Lawmakers look to increase COVID-19 funding

Tax Hot Topics newsletter Lawmakers in Washington are working toward an agreement to provide additional COVID-19 relief, but the package will likely be limited in scope and will not include any of the tax priorities recently under consideration.

The deal would provide an extra $300 billion in funding for Paycheck Protection Program (PPP) plus $60 billion for the Economic Injury Disaster Loan program. Leaders in Congress are also negotiating over increased funding for hospitals and COVID-19 testing.

The PPP was as part of the $2 trillion COVID-19 stimulus and relief bill enacted in late March and provides small businesses with loans that are eligible for forgiveness if they retain their employees. Congress initially allocated $349 billion for the program, but all of that has been disbursed through roughly a million loans since the program began accepting applications on April 3.

The urgency to prevent a lapse in funding has resulted in a number of more expansive, and potentially contentious tax proposals under consideration being shelved for the time being. House Democrats have been discussing priorities that include retroactively rolling back the $10,000 cap on the state and local tax deduction and expanding the recently enacted sick pay and paid family leave requirements to larger employers but will likely receive pushback. President Donald Trump has also floated cutting payroll taxes and removing the 50% cap on deducting meals and entertainment as a way to help the restaurant industry.

Congress is expected to move quickly on the funding bill, but the timing of additional legislation is uncertain. The House was set to return from its three-week recess on April 20 but has since pushed that back to May 4. Absent a remote-voting arrangement, Congress can only pass legislation without reconvening in-person by unanimous consent, which limits the scope of any bill significantly.

Dustin Stamper
Managing Director
Washington National Tax Office
T +1 202 861 4144

Omair Taher
Senior Associate
Washington National Tax Office
T +1 202 861 4143

Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.