Tax Update (September 14)
Biden Tax Plan
On Wednesday (Sep. 9), Democratic nominee for president Joe Biden outlined his plan to promote a “Made in America” future through changes to the tax code and executive actions. Biden criticized President Trump’s policies, and said they have encouraged companies to offshore jobs.
The Biden Offshoring Tax Penalty would target those who offshore manufacturing and service jobs to foreign nations in order to sell goods or provide services back to the American market. Biden plans to establish a 28 percent corporate tax rate, plus a 10 percent Offshore Penalty on profits of any production by a U.S. company overseas for sales back to the U.S.
The “Made In America” tax credit would be a 10 percent advanceable tax credit for companies making investments to create jobs and accelerate economic recovery. It will be available for the following purposes: revitalizing existing closed or closing facilities, retooling facilities that advance manufacturing competitiveness and employment, reshoring job-creating production to the U.S., expanding U.S. facilities to grow employment, and increasing manufacturing payroll.
To close the “Trump offshoring loopholes,” Biden said he would: end U.S. companies’ ability to pay zero taxes on the first 10 percent of their profits when they locate manufacturing and service jobs overseas, require minimum tax on all foreign earnings of U.S. companies located overseas, and end the use of “tax haven strategies” to allow companies to offshore jobs and avoid U.S. taxes.
To view the Biden/Harris Buy America fact sheet, click here.
On Thursday (Sep. 10), the Senate voted 52-47 on the Republican COVID-19 relief “skinny package.” The bill did not get the 60 votes necessary to pass out of the chamber. Senator Rand Paul (R-KY) was the only Republican to vote against the bill. The legislation included funding for the Paycheck Protection Program, expanded unemployment benefits, schools, the U.S. Postal Service, and liability protections for businesses, schools, and health care providers.
On Thursday (Sep. 10), House Ways and Means Ranking Member Kevin Brady (R-TX) said he would push for the inclusion of technical corrections to the Tax Cuts and Jobs Act (TCJA) in a Continuing Resolution (CR) that is expected to pass later this month.
“There are a number of corrections that are routine, many of them clerical, and have no cost to the budget but can be helpful to businesses and organizations,” Brady said.
On Thursday (Sep. 10), House Speaker Nancy Pelosi (D-CA) stated, “I have said publicly I am for a clean CR. So we’re down that path. We are now looking at anomalies and we’ll figure out the timing when we do that.”
On Wednesday (Sep. 9), French Finance Minister Bruno Le Maire said the U.S. was blocking negotiations on a global digital tax. Additionally, Le Maire stated that if negotiations at the Organization for Economic Cooperation and Development (OECD) fail, he will call for an EU digital tax proposal by the first quarter of 2021.
“An agreement at the OECD will be very difficult to reach … the fact is that today the United States is blocking an agreement at the OECD level on digital taxation,” Le Maire said.
“Should the blockage at the OECD be confirmed by the end of the year, we expect the EU to table a formal proposal for the taxation of digital activities in the first quarter of 2021 and we will plead for this with Paolo Gentiloni (European Commissioner for Economy) and Ursula von der Leyen (Commission President),” he added.
Payroll Tax Deferral
On Friday (Sep. 11), House Ways and Means Ranking Member Brady introduced the Support for Workers, Families, and Social Security Act. The legislation would forgive the payroll taxes deferred under President Trump’s payroll tax Executive Order (EO).
“This bill forgives the payroll taxes deferred by President Trump to help working families, many of whom now rely on a single paycheck. I call on Congress, including Democrats who forgave these payroll taxes twice for President Obama, to act now to help our essential workers keep more of what they work so hard to earn,” Brady said.
To view a one-pager of the bill, click here.
To view the legislative text for the bill, click here.
On Monday (Sep. 7), Austrian public broadcaster Österreichischer Rundfunk reported more than 100 American COVID-19 stimulus checks have been cashed throughout the country. Austrian bankers suspect that some checks were sent out erroneously, while others were sent to former U.S. taxpayers or former au-pairs.
On Tuesday (Sep. 8), the Internal Revenue Service (IRS) said people who have not filed tax returns have until Oct. 15 to sign up online to receive an economic impact payment. The IRS will start mailing about nine million letters around Sep. 24 to individuals who may be eligible for the payment but have not yet signed up. Those who do not sign up have the option to wait until next year and claim the payment as a tax credit by filing a return for 2020.
On Wednesday (Sep. 9), House Ways and Means Chairman Richard Neal (D-MA) sent a letter to IRS Commissioner Chuck Rettig and urged the IRS to send letters to those eligible for economic impact payments as soon as possible. Additionally, Neal requested that the Oct. 15 online sign up deadline be extended.
To view Neal’s letter to Rettig, click here.
Ways and Means Hearing
On Friday (Sep. 11), House Ways and Means Subcommittee on Select Revenue Measures held a hearing entitled “Consequences of Inaction on COVID Tax Legislation.”
To view a summary of the hearing, click here.
 Becker, Bernie. “Brady to push tax law fixes for funding bill.” Politico Pro, 10 Sep. 2020. https://link.edgepilot.com/s/aefb5ac4/xVKUefE3CUeX98Zf1exASQ?u=https://subscriber.politicopro.com/article/2020/09/brady-to-push-tax-law-fixes-for-funding-bill-3983825
 Braun, Elisa. “Le Maire: OECD agreement on digital tax ‘very difficult to reach.” Politico Pro, 9 Sep. 2020. https://link.edgepilot.com/s/f0e30354/IfxiIRdGuUSHfHMeezpYNQ?u=https://subscriber.politicopro.com/article/2020/09/le-maire-oecd-agreement-on-digital-tax-very-difficult-to-reach-3983790
 Gehrke, Laurenz. “More than 100 Austrians ‘accidentally’ received U.S. coronavirus stimulus money.” Politico Pro, 8 Sep. 2020. https://link.edgepilot.com/s/2e90b05b/36I6JIa5Eka9bx0EP6clcg?u=https://subscriber.politicopro.com/article/2020/09/more-than-100-austrians-accidentally-received-us-coronavirus-stimulus-money-3983741
 Lorenzo, Aaron. “ IRS sets Oct. 15 deadline for non-filers to register for economic aid.” Politico Pro, 8 Sep.2020. https://link.edgepilot.com/s/a62fb7c9/6iZOokAKjk6qdDdq7hwq5w?u=https://subscriber.politicopro.com/article/2020/09/irs-sets-oct-15-deadline-for-non-filers-to-register-for-economic-aid-3983756
 Becker, Bernie. “Neal pushes IRS to speed up its outreach on stimulus checks.” 10 Sep. 2020. https://link.edgepilot.com/s/ac8538b4/s4JxoOB5lkyZwH8nPG2W3Q?u=https://subscriber.politicopro.com/article/2020/09/neal-pushes-irs-to-speed-up-its-outreach-on-stimulus-checks-3983829