Senate Republicans want to “wait and see” before approving more coronavirus relief. The Wall Street Journal reports (paywall) that some GOP lawmakers are reluctant to embrace more spending on coronavirus aid, citing rising deficits. They say their central demand is to shield from lawsuits companies operating during the pandemic. President Trump, however, continues to push for infrastructure spending and new tax cuts. Meanwhile House Democrats still aim to finish this week their version of a massive sequel to the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It may include up to $1 trillion in new aid for states and cities, and more payments for healthcare providers and households.
Bipartisan group of senators want Treasury and SBA to ease some relief loan rules. A group of 19 senators have asked Treasury Secretary Steven Mnuchin and Small Business Administration Administrator Jovita Carranza to increase the cap on loan forgiveness under the Paycheck Protection Program (PPP). Now, a small business PPP loan becomes a grant if at least 75 percent of the loan covers payroll. The senators want to lower that threshold to 50 percent so firms would have flexibility to spend the money on rent and other expenses. Mnuchin says he doesn’t have the flexibility to alter the terms of the program.
Will PPP-covered business expenses be tax deductible? IRS chief counsel Mike Desmond won’t say. In a Tax Analysts webcast, Desmond says the IRS received correspondence from Senate Finance Committee Chair Chuck Grassley, top panel Democrat Ron Wyden, and House Ways & Means Chair Richard Neal asking that such expenses be made tax-deductible. Desmond would not say whether the agency will revise its ruling that a business with a forgiven PPP loan—essentially tax-exempt income—can also deduct expenses paid for with that forgiven loan.
CARES support appears to be falling short. TPC’s Tax Hound looks at what it’s like to be on the receiving end of expanded unemployment insurance benefits, PPP loans, or direct payments provided through the CARES Act. For many, this costly government aid has yet to be received, or is falling short.
California becomes first state to borrow federal money to cover unemployment benefits. It is one of nine states to request $36 billion so far, including Connecticut, Hawaii, Illinois, Massachusetts, New York, Ohio, Texas, and West Virginia. California has borrowed $348 million in federal funds.
IRS says economic impact payments cannot go to deceased or incarcerated people. In an update to its frequently asked questions webpage, the IRS says that any payment made to someone who died this year must be returned. This could be awkward since more than 70,000 of those who passed away this year died from COVID-19. Their spouse however, can keep their payment. Similarly, people who are incarcerated must return their payments, though their spouses may also keep their share.
The IRS now has Virtual Settlement Days for tax dispute resolution. Settlement days are designed to help unrepresented taxpayers get assistance without additional litigation or a Tax Court trial. Forbes explains that with stay-at-home orders in effect under the pandemic, parties can try to settle their cases remotely, screen-to-screen, instead of face-to-face.
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