COVID relief, tax extenders wrapped into FY 2021 spending package - Deloitte
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Tax News & Views
Capitol Hill briefing.
December 21, 2020
In this issue:
COVID relief, tax extenders wrapped into FY 2021 spending package .................................................................... 1
COVID relief, tax extenders wrapped into FY 2021 spending package
House and Senate leaders unveiled a massive bill on December 21 that would provide tax and direct spending relief for
businesses and individuals affected by the coronavirus pandemic; extend dozens of expiring tax deductions, credits,
and incentives; provide tax relief for victims of recent natural disasters; and fund the federal government for the
remainder of fiscal year 2021.
All told, the COVID relief component (tax and spending) of the Consolidated Appropriations Act, 2021, is expected to
cost just under $1 trillion, with the tax provisions related to further COVID response and relief accounting for $167.3
billion over 10 years, according to an estimate from the Joint Committee on Taxation (JCT) staff. The tax extenders,
disaster relief, and other assorted tax provisions in the measure would reduce federal receipts by an additional $160.7
billion (combined) over the same period. Appropriations to continue government operations for the rest of this fiscal
year are expected to amount to $1.4 trillion.
URL: https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-116HR133SA-RCP-116-68.pdf
URL: https://www.jct.gov/publications/2020/jcx-24-20/
The agreement on COVID relief provisions came after a marathon weekend negotiating session between the two
chambers that played out against the threat of a lapse in government funding at midnight on December 20, when the
short-term continuing resolution (CR) keeping the government’s doors open was set to expire. (Both chambers
approved a 24-hour CR earlier that day to buy themselves additional time to finish their work and President Trump
signed it into law shortly before the midnight deadline.) But those weekend negotiations were preceded by months of
on-again, off-again talks that at various points involved House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader
Tax News & Views (Special Edition) Page 1 of 9 Copyright © 2020 Deloitte Development LLC
December 21, 2020 All rights reserved.Mitch McConnell, R-Ky., Senate Democratic Leader Chuck Schumer of New York, House Republican Leader Kevin McCarthy of California, and Treasury Secretary Steven Mnuchin. The House approved the measure late on December 21. The Senate was expected to take it up some time thereafter, although the timeline for action in that chamber had not been finalized at press time and could be delayed if senators insist on various procedural hurdles that McConnell is hoping to avoid with the consent of his 99 other colleagues. President Trump is expected to sign the measure into law once it reaches his desk. At press time, it was unclear whether congressional action would be swift enough to obviate the need for an additional continuing resolution to prevent a partial shutdown of the federal government at midnight on December 21. Highlights At a high level, the legislation reprises several significant COVID relief provisions for businesses and individuals that were originally enacted in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) in March. Among other things, it would extend and enhance the Paycheck Protection Program (PPP) – including by clarifying the deductibility of certain expenses paid for with forgiven PPP loan funds – and provide a short-term extension of the employee retention tax credit to encourage businesses to keep workers on their payrolls. Certain individuals would see another round of economic impact payments – albeit at lower levels than what was enacted in the CARES Act, as well as temporary enhancements to the charitable giving deduction and the earned income tax credit. The measure also would extend the federal supplement for state-level unemployment insurance benefits, although that plus-up is less generous than the original CARES Act provision. Proposals not included: The COVID component does not include additional aid for state and local governments (something that had been a key priority for Speaker Pelosi and congressional Democrats) or COVID-related liability protections for businesses (something Senate Majority Leader McConnell had previously identified as a “red line” in negotiations on a relief deal). Negotiators ultimately agreed to McConnell’s suggestion to table both provisions and focus instead on less controversial items that could garner bipartisan support in both chambers. On extenders, the legislation advances the efforts of taxwriters to bring more long-term certainty to