Law360 (March 22, 2020, 8:09 PM EDT) -- A last-ditch effort to pump $2 trillion into the U.S. economy to combat the novel coronavirus epidemic stalled Sunday, with Senate lawmakers continuing negotiations on legislation to boost unemployment benefits, ease business taxes and send rebate checks to Americans.
Labor Secretary Eugene Scalia, Sen. Mitch McConnell, Treasury Secretary Steven Mnuchin, Sen. Chuck Schumer and White House adviser Larry Kudlow attend a meeting to discuss the coronavirus relief bill on Friday. (AP)
Senate Majority Leader Mitch McConnell, R-Ky., said he would still attempt to get the legislation passed by his chamber on Monday, and he blamed the delay on unreasonable demands by House and Senate Democratic leaders. Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said provisions under the jurisdiction of his committee to delay business taxes and provide liquidity for employers to keep their workers on the job had largely attained consensus and would end up in the final bill.
But Senate Minority Leader Chuck Schumer, D-N.Y., said negotiations among Treasury Secretary Steven Mnuchin, McConnell, House Speaker Nancy Pelosi, D-Calif., and House Minority Leader Kevin McCarthy, R-Calif., failed to reach an acceptable level of funding for hard-hit Americans, health care providers and citizens affected by the virus. Schumer called for more transparency, accountability and protections for workers in the bill.
"Changes to the legislation are being made even as we speak," he said. "The bill can and must continue to improve."
Senate Democrats said they opposed the legislation because it would provide the U.S. Department of the Treasury with an unaccountable "slush fund" to address the impact of COVID-19, the illness caused by the coronavirus. There was also confusion about whether expanded unemployment benefits would last for three or four months, Senate Finance Committee ranking member Ron Wyden, D-Ore., told reporters.
"I'm gonna be staying here for however late it takes," Wyden said. "I think we are going to get this done in a way that is fair, makes common sense and really deals with this unprecedented challenge."
According to a copy of the latest version of the legislation obtained by Law360, the bill would provide billions of dollars in loans from the U.S. Small Business Administration to employers struggling to meet their payroll, provided the companies paid salaries and payroll taxes as of Feb. 15.
Under the bill, the IRS would also send $1,200 payments to individuals or $2,400 payments to couples filing joint tax returns. The payments would be reduced for those with incomes above $75,000 or $150,000 for couples and would be eliminated for those with incomes of more than $99,000 or $198,000 for couples. The payments would be based on 2019 tax returns if available or 2018 returns otherwise.
The bill also addresses some unintended consequences from the Tax Cuts and Jobs Act . It would fix the so-called retail glitch by allowing retailers to immediately write off expenses related to physical improvements instead of depreciating them over the course of 39 years.
Due to Democratic objections, the latest version of the bill jettisoned a provision that would restore limits on "downward attribution" of the stock ownership of foreign corporations, instead keeping a change under the TCJA that subjected some foreign entities to additional tax and reporting requirements.
The legislation would also allow employers and self-employed workers to pay their 6.2% payroll tax obligations over the next two years. Employers that chose to defer payment would be required to provide half of the total amount by Dec. 31, 2021, and the other half by Dec. 31, 2022.
The bill would also provide that businesses could carry back losses from 2018, 2019 and 2020 for up to five years. Also, net operating losses would temporarily not be subject to a taxable income limitation, meaning they could fully offset income. Additionally, businesses would be able to increase the amount of interest expenses they could deduct for the 2019 and 2020 tax years by raising the 30% limitation on adjusted taxable income under Internal Revenue Code Section 163(j) to 50%.
In an effort to encourage donations, the legislation would allow individuals to deduct up to $300 in charitable contributions, regardless of whether they itemize their returns or utilize the standard deductions.
The bill would also waive the 10% early withdrawal penalty for retirement fund distributions of up to $100,000 made on or after Jan. 1, 2020, and taxpayers would have three years to repay the money.
The bill is the third major piece of legislation that Congress has worked on this month to address the outbreak of the coronavirus. President Donald Trump signed into law the Families First Coronavirus Response Act, or H.R. 6201, on Wednesday. Previously, he signed an $8.3 billion measure designed to help federal and state health care agencies respond to the virus.
--Additional reporting by Joshua Rosenberg. Editing by Christine Chun.
Correction: A previous version of this story misnamed the bill. The error has been corrected.
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