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BPAA Federal Policy Update - January 1, 2021

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COVID-19 Relief & Tax Update

  • Trump Signs Virus Relief Bill After Panning $600 Checks President Donald Trump signed a bill containing $900 billion in pandemic relief, backing down from last-minute demands that undercut his own negotiating team, risked a government shutdown and delayed widely supported economic aid as coronavirus cases continue to rise. The legislation Congress passed Dec. 21 includes $1.4 trillion in government spending to fund federal agencies through the end of the fiscal year in September. The government had been operating on temporary spending authority that expires after the end of the day Monday. The combined $2.3 trillion package was the product of intense negotiations, from which Trump was largely absent until he surprised lawmakers of both parties by demanding bigger stimulus payments for individuals after the bill was already passed.
    • In signing the bill, Trump demanded a vote in Congress to replace $600 in stimulus payments with $2,000 -- a non-binding request that is unlikely to pass both chambers.
    • That demand also plays into Democrats’ hands. House Democrats were already planning a vote Monday to increase payments to individuals, allowing Senate Democrats to pressure Republican leader Mitch McConnell to take up the House bill without other unrelated provisions Trump requested.
    • Tax Foundation reports - The coronavirus relief bill extends and modifies several provisions first enacted in the CARES Act, Congress’s $2.2 trillion pandemic relief law that was passed in March. With this package, lawmakers will have responded to the coronavirus and related economic hardship with a record-setting $3 trillion of fiscal support. The package extends relief through mid-March of 2021, providing support to help people and businesses get through the next several months of the pandemic. 
    • An 11-week extension of the unemployment insurance (UI) compensation benefits first provided in the CARES Act that are due to expire on December 26. This includes the Pandemic Unemployment Assistance (PUA) that extends UI benefits to workers who traditionally are ineligible, such as gig economy workers and independent contractors, and Federal Pandemic Unemployment Assistance (FPUA), which will provide an additional $300 per week supplement to state UI compensation. Read more about the Tax Provisions of the fourth COVID-19 Relief Package at the Tax Foundation.


  • PPP Deductibility in COVID-19 Relief Package: The Covid-19 package clarifies that businesses can deduct expenses paid for with Paycheck Protection Program loan funds, which can be forgiven by the government. The loans were created in the CARES Act (Public Law 116-136) to give a lifeline to struggling businesses. The deductibility issue has been a major point of tension since then, as the IRS said expenses weren’t deductible if paid for with PPP loans that were later forgiven. The provision is a huge win for business owners, with some firms potentially seeing tax benefits that outweigh the amount of the loan. Business owners paying the top tax rate could generally save as much as $37 on their taxes for every $100 of tax-free PPP money they received. Kevin Kuhlman of the National Federation of Independent Businesses said the provision will help PPP recipients cope with “significant cash flow problems” when tax filings are due in April. Read more at Bloomberg Government.


  • TAX VIRUS BRIEFING from Bloomberg Government: New Aid as Pandemic Plagues the New Year: Payments of up to $600 a person have begun hitting bank accounts as the IRS starts to deliver what it took Congress months to authorize: a second round of economic impact payments, along with almost countless other measures in pandemic relief legislation.
    • Delivery of the payments began this week, the IRS said, even amid President Donald Trump’s eleventh-hour push to raise the payments to $2,000. The effort, endorsed by the Democrat-led House, hasn’t succeeded in the Senate.
    • The coronavirus aid measure, part of a giant government funding bill, increases the Paycheck Protection Program’s combined lending authority to $806.5 billion, from $659 billion, and extends it to March 31, 2021, from Aug. 8. It provides $15 billion for grants to live venue operators. It expands the disaster loan program. It extends credits for paid sick and family leave. And it does many dozens of other things. Read more here.


  • Small businesses still struggling with COVID impacts must consider tax implications, too The new relief package includes several forms of aid for small businesses, including a new Paycheck Protection Program. The round of aid will also let business owners claim tax deductions on payroll and other expenses their PPP money paid for. Small business advocates have welcomed the change, but business owners still face a lot of uncertainty when it comes to their tax bills. Before the new relief package was signed into law, New York City cocktail bar owner Ashwin Deshmukh just wasn’t sure when he should apply for forgiveness on his PPP loan, and how that would impact his tax bill. Read more here at MarketPlace.


Labor & OSHA Update

  • Jobless Benefits Won’t Lapse After Delay, Labor Department Says Unemployed people claiming federal benefits won’t see a one-week gap in their payments, despite the delay in President Donald Trump signing the program extension into law, according to the Department of Labor.
    • States are implementing the provisions as quickly as possible, and the Labor Department doesn’t anticipate that claimants will miss a week of benefits due to the timing of the new law’s enactment, a spokesman for the Department said in a statement Tuesday.
    • Trump signed a bipartisan stimulus and government funding bill, which included an 11-week extension of unemployment benefits, into law on Sunday, a day after benefits expired. That prompted concern that jobless Americans would lose out on benefits for the last week of December. Trump held off signing the bill for several days as he demanded bigger stimulus payments for individuals and action on two unrelated issues involving election security and removing a liability shield for technology companies.
    • The pandemic relief law provides a $300-a-week payment for jobless individuals and extends benefits for self-employed and gig workers through mid-March. The $300 federal payments are on top of benefits that state unemployment offices provide. The state benefits vary by income and jurisdiction, but the average state payment was $378 a week, according to Labor Department data.
    • The measure largely extends programs with few changes, meaning that existing guidance will continue to apply, making it easier for the states to implement, the Labor Department spokesman said. Read more at Bloomberg Government.


