Legislative update: House passes COVID-19 relief bill, including tax provisions

House passes COVID-19 relief bill

The U.S. House of Representatives in the early morning hours of February 27, 2021, passed H.R. 1319, the “American Rescue Plan Act of 2021,” by a mostly party-line vote of 219-212.

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The legislation is estimated by the Congressional Budget Office (CBO) to increase the deficit by $1.92 trillion over 10 years—more than the $1.889 trillion provided in the operable budget resolution. The Joint Committee of Taxation separately provided revenue estimates of the tax provisions in the legislation.

Read prior coverage of portions of the legislation as approved by the Ways and Means Committee: TaxNewsFlash

  • Read the legislative text [PDF 1.2 MB] of the bill, as reported by the House Budget Committee.
  • Read an analysis [PDF 280 KB] from CBO of the budgetary effect of the bill. 
  • Read a JCT technical explanation of the modification of exceptions of reporting third-party network transactions.

Modifications to Ways and Means Committee provisions

During its consideration, the House approved a manager’s amendment modifying various provisions of the bill produced by the Ways and Means and Budget committees.  Read the manager’s amendment [PDF 415 KB].

A provision added to the bill with the adoption of the manager’s amendment would modify section 6050W to reduce to $600 (from $20,000) the threshold for third-party settlement organization reporting.  The provision also clarifies that reporting would not be required for transactions that are not for goods or services.

In addition, the manager’s amendment (as adopted) added provisions relating to the employer retention tax credit (ERTC), multiple employer plans, and sick and family leave credits for employers and self-employed individuals

Budget reconciliation

Budget reconciliation is a process under which spending and revenue legislation (including tax measures) is not subject to potential Senate filibuster rules, and thus may be passed by a simple majority vote in the Senate. To retain the protection from a Senate filibuster that the reconciliation rules provide, provisions in legislation being considered under the budget resolution must meet a number of complex requirements. Any senator can raise a point of order against any provision that does not meet these requirements.

The ability to use these rules was “unlocked” when the House and Senate agreed to a budget resolution for FY 2021 on February 5, 2021. The budget resolution permits the reconciliation bill produced, pursuant to its instructions, to increase the deficit by a maximum of $1.9 trillion over the 10-year budget window.

What’s next?

The bill will be transmitted to the Senate, where consideration is expected to begin shortly.  The House-passed bill may be modified in the Senate to comply with budget reconciliation requirements. If the bill is modified in the Senate, it would then be returned to the House for approval before it could go to the president for signature. 

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