the tax code by making several temporary tax provisions permanent, such as the reduced excise tax rates for craft brewers, vintners, and distillers and the deduction for energy-efficient commercial buildings. Certain provisions, such as the new markets tax credit, work opportunity tax credit, and lookthrough treatment for payments between related controlled foreign corporations, would be extended for five years, while others would be renewed for just one or two years. Tax relief for businesses The new legislation would extend and modify two significant CARES Act incentives targeted to cash-strapped businesses. Paycheck Protection Program: The new legislation would expand the Paycheck Protection Program (PPP) and clarify that debt forgiven under the PPP is not includible in gross income. It also clarifies that certain business expenses paid with forgiven PPP funds are tax deductible, a position that would contravene the stance taken by the IRS. (The Treasury Department and IRS issued guidance last month, along with Notice 2020-32 earlier in the year, reiterating and clarifying their position that taxpayers may not claim a deduction for otherwise deductible business expenses that are paid with proceeds from forgiven PPP loans. Senate Finance Committee Chairman Charles Grassley, R-Iowa, Finance Committee ranking member Ron Wyden, D-Ore., and House Ways and Means Committee Chairman Richard Neal, D-Mass., have challenged that position as contrary to congressional intent. For details, see Tax News & Views, Vol. 20, No. 51, Nov. 20, 2020.) The legislation specifically provides that tax basis and other tax attributes will not be reduced as a result of those amounts being excluded from gross income. Special rules are provided for partnerships and S corporations. The provision is effective for tax years ending after the date of enactment of the CARES Act. Although there had been some discussions among negotiators about including “guardrails” that would limit deductibility, no such provisions were ultimately included. URL: https://newsletters.usdbriefs.com/2020/Tax/TNV/201120_2.html Additional PPP enhancements include, among other things, funding to allow the hardest-hit small businesses and nonprofit entities to receive a second forgivable loan, an expanded list of forgivable expenses (such as the purchase of Tax News & Views (Special Edition) Page 2 of 9 Copyright © 2020 Deloitte Development LLC December 21, 2020 All rights reserved.
personal protective equipment and the cost of structural modifications to ensure workplace safety), and simplified loan
forgiveness procedures for borrowers with PPP loans of $150,000 or less.
Tax treatment of other loan forgiveness and financial assistance programs: The legislation likewise clarifies
that gross income does not include forgiveness of certain loans, Emergency Economic Insurance Disaster Loan (EIDL)
grants, and certain loan repayment assistance, as provided by the CARES Act. It also clarifies that deductions are
allowed for otherwise deductible expenses paid with the amounts not included in income, and that tax basis and other
tax attributes will not be reduced as a result of those amounts being excluded from gross income. Special rules are
provided for partnerships and S corporations. The provision is effective for tax years ending after the date of
enactment of the CARES Act. The legislation provides similar treatment for Targeted EIDL advances and Grants for
Shuttered Venue Operators, effective for tax years ending after the date of enactment of the provision.
Employee retention tax credit: The CARES Act includes a refundable tax credit, computed on a calendar-quarter
basis, against the 6.2 percent employer-side Social Security payroll tax for certain employers carrying on a trade or
businesses in 2020 that either fully or partially suspend operations due to a government order or that sustain a
significant decline in gross receipts (defined as the first calendar quarter after December 31, 2019, for which gross
receipts within the meaning of section 448(c) are less than 50 percent of the amount in the corresponding prior-year
quarter and ending with the next quarter in which gross receipts exceed 80 percent of the corresponding prior year
quarter). The refundable credit is only applicable for wages paid after March 12, 2020, and before January 1, 2021.
Under the CARES Act, this employee retention tax credit (or ERTC) is based on 50 percent of the “qualified wages” (up
to $10,000 per employee per year) paid to each employee. The computation of qualified wages differs depending on
whether the employer’s average number of full-time employees during 2019 was more or less than 100.
The ERTC as enacted in the CARES Act is not available to governmental employers, but is available to certain
nonprofits.
