Tax Update (June 29)
On Thursday (Jun. 25), a group of House Democrats released clean energy tax legislation that would expand credits for a variety of technologies. The “GREEN Act of 2020” would extend the Production and Investment Tax Credits, 45Q credit for carbon capture, energy credit for offshore wind facilities, excise tax credit relating to alternative fuels, electric vehicle credits, energy efficiency credits, and more.
The 94-page proposal is similar to the provisions included in Democrat’s recently released $1.5 trillion infrastructure package. The House Ways and Means Committee could mark up the legislation in the coming months.
To view CHCG’s summary of tax provisions in H.R. 2, click here.
Economic Relief Payments
On Thursday (Jun. 25), the Government Accountability Office (GAO) released a report that found the Treasury Department and IRS sent around 1.1 million stimulus checks, totaling close to $1.4 billion, to deceased individuals as of April 30. These events represent less than one percent of all payments.
Additionally, the report found around 450,000 people did not receive stimulus payments for eligible children. The issue arose from people who did not file tax returns. The IRS is working on providing supplemental payments by the end of July for the individuals who registered their qualifying children between April 10 and May 17.
In a joint letter to Secretary Steven Mnuchin on June 17, Britain, France, Italy, and Spain suggested a “phased approach” to negotiations on a digital services tax at the Organization for Economic Cooperation and Development (OECD). Mnuchin informed the four countries in a letter on June 12 that the U.S. is pausing participation in OECD negotiations.
“We believe that a phased approach, initially focused on automated digital services, would considerably ease the task of achieving a consensus-based solution and make a political agreement within reach this year,” said Finance Ministers from Britain, France, Italy and Spain.
To view the letter, click here.
On Monday (Jun. 22), the Supreme Court declined Altera’s petition to review the Ninth Circuit’s decision to overturn a unanimous Tax Court decision on the validity of Treasury Regulations under Section 482 which require cost sharing of stock-based compensation. This ends Altera’s eight years of litigation and confirms that stock-based compensation must be included in costs shared under a qualified cost sharing arrangement. Currently it is only applicable to cases in the Ninth Circuit jurisdiction.
The Altera case has been watched closely by the tax community for its erosion of the arm’s-length principle for transfer pricing and application of the Administrative Procedures Act to Treasury regulations, in addition to its stock-based compensation implications.
Child Care Credit
On Thursday (Jun. 25), House Appropriations Chairwoman Nita Lowey (D-NY) and House Ways and Means Chairman Richard Neal (D-MA) introduced the “Child Care for Economic Recovery Act” which would expand the child and dependent tax credit to more low- and middle-income families. The legislation would also create a 50 percent refundable tax credit for child care providers to cover mortgage payments, utility and rent costs, and expand the employee retention credit. House Appropriations spokesman Evan Hollander said House Democrats will encourage the bill’s content to be included in the next COVID-19 relief package.
Adragna, Anthony & Wolff, Eric. “House Democrats release green energy tax credit bill.” Politico Pro, 25 Jun. 2020.
Jagoda, Naomi. “Treasury sent nearly $1.4B in stimulus payments to dead people:report.” The Hill, 25 Jun. 2020.
Lorenzo, Aaron. “GAO finds 450,000 missed out on stimulus money for eligible children.” Politico Pro, 25 Jun. 2020.
Heikkila, Melissa & Smith-Meyer, Bjarke. “France, U.K., Spain, Italy suggest ‘phased approach’ to digital tax talks.” Politico Pro, 26 Jun. 2020. https://link.edgepilot.com/s/6928706f/tOXe_LAB_0eyaZTLndNE7w?u=https://subscriber.politicopro.com/article/2020/06/france-uk-spain-italy-suggest-phased-approach-to-digital-tax-talks-3981980
“Supreme Court Declines Certiorari in Altera, a Stock-Based Compensation Cost Sharing Regulations Stand.” Crowell Moring, 26 Jun. 2020. https://link.edgepilot.com/s/172228e7/8DRXfsqN80_U9Yw2ovFkxg?u=https://www.crowell.com/NewsEvents/AlertsNewsletters/all/Supreme-Court-Declines-Certiorari-in-Altera-Stock-Based-Compensation-Cost-Sharing-Regulations-Stand
Emma, Caitlin. “Top Democrats unveil bill to boost child care during pandemic.” Politico Pro, 25 Jun. 2020.