By Stephen K. Cooper

Law360 (May 13, 2020, 7:54 PM EDT ) Businesses could immediately expense costs of updating their workplaces and providing protective equipment to workers under Republican proposals to help companies reopen safely amid the novel coronavirus pandemic, House Ways and Means Committee ranking member Kevin Brady said Wednesday.

Brady, R-Texas, said expanding expensing would help defray the cost of property and structural upgrades this year as companies attempt to address health concerns caused by COVID-19, the respiratory disease caused by the coronavirus, that has resulted in massive employee layoffs and business closures nationwide.

The temporary tax incentive, which is one of several legislative ideas House Republicans are discussing with officials in the administration of President Donald Trump, could be offered in the next round of virus relief legislation, he said.

But Brady said Republicans would like to go even further and make 100% expensing a permanent part of the tax code. Under the Tax Cuts and Jobs Act , the full expensing allowance begins to phase out by 20% per year beginning in taxable years after 2022 and expires Jan. 1, 2027.

"The White House has suggested [that, in order] to provide certainty for those long term investments [that] we want businesses to make," Brady said. "We think the economy and workforce places will look different in the future. Why not encourage businesses to make those investments now for the long term?"

Ways and Means Chairman Richard Neal, D-Mass., recently told Law360 that he would consider GOP proposals to expand temporary full expensing of business equipment in exchange for GOP support for Democratic efforts to provide aid for states and workers impacted by the economic downturn.

"We are open at the committee level to suggestions on all of this," Neal said in April.

Republicans are also discussing the merits of providing a targeted tax incentive to accelerate the creation of U.S. production lines for crucial but hard-to-obtain medicine and supplies for vulnerable American patients, Brady said.

Brady said other Republican ideas under consideration include doubling the size of the research tax credit and permanently eliminating the provision in the TCJA that forces businesses to amortize their research costs over five years.

Republican lawmakers will need to weigh industry-specific proposals such as eliminating the TCJA tax law's restriction on deducting the cost of business meals and entertainment. Trump recently floated the idea of restoring the full deduction.  

The 2017 tax overhaul eliminated the 50% business deduction for activities considered entertainment, but it allowed companies to continue to deduct half of business-related meal expenses. In February, the IRS proposed rules on the deduction that said, among other things, that meals must be paid for separately from entertainment expenses to qualify for the deduction.

Brady offered support for Trump's suggestion of cutting payroll taxes for workers through the end of 2020. In April, Trump said that a major infrastructure spending plan to stimulate the economy must include a payroll tax cut if lawmakers want his support.

"It's an immediate 7% pay raise for workers that's welcome in every family in the economy," Brady said, adding that it would provide an incentive for employees to return to work and would lessen inflationary pressure on wages.  

Brady's comments came a day after House Democrats unveiled the Health and Economic Recovery Omnibus Emergency Solutions Act, or the HEROES Act, a $3 trillion bill to provide support to state and local government, revamp the Internal Revenue Service's economic impact payment program as well as institute a second round of payments to Americans.

Brady offered criticism of the legislation, which is scheduled for a House vote on Friday, saying he doesn't support providing individuals with another round of $1,200 economic impact payments because the payments wouldn't support efforts to return to work. In addition, those payments should not be expanded to individuals who have taxpayer identification numbers, rather than Social Security numbers, he said.

He did offer support for the bill's inclusion of a bipartisan proposal to make the employee retention tax credit worth 80% of qualified wages up to $15,000 per calendar quarter and up to $45,000 for the calendar year.

"We are willing to discuss, in a bipartisan way, how to make the credit work better and to expand it," Brady said. "We're open to it."

Neal couldn't immediately be reached for comment.

--Additional reporting by Dylan Moroses and Alan K. Ota. Editing by Neil Cohen.

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