The new legislation would extend the ERTC through June 30, 2021, and modify it by:
• Increasing the credit rate from 50 percent to 70 percent of qualified wages;
• Expanding eligibility for the credit by reducing the required year-over-year gross receipts decline from 50
percent to 20 percent and providing a safe harbor allowing employers to use prior-quarter gross receipts to
determine eligibility;
• Increasing the limit on per-employee creditable wages from $10,000 for the year to $10,000 for each quarter;
• Boosting the full-time employee threshold for a business to be treated as a “large employer” (and therefore
subject to a restrictive standard for determining the qualified wage base) from 100 to 500 employees;
• Making the credit available to certain governmental employers; and
• Providing rules to allow new employers who were not in existence for all or part of 2019 to be able to claim the
credit.
These modifications would take effect on January 1, 2021.
The new legislation also would make retroactive clarifications and technical improvements to the ERTC as originally
enacted to:
• Provide that employers who receive Paycheck Protection Program loans may still qualify for the ERTC with
respect to wages that are not paid for with forgiven PPP proceeds;
• Clarify the determination of gross receipts for certain tax exempt organizations; and
• Clarify that group health plan expenses can be considered qualified wages even when no other wages are paid
to the employee, consistent with IRS guidance.
These provisions would take effect as if enacted in the CARES Act.
Credits for paid sick and family leave: The legislation would extend through March 31, 2021, the refundable
payroll tax credits for paid sick and family leave that were enacted earlier this year in the Families First Coronavirus
Response Act (P.L. 116-127). It also would allow self-employed individuals to use their average daily net earnings
from self-employment income from 2019, rather than 2020, for purposes of computing these credits.
Tax News & Views (Special Edition) Page 3 of 9 Copyright © 2020 Deloitte Development LLC
December 21, 2020 All rights reserved.In addition, the legislation would make technical changes coordinating the definitions of qualified wages within the paid sick leave, paid family and medical leave, and the exclusion of such leave from employer OASDI tax. This provision would retroactively apply as if included in Families First Act. Temporary allowance of full deduction for business meals: The legislation would provide a 100 percent deduction for business meal food and beverage expenses (but not business “entertainment” expenses) provided at a restaurant that are paid or incurred before January 1, 2023. Currently, the deduction is limited to 50 percent for those expenses. Election to waive application of certain modifications to farming net operating loss carryback rules: The legislation would allow farmers who elected a two-year net operating loss carryback prior to the CARES Act to elect to retain that two-year carryback rather than claim the five-year carryback provided in the CARES Act. It also would allow farmers who previously waived an election to carry back a net operating loss to revoke the waiver. These clarifications would apply retroactively as if included in section 2303 of the CARES Act. Charitable deductions: The bill would extend through the end of 2021 the increased limits on deductible charitable contributions for corporations. Pension plan provisions The legislation includes two provisions that would make changes to certain rules for employer-sponsored pension plans. Election to terminate transfer period for qualified transfers from pension plan for covering future retiree costs: Section 420 of the Internal Revenue Code permits “qualified future transfers,” under which up to 10 years of retiree health and life costs may be transferred from a company’s pension plan to a retiree health benefits account and/or a retiree life insurance account within the pension plan. These transfers must meet a number of requirements: the plan must be 120 percent funded at the outset, it must be 120 percent funded throughout the transfer period, all unused amounts must be transferred back, and the plan is subject to a maintenance of effort requirement. Applying the current-law requirements during the market volatility related to the coronavirus pandemic has caused plans that have been historically far over 120 percent funded to fall below120 percent and face a requirement to immediately restore these large market losses in order to get back to 120 percent funded. This provision would allow employers to make a one-time election during 2020 and 2021 to end any existing transfer period for any taxable year beginning after the date of election, provided the maintenance of effort continues to apply as if the transfer period were not shortened, the employer ensures the plan stays at least 100 percent funded throughout the original transfer period, the plan has funding targets for the first five years after the original transfer period, and all amounts left in the retiree benefits account at the end of the