By Mark Valentini, Director of Legislative Affairs
As the 116th Congress comes to a close, there is still some legislative work to be done before lawmakers adjourn for the year and go home for the winter holidays. A budget needs to be passed to keep the federal government funded through FY2021; a tax extenders bill is also in the works; the House and Senate each passed energy bills earlier this fall that need to be reconciled; a well-meaning amendment in the National Defense Authorization Act (NDAA) with potentially far-reaching consequences for contractors; and there continues to be interest in passing a COVID bill. It’s an ambitious agenda to fulfill in the next four weeks.
Tax extenders and COVID relief are the two vehicles where PHCC has the most to gain. For starters, the tax extenders package would extend or make permanent a slew of tax credits and deductions slated to expire at the end of this calendar year. The extenders package is expected to include extending energy-efficient tax credits under Sections 25C and 179D of the U.S. tax code. PHCC has been vociferous about extending these tax provisions that are a win-win-win for consumers, HVAC contractors and the environment by providing incentives for residential customers (under Section 25C) and commercial customers (under 179D) to invest in energy-efficient upgrades to their dwellings.
More importantly, PHCC learned that the tax extenders package likely will include a correction to Internal Revenue Service guidance issued on April 30 that prohibits deductions for qualified expenses paid for with funds obtained via the Paycheck Protection Program (PPP). PHCC has repeatedly argued that this guidance essentially acts as a tax on PPP funds when it was the express intent of Congress not to tax the PPP. While the U.S. Treasury has the authority to reverse this guidance, Secretary Steve Mnuchin insists that it is incumbent upon Congress to make this change.
The House and Senate each took up their own versions of the NDAA. There is a provision authored by Rep. Carolyn Maloney (D-NY) granting broad authority to the Financial Crimes Enforcement Network (FinCEN) to collect information on individuals with “beneficial ownership” of businesses. On its face, the provision is meant to be a tool to deter money laundering. However, the provision includes the requirement of reporting of any individual with a beneficial ownership stake in a company that opens an account with a financial institution to FinCEN. Furthermore, the legislation defers to FinCEN on determining the definition of “beneficial ownership” and compiling a beneficial ownership database that law enforcement would be able to access without a judicial warrant. The provision does not have bicameral support, which diminishes its chances to be included in the final bill during reconciliation, but its bipartisan nature keeps its chances alive.
In regard to COVID relief, Senate Majority Leader Mitch McConnell (R-KY) has expressed renewed interest in passing targeted legislation costing approximately $500 billion that would renew the PPP, extend PPP eligibility to 501(c)6 organizations, and include liability protections for small businesses. House Democrats under Speaker Nancy Pelosi’s (D-CA) leadership insist on a much larger package costing closer to $3 trillion that would include funding for state and local governments to combat the pandemic, provide additional stimulus payments, and renew the Federal Pandemic Unemployment Compensation (FPUC) program providing up to $600 in federal unemployment benefits per week for dislocated workers. A relief package may have to wait until the new Congress, as lawmakers wait for two Jan. 5 run-off Senate elections in Georgia that will determine which political party will control the chamber next year. If Republicans retain the Senate, we can expect the targeted relief preferred by Senator McConnell; if Democrats take control of the Senate, we can expect the much larger stimulus package preferred by Speaker Pelosi that will likely include all of PHCC’s policy priorities minus liability protection. Stay tuned…
Director of Legislative Affairs , PHCC-National Association