On The Hill

Tax Update (December 20)

Dec 20, 2020 | SHARE  
Congress
 
Appropriations/COVID-19 Stimulus
 
Friday (Dec. 18) evening, the House and Senate passed a two-day stopgap measure to keep the government open through the weekend.
 
Lawmakers are still working to finalize a $900 billion COVID-19 relief deal to attach to the FY 2021 $1.4 trillion government funding legislation. Various Members of Congress have expressed frustration in the lack of information around the COVID-19 relief talks, as well as what is included in the legislation being negotiated. Additionally, a push by Sen. Pat Toomey (R-PA) to curb the emergency lending authority of the Federal Reserve has caused contention within the chamber.
 
The new package reportedly includes a round of $600 direct payments, $325 billion in small business support, including $250 billion in Paycheck Protection Program funding, and $300 per week in supplemental federal unemployment insurance benefits for at least an additional 10 weeks.
 
Earlier this week, the bipartisan group of senators who released the framework for a $908 billion COVID-19 package last week agreed to split up the proposal. The House and Senate lawmakers introduced two bills on Monday (Dec. 14), one that includes unemployment insurance, small-business relief, education funding, vaccine distribution, and other key priorities, and a separate bill with the issues holding up the package: state and local government funding and business liability waivers. 
 
NDAA
 
President Trump has indicated he will veto the National Defense Authorization Act (NDAA). This would be the first veto override of the Trump presidency.
 
By law, Trump would have to veto the bill by Dec. 23. A vote in the House and Senate will be determined by how soon Trump formally rejects the legislation. House leaders are discussing bringing members back the week of Dec. 28, but no plans will be finalized until the measure is vetoed. For the Senate, the most likely scenario will be to hold the vote on Jan. 3, 2021.
 
 
Ways and Means
 
Democrats will add Delegate Stacey Plaskett from the Virgin Islands to the House Ways and Means Committee. Plaskett will replace Rep. Cedric Richmond (D-LA), who is joining the Biden administration. As a delegate, she is not able to cast floor votes, however, can participate in committee votes. Notably, Republicans are expected to add one more member to the committee.[1]
 
 
Biden-Harris Transition
 
This week, President-elect Biden announced the following nominees, appointees, and advisers:
 
Michael Regan, Environmental Protection Agency (EPA) Administrator
  • Currently serves as North Carolina’s Secretary of Department of Environmental Quality  
Jennifer Granholm, Energy Secretary
  • Served two terms as Governor of Michigan
Deb Haaland, Interior Secretary
  • Currently serves as the Representative for New Mexico’s 1st Congressional District
Gina McCarthy, National Climate Advisor
  • Served as EPA Administrator under the Obama-Biden administration
Brenda Mallory, White House Council on Environmental Quality (CEQ) Chair
  • Served as CEQ general counsel under the Obama-Biden administration
Pete Buttigieg, Transportation Secretary
  • Former Mayor of South Bend, IN
Ali Zaidi, Deputy National Climate Advisor
 
On Friday (Dec. 18), Biden announced additional members of his White House communications team. To view the list of new staff, click here
 
To view a full list of the Biden-Harris nominees, appointees, and White House staff, click here
 
 
Revenue Forecasts
 
On Monday (Dec. 14), the Congressional Budget Office (CBO) released a report on the accuracy of its FY2020 projections. The CBO revenue forecast was off by nine percent; a larger disparity than usual. Taxes paid by individuals were 16 percent higher than the CBO predicted. Every year the CBO does an analysis of its projections to improve future reports.[2]
 
To view the CBO report, click here.
 
 
Federal Reserve
 
On Tuesday (Dec. 15), the Federal Reserve announced it joined the Network for Greening the Financial System, an international group of banks and financial regulators to address climate risks.
 
“As we develop our understanding of how best to assess the impact of climate change on the financial system, we look forward to continuing and deepening our discussions with our NGFS colleagues from around the world,” Fed Chair Jerome Powell said in a statement.
 
President-elect Biden will likely make climate change a key issue for the Fed, Treasury Department, and other financial regulatory agencies.[3]
 
Final Regulations
 
On Friday (Dec. 18), the Internal Revenue Service (IRS) and Treasury Department released final regulations on the executive pay deduction limit. The regulations include the types of corporations covered by the cap and “retain the basic approach” of the rules proposed in 2019. The 2017 Tax Cuts and Jobs Act (TCJA) eliminated the deduction for performance based pay that exceeds $1 million per year for certain employees at publicly held corporations.[4]
 
To view the final regulations, click here
 
 
APTC
 
On Tuesday (Dec. 15), Sen. Mark Warner (D-VA) said the IRS and Centers for Medicare & Medicaid Services (CMS) informed his office that the agencies are suspending actions that would take away advanced premium tax credits (APTC). Due to IRS tax return delays, many individuals would have missed the registration deadline for APTCs. The tax credit aims to help lower health insurance costs for individuals. Warner also asked the agencies to proactively alert APTC recipients about the changes and deadline extension.[5]
 
 
References
 
[1] Lorenzo, Aaron. “Ways and Means Democrats to fill open seat with Virgin Islands delegate” 17 Dec. 2020.
 
[2] Faler, Brian. “Coronavirus clouds official revenue forecasts, report shows.” Politico Pro, 15 Dec. 2020.
 
 
 
 
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