shortened transfer period must be returned to the pension plan (without application of an excise tax to such amounts). Temporary rule preventing partial plan termination: Generally, an IRS assessment of plan termination is triggered whenever workforce turnover exceeds 20 percent. The legislation would defer assessments until March 2021, to give companies time to restore at least 80 percent of their workforce and avoid termination. The provision would apply during any plan year which includes the period beginning on March 13, 2020, and ending on March 31, 2021, if the number of active participants covered by the plan on March 31, 2021, is at least 80 percent of the number of active participants covered by the plan on March 13, 2020. Tax relief for individuals Tax relief for individuals under the legislation includes, among other things, another round of direct payments for certain households, temporary enhancements to the earned income tax credit (EITC) and an extension for the deduction for charitable contributions, and a short-term federal supplement to state-level unemployment benefits. Direct payments: The legislation calls for a refundable tax credit (similar to the credit enacted in the CARES Act) of $600 for a single taxpayer, $1,200 for joint filers, and $600 per dependent child. The credit would phase out beginning at $75,000 of modified adjusted gross income for single taxpayers, $112,500 for head-of-household filers, and $150,000 for joint filers at a rate of $5 per $100 of income. (The CARES Act provided payments of $1,200 for single Tax News & Views (Special Edition) Page 4 of 9 Copyright © 2020 Deloitte Development LLC December 21, 2020 All rights reserved.
taxpayers, $2,400 for joint filers, and $500 per child dependent, subject to the same phase-out thresholds that are
proposed under the new legislation.)
The Treasury Department is authorized to issue advance payments based on the information on 2019 tax returns.
Payments for Social Security beneficiaries, Supplemental Security Income recipients, Railroad Retirement plan
participants, and Veterans Administration beneficiaries who did not file returns for 2019 would be determined based on
information provided by the Social Security Administration, Railroad Retirement Board, or Veterans Administration.
Taxpayers without an eligible Social Security Number are not eligible for the payment; however, the legislation
provides that married taxpayers filing jointly where one spouse has a Social Security Number and one spouse does not
are eligible for a payment of $600, in addition to $600 per child with a Social Security Number.
Taxpayers who receive an advance payment that exceeds their maximum eligible credit based on 2020 information
would not be required to reimburse the government for any overpayment. If the credit based on 2020 information
exceeds the amount of the advance payment, taxpayers would be allowed to claim the difference on their 2020 tax
returns.
The payments generally would not be subject to administrative offset for past due federal or state debts and are
protected from bank garnishment or levy by private creditors or debt collectors.
“Lookback” for earned income tax credit and child tax credit: The bill includes a special temporary rule allowing
lower-income individuals to use their earned income from tax year 2019 to determine the earned income tax credit
and the refundable portion of the child tax credit (i.e., the additional child tax credit) in the 2020 tax year.
Charitable deduction: The legislation would extend for one year (through 2021) the $300 above-the-line-deduction,
which was established in the CARES Act and set to expire the end of 2020. It also would increase the amount for 2021
that married couples filing jointly can deduct for charitable contributions, from $300 to $600. Additionally, the bill
would extend through the end of 2021 the increased limits on deductible charitable contributions for individuals who
itemize.
Early retirement account distributions and plan loans: The legislation would clarify that the CARES Act’s rules
permitting penalty-free early retirement plan withdrawals and higher limits on loans from qualified plans apply to
money purchase pension plans in addition to defined contribution plans and IRAs. This provision would be effective as
if enacted in the CARES Act.
Temporary special rules for health and dependent care flexible spending arrangements: The legislation
would provide further flexibility for taxpayers to roll over unused amounts in their health and dependent care flexible
spending arrangements from 2020 to 2021 and from 2021 to 2022. It also would permit employers to allow employees
to make a 2021 mid-year prospective change in contribution amounts.
Targeted deductions and exclusions: The legislation includes provisions that would:
• Require the Secretary of the Treasury to issue guidance or regulations providing that personal protective
equipment and other supplies used for the prevention of the spread of COVID-19 are treated as eligible
expenses for purposes of the educator expense deduction. Such regulations or guidance shall be retroactive to
March 12, 2020.
