Tax News & Views New President, New Relief Roundup

January 15, 2021

Biden unveils $1.9T plan to stem COVID-19 and steady economy -  Ricardo Alonso-Zaldivar and Bill Barrow, Associate Press. “Called the “American Rescue Plan,” the legislative proposal would meet Biden’s goal of administering 100 million vaccines by the 100th day of his administration, and advance his objective of reopening most schools by the spring. On a parallel track, it delivers another round of aid to stabilize the economy while the public health effort seeks the upper hand on the pandemic.”

“Biden proposed $1,400 checks for most Americans, which on top of $600 provided in the most recent COVID-19 bill would bring the total to the $2,000 that Biden has called for. It would also extend a temporary boost in unemployment benefits and a moratorium on evictions and foreclosures through September.

And it shoehorns in long-term Democratic policy aims such as increasing the minimum wage to $15 an hour, expanding paid leave for workers, and increasing tax credits for families with children. The last item would make it easier for women to go back to work, which in turn would help the economy recover.”

Biden Proposes $1.9 Trillion Covid-19 Relief Package – Richard Rubin and Eliza Collins, WSJ ($). “His plan calls for a round of $1,400-per-person direct payments to most households, a $400-a-week unemployment insurance supplement through September, expanded paid leave and increases in the child tax credit. Aid for households makes up about half of the plan’s cost, with much of the rest going to vaccine distribution and state and local governments.”

Biden plan calls for $1,400 direct payments, expanded tax credits – Naomi Jagoda, The Hill. “Biden's plan also calls for temporary expansions of the child tax credit (CTC), the earned income tax credit (EITC) and child care tax credits, in an effort to help low- and middle-income households.”

“The president-elect is proposing that the CTC be fully refundable this year so that the lowest-income households can receive the full value of the credit. He's also calling for the maximum credit amount to be increased from $2,000 per child to $3,600 for children under 6 and $3,000 for other children. And he would make 17-year-olds eligible for the credit.”


Wyden Eyes Corporate Tax, Capital Gains Reform as Finance Chair – Jad Chamseddine, Tax Notes($). “The framework laid out by Sen. Ron Wyden, D-Ore., will include his attempt to finally make mark-to-market taxation a reality, saying on a call with reporters January 13 that preventing the wealthy from paying what they want, when they want on their investment income will fund Social Security for decades to come.”

Which Large U.S. Corporations Would Pay Biden’s 15% Minimum Tax? – Martin Sullivan, Forbes. “The new tax would apply a minimum 15 percent tax rate on income reported on financial statements of corporations with at least $100 million of book income. According to reports, foreign taxes would be creditable, and carryovers (for years with negative minimum tax liability) would be allowed.”

“We estimate that 33 of the 100 largest U.S. companies could be subject to President-elect Joe Biden’s proposed corporate minimum tax and pay a total extra tax of $20 billion annually if that proposal were enacted as stand-alone legislation.”


Free File Is Now Open For TaxpayersKelly Phillips Erb, Forbes. “Ready to file your 2020 tax return? The Internal Revenue Service (IRS) hasn’t officially announced the start date to the new season, but the website indicates that Free File is officially open.” 

Final 2020 Estimated Tax Payment Due on Friday – Russ Fox, Taxable Talk.

“The fourth quarter estimated tax payment for individuals and trusts/estates is due this Friday, January 15th. If you make estimated payments (Form 1040-ES and the state equivalents) you should either mail your payment (using certified mail, return receipt requested) on or before January 15th or pay electronically using EFTPS (requires pre-enrollment) or IRS Direct Pay. Don’t forget your state and local estimated payments (if required); most states have webpay systems that you can use.”

Final regs. Govern deductibility of fines and penalties – Alistair M. Nevius, J.D., Journal of Accountancy. “Taxpayers subject to government fines and penalties received guidance on when those payments are deductible or not deductible under final regulations posted by the IRS on Tuesday (T.D. 9946). The regulations provide guidance on Sec. 162(f), which was amended by the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, and on information reporting requirements under Sec. 6050X.

Accounting for Lease Concessions Resulting from the COVID-19 Pandemic – Eide Bailly. “The COVID-19 pandemic has resulted in significant market uncertainty, business shutdowns, and decreased operations across various business industries. For many of the entities affected by the pandemic, lease-related expenses represent a significant cost to operations. Therefore, entities have negotiated lease concessions with their lessors in order to reduce the economic hardships caused by the pandemic.”


Congress Can Help State and Local Governments Prepare for a Rainy Day Without Repealing the SALT Cap – Leonard Burman, Tracy Gordon, and Nikhita Airi, TaxVox. “With Joe Biden in the White House and narrow control of the Congress, Democrats are likely to try to restore the full state and local tax (SALT) deduction, capped through 2025 at $10,000 per year. But if lawmakers really want to assist state and local governments, rather than cutting federal income taxes for mostly high-income households, we suggest a SALT substitute.”


6 tax & financial tips for the next lottery millionaire – Kay Bell, Don’t Mess With Taxes. “More than $1 billion is up for grabs in the two national lotteries. The Powerball jackpot is at $550 million. A solo Mega Millions winner will walk away with $600 million. Since I know you've got your lotteries tickets in hand, here are six tax and financial tips in case you are the next big winner in either or both upcoming drawings.”

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