax relief bill.” The Hill, 16 Sep. 2020. https://link.edgepilot.com/s/c8a2bee6/Q17mdkXkSkGWos50GyCpHw?u=https://thehill.com/policy/finance/516764-senators-offer-disaster-tax-relief-bill

 

^[3] Lorenzo, Aaron. “Be it Trump or Biden, taxes will rise, execs say.” Politico Pro, 15 Sep. 2020. https://link.edgepilot.com/s/a4d3bd3d/ExKehIusoUidrZcBRTBDbg?u=https://subscriber.politicopro.com/article/2020/09/be-it-trump-or-biden-taxes-will-rise-execs-say-3983899

 

^[4] Lane, Sylvan. “Powell warns failure to reach COVID-19 deal could ‘scar and damage’ economy.” The Hill, 16 Sep. 2020.

 

^[5] Lorenzo, Aaron. “IRS sets up webpage aimed at pot industry tax compliance.” Politico Pro, 14 Sep. 2020.

 

^[6] “Final regulations on business interest expense deduction limitation published in the Federal Register” IRS, 14 Sep. 2020.

 

^[7] Faler, Brian. “Treasury issues final ‘endowment tax’ regulations.” Politico Pro, 18 Sep. 2020. https://link.edgepilot.com/s/2109595b/gFe-pPY9_U69pJf2bX55xQ?u=https://subscriber.politicopro.com/article/2020/09/treasury-issues-final-endowment-tax-regulations-3984015

 

^[8] Smith-Meyer, Bjarke. “EU seeks to ‘redouble efforts’ for global digital tax.” Politico Pro, 17 Sep. 2020.