• Provide that certain emergency financial aid grants under the CARES Act are excluded from the gross income
of college and university students. It also would hold students harmless for purposes of determining eligibility
for the American Opportunity and Lifetime Learning tax credits. The provision would be effective as of the date
of enactment of the CARES Act.
Extension of certain deferred payroll taxes: A memorandum issued by President Trump on August 8, 2020,
allowed employers to defer withholding employees’ share of Social Security taxes or the railroad retirement tax
equivalent from September 1, 2020, through December 31, 2020, and required employers to increase withholding and
pay the deferred amounts ratably from those wages and compensation paid between January 1, 2021, and April 31,
2021. Under the memorandum, penalties and interest on deferred unpaid tax liability would begin to accrue beginning
on May 1, 2021.
Tax News & Views (Special Edition) Page 5 of 9 Copyright © 2020 Deloitte Development LLC
December 21, 2020 All rights reserved.The legislation would extend the repayment period through December 31, 2021. Penalties and interest on deferred
unpaid tax liability would not begin to accrue until January 1, 2022.
Unemployment insurance assistance: The legislation would provide $300 in weekly federal unemployment
insurance payments on top of state-level benefits for four months – a drop from the $600 per week Democrats had
been pushing for and which had applied earlier in 2020 under the CARES Act. The additional payments would continue
through March 14, 2021.
It also would extend the Pandemic Unemployment Assistance (PUA) program, with expanded coverage to the self-
employed, gig workers, and others in non-traditional employment, and the Pandemic Emergency Unemployment
Compensation (PEUC) program, which provides additional weeks of federally funded unemployment benefits to
individuals who exhaust their regular state benefits.
The bill would provide an extra benefit of $100 per week for certain workers who have both wage and self-
employment income but whose base unemployment insurance benefit calculation doesn’t take their self-employment
into account.
Tax extenders
The legislation extends dozens of temporary provisions collectively known as “tax extenders” over various time spans
as discussed below. Most of these provisions were otherwise scheduled to expire after December 31, 2020, though a
handful – such as incentives for maintaining short-line railroad tracks and for producing biodiesel and renewable diesel
fuels – were not set to lapse until the end of 2022.
Provisions made permanent: The deal would permanently extend a number of tax provisions benefiting individuals
and businesses, which include:
• The lower adjusted gross income (AGI) threshold (that is, 7.5 percent instead of 10 percent) above which out-
of-pocket medical expenses can be claimed as an itemized deduction under section 213(f);
• The exclusion from gross income under section 139B(d) for certain benefits provided to volunteer firefighters
and emergency responders, as included in the SECURE Act of 2019;
• The above-the-line deduction for qualified tuition and related expenses under section 222 would be repealed
after 2020 and replaced with increased income phase-out thresholds for the Lifetime Learning credit under
section 25A(d)(2);
• Lower excise tax rates on small brewers, vintners, and distillers under sections 5001, 5041, and 5051;
• The deduction for energy-efficient commercial buildings under section 179D (with the per-square-foot
limitation indexed to inflation plus updated energy efficiency standards for claimants); and
• The credit for maintaining short-line railroad tracks under section 45G, though the credit rate would be
reduced from 50 percent to 40 percent beginning in 2023.
Five-year extensions: The package would grant five-year extensions to a number of provisions, thereby generally
aligning their new expiration dates with the December 31, 2025, the date after which nearly all of the provisions
affecting individual taxpayers in the 2017 tax code overhaul (P.L. 115-97, commonly called the Tax Cuts and Jobs Act
or TCJA) are also scheduled to lapse, setting up a massive fiscal cliff for future legislators to tackle. Certain TCJA-
related business provisions, including the deduction for individuals, estates and trusts under section 199A, as well as
components of the new international tax regime, are also scheduled to expire or phase-in after 2025.
