On The Hill

Tax Update (January 17)

Jan 20, 2021 | SHARE  
Congress
 
Yellen Confirmation
 
On Tuesday (Jan. 19), the Senate Finance Committee will hold a hearing on the nomination of Janet Yellen for Secretary of Treasury. Some Republican Senators have already said they will support her nomination. If confirmed, Yellen will be the first woman to serve as Treasury Secretary.[1]
 
Impeachment
 
On Wednesday (Jan. 13), the House voted 232-197 to impeach President Trump for “inciting violence against the government of the United States.” House Republican Conference Chairman Liz Cheney (WY) and nine other House Republicans voted with Democrats for the one article of impeachment. Senate Majority Leader Mitch McConnell (R-KY) has said the Senate will not return before Tuesday (Jan. 19). Impeachment proceedings in the Senate will likely start after Trump is out of office. Under current Senate rules, once proceedings begin, the Senate is barred from completing other work.
 
Wyden Tax Plan
 
On Wednesday (Jan. 13), incoming Senate Finance Chairman Ron Wyden (D-OR) said he will release a plan on raising corporate taxes. Wyden added that he wants to roll back tax rates on corporations that were lowered in the 2017 Tax Cuts and Jobs Act (TCJA). However, he did not specify what he would like the corporate tax rate to be.
 
Additionally, Wyden mentioned that he would eventually like to raise taxes on the wealthy. Democrats will have a slim majority in the Senate which will likely limit major tax changes.[2]
 
Ways and Means Republican Members 
 
Representatives Carol Miller (R-WV), Kevin Hern (R-OK), and Lloyd Smucker (R-PA) will join the House Ways and Means Committee. Republicans added an extra spot on the committee after picking up seats in the November election. Representatives George Holding (R-NC) and Kenny Marchant (R-TX) served on the committee in the 116th Congress, however, did not seek reelection last year.[3]
 
Ways and Means Democrats
 
On Monday (Jan. 11), House Ways and Means Chairman Richard Neal (D-MA) released a new legislative framework for the 117th Congress. The plan addresses how committee Democrats will address racism, ableism, and other social issues in the U.S. The report includes health and economic equity pillars.
 
To view the Ways and Means Democrats report, click here.
 
Paycheck Protection Program
 
On Wednesday (Jan. 13), the Small Business Administration (SBA) announced it will reopen the Paycheck Protection Program (PPP) loan portal for eligible lenders who have $1 billion or less in assets on Friday (Jan. 15). The portal will fully reopen on Tuesday (Jan. 19) for all PPP lenders to submit loan applications.
 
To view the SBA press release click, here.
 
 
American Rescue Plan
 
On Thursday (Jan. 14), President-elect Biden announced a $1.9 trillion to address the COVID-19 pandemic and stimulate economic recovery. The “American Rescue Plan” has modifications to the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).
 
The plan also includes $1,400 stimulus checks, $400-per-week unemployment insurance through September, expanded housing and rental assistance, and a minimum wage increase to $15 per hour. To help small businesses, Biden said the bill will provide a total of $15 billion in grants to more than one million businesses as well as provide $35 billion in government funds for a total of $175 billion investment for low interest loans.
 
To view a press release on the “American Rescue Plan,” click here.
 
 
Final Regulations
 
On Monday (Jan. 11), the Treasury Department and Internal Revenue Service (IRS) issued final regulations on how the “coach tax” created in the 2017 TCJA will work. The provision created a 21 percent tax on the top five highest paid executives at nonprofits whose pay is over $1 million. The tax is nicknamed the “coach tax” because it will likely be paid by university coaches.[4]
 
On Tuesday (Jan. 12), Treasury and IRS released final regulations on the deductibility of particular fines and penalties paid to government agencies due to lawsuits. The 2017 TCJA addressed complaints from some lawmakers and consumer groups about corporations being able to write off the cost of legal penalties for violations.[5]
 
On Wednesday (Jan. 13), Treasury and IRS issued final regulations on rules limiting tax deductions for borrowing. The regulations are part of the final push by the Trump administration to release regulations before the Biden administration is in office.[6]
 
On Thursday (Jan. 14), Treasury and IRS released final regulations on the “grain glitch.” Farming Cooperative groups criticized the rule and claimed it will create a significant tax increase on farmers.[7]
 
 
Federal Reserve
 
On Thursday (Jan. 14), Federal Reserve Chairman Jerome Powell said interest rates will stay near zero for the foreseeable future. Powell also said it is not the time to discuss any exit from the Fed purchasing $120 billion in securities every month.
 
