Congress is making a last-ditch effort to attach COVID-19 stimulus provisions to a must-pass government funding bill due this month. The stimulus package is expected to be relatively narrow and may not contain a substantial tax title, but additional relief will likely be a priority after President-elect Joe Biden takes office.
Lawmakers, including leaders from both parties, began to warm to bipartisan proposal last week. The breakthrough comes after a months-long stalemate and appears to be buoyed by a “second wave” of COVID-19 cases. While Republicans and Democrats are still negotiating over the details, the initial framework provides $908 billion in aid, including $288 billion for small business, a portion of which is allocated to the Paycheck Protection Program (PPP).
The package does not appear to include any of the major tax proposals under consideration during prior negotiations, such as enhancements to the employee retention credit and a second round of $1,200 stimulus checks for individuals. However, it is expected to reverse IRS guidance denying deductions after PPP loan forgiveness that’s excluded from gross income.
Democrats, who have long pushed for a much more expansive package, have framed it as a stopgap until the new administration comes in. Biden expressed his support for the proposal, acknowledging it merely “meets the basic immediate needs” and should be viewed as a “down payment.”
With Congress set to adjourn by Dec. 21, the two sides must work quickly to strike a deal. They will also have to reach an agreement on a bill to fund the government, which will ultimately serve as the vehicle for stimulus. Government funding is currently set to expire on Dec. 11, but Congress may extend pass a one-week extension to avert a government shutdown while negotiations continue.
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