The five-year extensions include:
• Lookthrough treatment of payments between related controlled foreign corporations for purposes of Subpart F
(section 954(c)(6);
• The new markets tax credit under section 45D(f) with a $5 billion annual allocation;
• The work opportunity tax credit under section 51(c)(4);
• Accelerated (seven-year) cost recovery for motorsports entertainment complexes under sections 168(i)(15);
• Expensing of certain qualified film and live theatrical production costs under section 181;
• The Oil Spill Liability Trust Fund financing rate under section 4611(f)(2);
• Empowerment zone tax incentives under various sections including section 1391(d)(1)(A)(i);
Tax News & Views (Special Edition) Page 6 of 9 Copyright © 2020 Deloitte Development LLC
December 21, 2020 All rights reserved.• The employer credit under section 45S for paid family and medical leave, originally enacted as part of the
TCJA;
• The expanded exclusion for employer-provided educational assistance, including student loan repayment
benefits as enacted as part of the CARES Act; and
• The gross income exclusion for discharge of indebtedness on a principal residence under section 108(a)(1)(e),
though the legislation would limit the maximum exclusion to $750,000 (down from $2 million) and in so doing
align the maximum exclusion with the maximum mortgage balance on which interest may be claimed as an
itemized deduction.
Two-year extensions: The legislation would extend the section 45Q credit for carbon capture and sequestration for
two years (through 2025, in the case of this particular provision), while also granting two additional years (through
2022) to the current 26 percent credit amount for the investment tax credit (ITC) for solar and certain other section
48 energy property. The residential energy efficient property tax credit under section 25D would also be extended for
two years. Under the deal, offshore wind projects that begin construction before 2026 would be eligible for the section
48 energy investment tax credit. Also, waste energy recovery property would be eligible for the energy ITC.
One-year extensions: Most other temporary tax provisions otherwise scheduled to lapse at the end of 2020 were
given one additional year of life and now face an expiration date of December 31, 2021. Notably, scheduled taxpayer-
unfavorable changes under the TCJA related to the deductibility of business interest expense and amortization of
research expenses are still scheduled to take effect after 2021. Those specific provisions were not touched in this
agreement.
Most provisions receiving one more year are in the renewable energy and energy efficiency space, including incentives
for:
• Alternative fuel and alternative fuel mixtures (sections 6426(d) and (e) and section 6427(e));
• Second generation biofuels (section 40(b)(6));
• Nonbusiness energy property (section 25C);
• Two-wheeled electric plug-in vehicles (section 30D);
• Fuel cell vehicles (section 30B(b));
• Construction of new energy efficient homes (section 45L);
• Alternative fuel vehicle refueling property (section 30C); and
• Renewable electricity production (section 45).
Also granted one-year extensions are the Indian employment credit (section 45A(f)), the mine rescue team training
credit (section 45N), the increased excise tax on coal directed to the Black Lung Disability Trust Fund (section
4121(e)(2)), accelerated (three-year) cost recovery for race horses (section 168(e)(3)(A)(i)), and the treatment of
mortgage insurance premiums as qualified residence interest (section 163(h)(3)).
FERC provision left out: The special rule for sales or dispositions to implement Federal Energy Regulatory
Commission (FERC) or state electric restructuring policy (section 451(k)) does not appear to have been renewed.
Disaster tax relief
The deal includes several provisions that would provide tax relief for individuals and businesses situated in disaster
areas (not related to the coronavirus pandemic) declared by the president after December 31, 2019, and through 60
days after the date of the bill’s enactment.
• Expanded use of retirement account funds for disaster-related expenses: The legislation would allow
residents of disaster areas to borrow or take out a loan of up to $100,000 from a retirement plan or IRA
account without penalty. Amounts withdrawn would be included in income over three years or may be
recontributed to avoid tax and restore savings. The repayment period would be extended for one year for new
and outstanding retirement plan loans.
