DC Tax Flash: House Democrats Release COVID-19 Relief Tax Draft, Markup To Begin Wednesday

Tax Alert
02.08.2021

The House Ways and Means Committee today released draft legislative text for the policy changes it intends to consider and approve by the end of the week. The panel plans to start work on the draft legislation on Wednesday and continue for two additional days. The legislation is destined for inclusion in a wider COVID-19 relief reconciliation bill being assembled by Democratic leaders in Congress.

On tax policy, the draft authorizes $1,400 payments to individuals, reinstates and expands the paid sick leave provisions that expired last year, and expands child tax credits and the Earned Income Tax Credit. Other key provisions include the following, as described by the Ways and Means Committee:

Sec. 9671 – Repeal of election to allocate interest, etc. on a worldwide basis

  • This provision repeals the election for U.S. affiliated groups to allocate interest expense on a worldwide basis. This change maintains pre-2021 policy regarding the allocation of expenses by eliminating the election that would be available starting in 2021. This change is effective for taxable years beginning in 2021.

Sec. 9651 – Extension of employee retention credit

  • Extends the employee retention tax credit, as added by the CARES Act and expanded and extended in P.L. 116-260, through December 31, 2021. Modifies the credit such that, beginning after June 30, 2021, the credit will be structured as a refundable payroll tax credit against the hospital insurance tax.

Sec. 9673 – Tax treatment of Restaurant Revitalization Grants

  • Exempts Restaurant Revitalization Grants from tax and provides that such exclusion shall not result in a denial of deduction, reduction of tax attributes, or denial of increase in basis by reason of this exclusion from income. Directs the Secretary to prescribe rules for determining a partner's distributive share of amounts received through a Restaurant Revitalization Grant.

The bill would also provide funding relief to multiemployer plans. It would also extend amortization relief for single employer pension plans and extend pension funding stabilization percentages for these plans.

The following lists (and links to) the documents released today by the Ways and Means Committee:

Section-by-Section

Full Text


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