  • Tip-Pooling Final Rule Released: Businesses Can Require Servers to Share Tips Under New U.S. Rule Servers and other workers who receive tips could be required by their employer to share that gratuity with non-tipped staff members such as dishwashers, under a final regulation the Labor Department announced on Tuesday. The rule is the culmination of more than three years of work by the Trump administration to deliver the regulation long sought by the restaurant industry.
    • The regulation provides clarity to employers and “could increase pay for back-of-the house workers, like cooks and dishwashers, who have been excluded from participating in tip pools in the past,” Cheryl Stanton, the Labor Department’s wage and hour administrator, said in a statement. Newly allowed tip sharing can “reduce wage disparities among all workers who contribute to customers’ experience,” she added.
    • Advocates for low-wage workers, however, said the new rules allow businesses to use tips, rather than wage increases, to compensate dishwashers, cooks and janitors. They also say another aspect of the rules allows employers to more easily use tips to satisfy minimum-wage requirements.
    • The rule is set to go into effect in 60 days. The Biden administration could seek to delay implementation of the rule and begin work to produce its own rule. Also, it could elect not to defend the Trump rule in an expected court challenge.
    • The rule announced Tuesday only allows gratuity pooling if the tipped employee is paid the full federal minimum wage of $7.25 an hour. Under federal law, tipped workers can be paid as little as $2.13 an hour, so long as they earn enough tips to match the federal minimum. State laws vary. Read more at the Wall Street Journal.


  • LABOR BRIEFING: Workplace Vaccine Mandates Targeted in States Employers considering Covid-19 vaccination plans for their workforces have another potential strike against the option of requiring inoculations—a growing number of state legislative proposals aimed at banning vaccine mandates. Mandate Backlash: State lawmakers are floating proposals aimed at preventing government agencies, employers, or schools from forcing people to get the Covid-19 vaccine, although none of the bills have succeeded yet. In one unusual case, a Minnesota lawmaker proposed 10 years in prison for any government official or business owner who forces vaccinations. Read more at Bgov.


Election & Transition Update

  • Georgia Sen. David Perdue Quarantines After Possible Coronavirus Exposure Georgia Sen. David Perdue is quarantining with his wife after coming into close contact with someone that tested positive for the coronavirus, his campaign said Thursday. News of his possible exposure to the virus comes with just days to go until his state's runoff election for his senate seat. His campaign said Perdue was notified of the exposure Thursday morning. The campaign said in a statement that, "Both Senator Perdue and his wife tested negative today, but following his doctor's recommendations and in accordance with CDC guidelines, they will quarantine."
    • It's unclear for how long the senator will quarantine. He has just four days before Tuesday's runoff elections in the state that could determine the fate of the majority party in the U.S. Senate.
    • Perdue is wrapped in a heated, high-profile campaign against Democrat Jon Ossoff. Georgia Sen. Kelly Loeffler is also in a runoff for her seat against Democrat Rev. Raphael Warnock — a race that has also garnered national attention. If Democrats win both elections, they will take control of the Senate this year with a 50-50 tie broken by Vice President-elect Kamala Harris. Read more at NPR. Read more at NPR.


  • President-elect Biden Names Progressives To His Economic Team President-elect Joe Biden announced new members of his economic team on Monday, including two progressive members to the National Economic Council. Biden said he would name David Kamin, a former Obama administration official, as deputy director of the NEC. Bharat Ramamurti, a former aide to Senator Elizabeth Warren, will be deputy NEC director for financial reform and consumer protection. Biden also named Joelle Gamble as special assistant to the president for economic policy.
    • Ramamurti and Gamble both have ties to the Roosevelt Institute, a progressive economic think tank. Ramamurti, Warren’s point person on financial regulation, was considered a candidate for a job on the Securities and Exchange Commission. Read more at Bloomberg Government.


  • Why Jan. 6 Is Key Date for Trump’s Election Gripes The voters have spoken. So have the electors who, under America’s unique system, have the official job of choosing the next president. The U.S. Congress still has a role to play, one that’s usually mostly ceremonial, but this time around could mark one last attempt by loyalists to President Donald Trump to overturn the election of President-elect Joe Biden.
    • On Jan. 6, the Senate and House meet jointly to open and count certificates of electoral votes from the 50 states and the District of Columbia, in alphabetical order. The process is spelled out in great detail in the U.S. legal code, right down to the Jan. 6 date and the hour (1 p.m.) at which the joint session begins.
    • At least two House Republicans have said they either plan to make an objection to the declaration or that they support such an effort -- Mo Brooks of Alabama and incoming freshman Marjorie Taylor Greene of Georgia.
    • That seemed unclear until Senator Josh Hawley, a Missouri Republican, announced on Dec. 30 that he would raise an objection as well, mentioning Pennsylvania as one state whose election procedures troubled him. Senate Majority Leader Mitch McConnell had urged fellow Republicans not to object, saying it could hurt the party politically.
    • The joint session immediately recesses before the next state is called, and the House and Senate meet separately to debate the objection for up to two hours before voting on whether to count or discard the electoral votes in question. Only if the objection is approved by both houses would votes be excluded. With a Democratic majority in the House, and several Republican senators on record opposing Trump’s attempts to overturn Biden’s win, any objection would be highly unlikely to succeed in getting electoral votes thrown out. But if separate two-hour debates are required for multiple states, the process could be a drawn-out affair. Read more at Bloomberg Government.
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