• Employee retention credit for disaster zones: The legislation would provide a tax credit of 40 percent of
wages (up to $6,000 per employee) to employers in disaster zones (disaster areas where individual and public
assistance is mandated). The credit would apply to wages paid without regard to whether services associated
with those wages were performed.
Tax News & Views (Special Edition) Page 7 of 9 Copyright © 2020 Deloitte Development LLC
December 21, 2020 All rights reserved.• Expansion of low-income housing tax credit in disaster zones: The legislation would increase the low-
income housing tax credit allocations in states that experienced the most serious disasters in 2020. The
increase is equal to $3.50 multiplied by the number of residents in qualified disaster zones and is capped at 65
percent of the state’s 2020 credit allocation.
Other provisions
The legislation also would make several other changes to the tax code that as outlined below:
• Low-income housing tax credit: The deal would provide a minimum 4 percent LIHTC rate or floor for
certain projects acquired for rehabilitation or for projects funded using tax exempt bonds.
• TCJA depreciation fix: The legislation would allow real property trades or businesses (that is, businesses that
elect out of the section 163(j) limitation on business interest deductibility) to utilize the 30-year alternative
depreciation system (ADS) on residential rental property placed in service before 2018.
• Life insurance contracts: The bill would change a pair of fixed interest rates – last updated in 1984 – utilized
in determining whether whole life insurance policies qualify as life insurance contracts under the tax code by
tying the rates to periodically updated benchmark interest rates.
• Authority to waive certain information reporting requirements: The legislation would give Treasury
authority to waive information filing requirements for any amount excluded from income by reason of the
exclusion of covered loan amount forgiveness from taxable income, the exclusion of emergency financial aid
grants from taxable income, or the exclusion of certain loan forgiveness and other business financial
assistance under the CARES act from income.
• Oversight and audit reporting of federal pandemic response: The CARES Act authorizes the Comptroller
General to conduct monitoring and oversight of federal response efforts related to the coronavirus pandemic
and its general effects. The Comptroller General is required to provide briefings and reports to “appropriate
congressional committees.” The new legislation would clarify that “appropriate congressional committees”
includes the House Ways and Means Committee and the Senate Finance Committee.
• Disclosures to identify tax receivables not eligible for collection pursuant to qualified tax collection
contracts: Section 1205 of the Taxpayer First Act (P.L. 116-25) excludes supplemental Social Security (SSI)
and Social Security disability insurance (SSDI) beneficiaries from the IRS private debt collection program
beginning on January 1, 2021. The IRS and SSA need statutory authority to share information to determine
which taxpayers are SSI or SSDI beneficiaries and eligible for exclusion from the IRS program. The new
legislation would provide the authority needed to share such information and make the Taxpayer First Act
provision work as intended.
• Modification of certain protections for taxpayer return information: The legislation would correct a
provision in the CARES Act that deleted taxpayer confidentiality protections applicable to tax return
information related to student loan applications that is shared by the IRS with the Department of Education
(and the subsequent redisclosure to colleges, universities, and scholarship funds). The measure would restore
taxpayer confidentiality protections to the tax return information shared by IRS while allowing certain uses as
requested by the committees with education jurisdiction.
• Minimum age for distributions during working retirement: The legislation would allow certain
construction and building trades workers age 55 or older who are receiving retirement benefits to continue to
work and receive such benefits.
IRS budget
On the appropriations side, the measure would provide roughly $12 billion in funding for the Internal Revenue Service
for fiscal year 2021, up from the $11.5 billion allocated to the agency in fiscal year 2020.
— Alex Brosseau and Michael DeHoff
Tax Policy Group
Deloitte Tax LLP
Tax News & Views (Special Edition) Page 8 of 9 Copyright © 2020 Deloitte Development LLC
December 21, 2020 All rights reserved.This document contains general information only and Deloitte is not, by means of this document, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This document is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this document. About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms. Tax News & Views (Special Edition) Page 9 of 9 Copyright © 2020 Deloitte Development LLC December 21, 2020 All rights reserved.
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