Tax Update (October 13)
On Tuesday (Oct. 6), President Trump tweeted that he wanted to postpone COVID-19 stimulus negotiations until after the election. However, he has since reversed course, and the White House is now pushing for a stimulus package.
Friday afternoon (Oct. 9), Trump said negotiations were moving along. Director of the National Economic Council Larry Kudlow said the president has approved a “revised package” ahead of another planned discussion between Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi (D-CA). Sources said the new proposed package is about $1.8 trillion.
Senate Majority Leader Mitch McConnell (R-KY) said on Friday (Oct. 9) that a COVID-19 stimulus deal is “unlikely in the next three weeks.
Negotiations will likely continue throughout the weekend. It is unclear if or when a deal will be reached.
The Supreme Court confirmation hearings for Amy Coney Barrett will begin on Monday (Oct. 12). Senate Republicans will urge lawmakers to swiftly confirm Barrett before the election. Two Senate Judiciary Committee members, Thom Tillis (R-NC) and Mike Lee (R-UT), will appear remotely after testing positive for COVID-19. Democrats are opposed to pushing forward with the hearings and a vote this close to the general election.
On Friday (Oct. 9), House Minority Leader Kevin McCarthy (R-CA) and House Ways and Means Ranking Member Kevin Brady (R-TX) introduced H.R. 11, the Commitment to American GROWTH Act. The legislation makes modifications to the 2017 Tax Cuts and Jobs Act (TCJA) including make permanent the full expensing provision, doubles the research and development (R&D) credit, repeals R&D amortization, and allows companies to bring back IP from offshore without any immediate tax cost. The bill also offers incentives to encourage “medical independence from China.”
“President Trump proved that through low taxes and balanced regulation, we can grow jobs and paychecks. Using those same tools, our bill will grow this economy, boost American innovation, and secure our medical supply chain from China,” Brady said.
To view a section by section of the bill, click here.
On Thursday (Oct. 8) and Friday (Oct. 9), the Organization for Economic Cooperation and Development (OECD) met to attempt to overcome issues with the OECD’s Pillar One and Two proposals. Talks have been delayed due to the COVID-19 pandemic. On Monday (Oct. 12), OECD Secretary General Angel Gurria and OECD Tax Director Pascal Saint Amans will give an update on negotiations.
Powell on Stimulus
On Tuesday (Oct. 6), Federal Reserve Chairman Jerome Powell said a “conservative” approach to additional COVID-19 stimulus legislation could harm an economic rebound from the COVID-19 recession.
“Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth,” Powell said. “By contrast, the risks of overdoing it seem, for now, to be smaller. Even if policy actions ultimately prove to be greater than needed, they will not go to waste,” he added.
Powell also said it was important to listen to medical experts to help prevent a further economic downturn.
On Monday (Oct. 5), the IRS announced individuals who do not file tax returns will have until Nov. 21 to register online to receive an economic impact payment. In early September, House Ways and Means Chairman Richard Neal (R-MA) asked the IRS to push back the original Oct. 15 registration deadline. IRS Commissioner Chuck Rettig indicated another extension of this deadline will not occur because it would adversely impact the 2020 and 2021 tax filing seasons.
On Wednesday (Oct. 7), the Treasury Inspector General for Tax Administration announced it will launch reviews of IRS’s handling of tax related COVID-19 provisions as part of its FY21 audit plan. The audit will include how businesses used tax credits; corporate compliance with net operating loss allowances; and the delivery of economic stimulus payments. Additionally, the audit will look into the implementation of Opportunity Zones (OZ) and whether the IRS is policing individuals who attempt to circumvent the $10,000 cap on state and local deductions (SALT). The plan will have 150 audits that are either new or in-process.
To view the Treasury Inspector General for Tax Administration audit plan, click here.
On Wednesday (Oct. 7), the IRS released additional regulations on the base erosion and anti-abuse tax (BEAT). The regulations cover how the BEAT is applied to partnerships and how deduction waivers will be handled.
To view the regulations, click here.
Financial Services Committee
On Sunday (Oct. 4), Rep. Tom Graves (R-GA) left Congress. Representative Steve Womack (R-AR) will now take Graves’ spot as House Appropriations Subcommittee on Financial Services Ranking Member. Womack currently serves as Ranking Member on the House Budget Committee and had to receive a waiver to serve in both committees due to Republican conference rules. He is not expected to remain the Ranking Member of the House Budget Committee in the next Congress, if re-elected.
Senate Finance Retirement
On Monday (Oct. 5), Sen. Pat Toomey (R-PA) formally announced he will not run for reelection in 2022 nor run for governor of Pennsylvania. Toomey currently serves on the Senate Finance and Senate Banking committees.
On Wednesday (Oct. 7), the House Oversight and Reform Subcommittee on Government Operations held a hearing entitled, “IRS in the Pandemic.”
To view a summary of the hearing, click here.
On Tuesday (Oct. 13), the House Ways and Means Subcommittee on Oversight will hold a hearing entitled “Taxpayer Fairness.”
 Gottlieb, Isabel & Ali Hamza. “OECD Digital Tax Talks Look to Close Major Gaps to Get Agreement.” Bloomberg Tax 5 Oct. 2020. https://link.edgepilot.com/s/45d72563/vL6Zg1NNo0WtszXDva4uPg?u=https://news.bloombergtax.com/daily-tax-report-international/oecd-digital-tax-talks-look-to-close-major-gaps-to-get-agreement
 Warmbrodt, Zachary. “Powell presses Congress on more relief, warning of `tragic’ scenario for economy.” Politico Pro, 6 Oct. 2020. https://link.edgepilot.com/s/0484a22d/SiEX3cxdtUeSnE4AXLBeqw?u=https://subscriber.politicopro.com/article/2020/10/powell-presses-congress-on-more-relief-warning-of-tragic-scenario-for-economy-3984409
 “IRS gives non-filers more time to seek stimulus payments.” Politico Pro, 5 Oct. 2020. https://link.edgepilot.com/s/f160c2af/dWf6xwvVFEqV5RszcNo8TQ?u=https://subscriber.politicopro.com/article/2020/10/irs-gives-non-filers-more-time-to-seek-stimulus-payments-3984392
 “IRS watchdog plans close look at Covid-related tax initiatives.” Politico Pro, 7 Oct. 2020. https://link.edgepilot.com/s/ad2fdfe2/TnfpWBTFD0WRMrOS1gRkrQ?u=https://subscriber.politicopro.com/article/2020/10/irs-watchdog-plans-close-look-at-covid-related-tax-initiatives-3984473
 “IRS releases another batch of BEAT regulations.” Politico Pro, 8 Oct. 2020. https://link.edgepilot.com/s/28a33252/pqmqbTJgAUKLM4kzg-vhsA?u=https://subscriber.politicopro.com/article/2020/10/irs-releases-another-batch-of-beat-regulations-3984515
 Emma, Caitlin. “Womack named ranking member on Financial Services spending panel.” Politico Pro, Oct. 7 2020. https://link.edgepilot.com/s/14e4f99c/8-n5qPEQ80G3Pq8Ay02L6g?u=https://subscriber.politicopro.com/article/2020/10/womack-named-ranking-member-on-house-appropriations-financial-services-panel-3984475
 Everett, Burgess. “Toomey to retire from Senate, take pass on gubernatorial run.” Politico Pro, 5 Oct. 2020. https://link.edgepilot.com/s/33b83da4/0ed7SxpA-E2nvwUaHlsxoA?u=https://subscriber.politicopro.com/article/2020/10/toomey-to-retire-from-senate-take-pass-on-gubernatorial-run-2004928