On The Hill

Tax Update (July 6)

Jul 6, 2020 | SHARE  
Tax Filing Deadline
 
On Monday (Jun. 29), the Treasury Department announced the July 15 tax filing and payment deadline would not be postponed. Filers can request an extension which would give them until October 15 to file returns, however they would still need to pay what they owe by July 15 to avoid penalties.
 
On Wednesday (Jul. 1), House Ways and Means Ranking Member Kevin Brady (R-TX) left open the possibility that some tax payment deadlines could be extended.
 
“I know there are discussions at Treasury and in the tax-writing committees on that issue — no decision has been made yet,” Brady said.[1]
 
 
Potential New Stimulus
 
On Tuesday (Jun. 30), Senate Majority Leader Mitch McConnell (R-KY) said the Senate will focus on the next COVID-19 relief package when they return from the July Fourth recess with the goal of finishing it before the August recess.
 
McConnell said the period “dovetails nicely with the perfect time, to take an assessment of the economy and the progress we’re making on the health care front and see if there is additional assistance needed for our health care providers.”[2]
 
President Trump said in an interview on Wednesday (Jul. 1), that he supports another round of stimulus payments. Trump said he wants checks to be more than $1,200 which is the amount pushed by some Democrats.
 
“I want the money getting to people to be larger so they can spend it,” said Trump.[3]
 
 
House Democrat’s Infrastructure Bill
 
On Wednesday (Jul. 1), the House passed H.R. 2, the INVEST in America Act, with a vote of 233-188. The bill included various tax provisions and was focused on rebuilding roads and bridges, combating climate change, promoting clean energy, and rebuilding drinking water infrastructure.
 
The bill has virtually no chance of becoming law in its current form. Senate Majority Leader Mitch McConnell (R-KY) said the bill will die in the Senate, and the White House said it would veto the legislation.[4]
 
 
Climate Proposal
 
On Tuesday (Jun. 30), House Democrats unveiled the Select Committee on the Climate Crisis’s majority report. The document is nearly 550 pages, and is the most ambitious Democratic climate plan to date. The policy recommendations would reduce emissions 88 percent below 2010 levels by 2050, and generate benefits totaling roughly $8 trillion, according to an analysis by Energy Innovation, a nonpartisan energy and environment research firm. Additionally, the report encompasses more than 100 proposed bills.
 
The report recommends various tax provisions, including expansions of the production tax credit and investment tax credit. Additionally, the report mentions a carbon pricing system, but noted that carbon pricing is not a “silver bullet.” This report suggests expanding tax credits for electric vehicle purchases.[5]
 
To view the full report, click here.
 
To view a summary, click here.
 
To view a fact sheet, click here.
 
 
PPP
 
On Wednesday (Jul. 1), the House unanimously passed an extension of the Paycheck Protection Program (PPP) which would keep applications to the program open until August 8. The extension was passed by the Senate with unanimous consent on Tuesday (Jun. 30). Currently, there is about $130 billion in unspent money in the program. The bill, S. 4116, now awaits President Trump’s signature.[6]
 
 
Digital Tax
 
The Organization for Economic Cooperation and Development (OECD) Secretary-General Angel Gurria said on Wednesday (Jul. 1), an international deal on a digital services tax will likely have to wait until after the U.S. election in November. Gurria also warned European leaders of a potential trade war if they decide to move ahead with a digital services tax without the U.S.’ involvement.[7]
 
 
IRS
 
IRS Commissioner Charles Rettig told the Senate Finance Committee on Tuesday (Jun. 30) the IRS has stepped up efforts to stop tax evasion by the wealthy. Senate Finance Committee Ranking Member Ron Wyden (D-OR) asked Rettig about a recent report that found 900,000 high-income taxpayers did not file returns from 2014-2016 which totaled around $46 billion in unpaid taxes. Rettig outlined that the IRS changed leadership posts and moved officials with criminal investigation backgrounds into higher positions in part to respond to tax evasion from wealthy individuals.[8]
 
 
Upcoming Congressional Schedule
 
The House and Senate are in recess for the next two weeks.
 
The Senate will return the week of July 20, where they will continue their work on NDAA. The hope is that they complete the must-pass legislation by the end of the month. Senate Majority Leader Mitch McConnell (R-KY) said they will begin working on the next COVID-19 package after the July Fourth recess, ideally getting it off the Senate floor by Aug. 6, when they begin their August recess.
 
The House will return the week of July 20 for votes, however Committees are expected to hold hearings over the next two weeks while it stands in recess. The House is currently scheduled to adjourn on July 31 for the August break. The House has extended rules allowing for proxy voting and remote House hearings until August 14. This gives the House flexibility to finalize any additional COVID-19 package before the August recess.
 
The Democratic National Convention will be held August 17 – 20.
 
The Republican National Convention will be held August 24 – 27.
 
 
References
 
[1] Faler, Brian. “Brady: Some tax payment deadline delays still possible.” Politico Pro, 1 Jul. 2020.
 
[2] Levine, Marianne & Ferries, Sarah. “McConnell eyes next coronavirus package after July recess.” Politico Pro, 30 Jun. 2020.
 
[3] Lorenzo, Aaron. “Morning Tax.” Politico, 2 Jul. 2020.
 
[4] Snyder, Tanya. “House sends massive infrastructure bill to the Senate, where it has no path forward.” Politico Pro, 1 Jul. 2020.
 
[5] Hulac, Benjamin. “Climate panel urges sweeping change, deep carbon cuts.” Roll Call. 30 Jun. 2020.
 
[6] Moreno, Edward. “House votes unanimously to extend deadline for coronavirus small-business loan program.” The Hill, 1 Jul. 2020.
 
[7] Tamma, Paola. “OECD’s Gurria: No digital tax deal before U.S. election.” Politico Pro, 1 Jul. 2020.
 
[8] Lorenzo, Aaron. “IRS chief says agency is cracking down on wealthy tax cheats.” Politico Pro, 30 Jun. 2020.
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