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Senate Adjourns Without a Relief Deal, Approves Tax Court Judges

Posted on Aug. 14, 2020

The Senate will not officially meet again until after Labor Day weekend, leaving businesses that are relying on tax relief and additional forgivable loans in limbo as lawmakers blame each other. 

The Senate is not expected to meet until September 8, and talks between the two parties have come to a standstill. Senate Majority Leader Mitch McConnell, R-Ky., said August 13 that only bipartisan consent would allow the Senate to convene before the effective date. “I would hope our Democratic colleagues will let the Senate act sometime soon,” he said. 

Across the Capitol, House Speaker Nancy Pelosi, D-Calif., lobbed attacks against Republicans for failing to negotiate with them on their priorities, such as aid for states, increased unemployment insurance, and additional funding for the postal service. 

This means businesses will have to wait to see some tax provisions both sides agree on implemented, including the expansion of the employee retention tax credit that was included in the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act in the Senate and the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 6800) in the House.

Other businesses were hoping that Congress could pass legislation that would help them keep their employees by allowing them to apply credits for cleaning supplies and rearranging their stores. The Clean Start Coalition called on lawmakers and the administration to swiftly pass the HEALS Act, which includes a provision to create a refundable tax credit against payroll taxes for 50 percent of costs incurred by businesses for testing, personal protective equipment, disinfecting, extra cleaning, and reconfiguring workspaces.

“A cleaning and sanitation tax credit will be crucial to help companies overcome the unexpected costs needed to appropriately clean and disinfect their spaces, remain open for business, and restore consumer confidence,” John Barrett, executive director of the Worldwide Cleaning Industry Association, said in an August 7 letter. 

PPP Sits on Sidelines 

Perhaps the biggest blow has come to the businesses hoping Congress was going to extend the Paycheck Protection Program (PPP) and make it available for a second round of loans. The small business loan program expired on August 8, and the HEALS Act would have created a second round of loans to businesses that already benefited from the PPP.

There was some talk among Republican lawmakers to put a PPP extension bill by Sens. Marco Rubio, R-Fla., and Susan M. Collins, R-Maine, on the Senate floor before lawmakers left town to force a vote on the issue, but it never materialized.

Senate Finance Committee member John Cornyn, R-Texas, told Tax Notes that he didn’t see much hope for stand-alone measures, even ones that would fast-track a program as popular as the PPP. “This isn’t about the merits of the program, but about maintaining maximum leverage,” Cornyn said, pinning the blame on Democrats

Cornyn said he hasn’t seen a breakthrough to make affiliated PPP expenses deductible. While that could be done unilaterally by the administration if it revokes prior IRS guidance (Notice 2020-32, 2020-21 IRB 837) that prevents businesses from deducting some expenses, Congress could also approve legislation (S. 3612) by Cornyn that would clarify the rule.

That has been a top priority of businesses across the country that benefited from the small business loan program. Kevin Kuhlman of the National Federation of Independent Business said in an email that his organization was disappointed to see the provision restoring PPP deductibility stripped from the HEALS Act. “NFIB is strongly supportive of restoring Congressional intent, reversing IRS Notice 2020-32, and protecting small business owners from a backdoor tax increase and administrative burden nightmare,” Kuhlman wrote. 

New Tax Court Judges 

The Senate approved two Tax Court nominees before leaving town on August 13. Christian N. Weiler and Alina I. Marshall were approved by unanimous consent to serve on the court for 15-year terms after their nominations were approved by the Finance Committee August 9.

Marshall comes to the position with some familiarity, having served as counsel to the chief tax judge since 2013. Weiler has been a tax attorney for over 15 years in New Orleans.

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