“When the time comes to raise interest rates, we will certainly do that. That time by the way is no time soon,” Powell said.[8]
 
 
Digital Taxes
 
On Thursday (Jan. 14), the Office of the U.S. Trade Representative (USTR) announced findings in Section 301 cases on digital service taxes (DST) adopted by the U.K., Austria, and Spain. The report found that the DSTs discriminate against U.S. digital companies, however, USTR did not take any specific actions.[9]
 
 
Fannie Mae and Freddie Mac
 
On Thursday (Jan. 14), Treasury and the Federal Housing Finance Agency reached a deal with Fannie Mae and Freddie Mac to allow the companies to retain more capital. Additionally, the deal sets conditions for the companies to leave government control.[10]
 
To view Treasury’s press release on the amended terms of the agreement, click here.
 
 
Biden-Harris
 
This week, President-elect Joe Biden announced the following nominees and appointees:
 
Shalanda Young, Deputy Director, Office of Management and Budget
 
Jason Miller, Deputy Director for Management, Office of Management and Budget
 
William Burns, Director of Central Intelligence Agency
 
Jahi Wise, Senior Advisor for Climate Policy and Finance
 
Nadiya Beckwith-Stanley, Special Assistant to the President for Budget and Tax Policy
 
Sameera Fazili, Deputy Director, National Economic Council
 
Janet McCabe, Deputy Administrator of the EPA
 
Deanne Criswell, FEMA Administrator
 
To view a full list of nominees, appointees, and White House staff, click here.  
 
 
IRS
 
On Friday (Jan. 15), the IRS announced the 2021 tax filing season will start on February 12 to allow more time to adjust to changes in the tax code and send the second round of stimulus checks. The IRS will maintain the traditional deadline of April 15.[11]
 
 
 References 
 
 
 
 
 
 
 
 
 
 
 
[6] Lorenzo, Aaron. “Final set of rules limiting business deductions for borrowing issued.” Politico Pro, 13. Jan. 2021. https://link.edgepilot.com/s/2c0bcfad/IZft2Mn8REeiArdJdUhGVQ?u=https://subscriber.politicopro.com/article/2021/01/final-set-of-rules-limiting-business-deduction-for-borrowing-issued-3986340
 
 
 
 
 
 
[9] Palmer, Doug. “USTR says Austria, U.K., Spain digital tax schemes are discriminatory.” Politico Pro, 14 Jan. 2021. https://link.edgepilot.com/s/f828b06d/e11Wpp85EESMjNllAefDPA?u=https://subscriber.politicopro.com/article/2021/01/ustr-says-austria-uk-spain-digital-tax-schemes-are-discriminatory-3986352
 
 
[10] O’Donnell, Katy. “Mnuchin gives Fannie, Freddie ability to build more capital on way out the door.” Politico Pro, 14 Jan. 2021. https://link.edgepilot.com/s/feb23e47/H4a51sf5KkCNwBltjg7w2Q?u=https://subscriber.politicopro.com/article/2021/01/mnuchin-gives-fannie-freddie-ability-to-build-more-capital-on-way-out-the-door-2028931
 
 
house_gov
HOUSE.GOV

The Week Ahead

For the main events of the next week and more, go straight to the key events on the house.gov website.

Find out more >
SENATE.GOV

The Week Ahead

For the main events of the next week and more, go straight to the key events on the senate.gov website.

Find out more >

Post Archive

Archives