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July 12, 2020

U.S. Tax This Week for July 10

Ernst & Young's U.S. Tax This Week newsletter for the week ending July 10 is now available. Prepared by Ernst & Young's National Tax Department in Washington, D.C., this weekly update summarizes important news, cases, and other developments in U.S. taxation.

Top of the Week

Final FDII/GILTI regulations released for publication

On July 9, 2020, the Treasury Department released final regulations (TD 9901) under IRC Section 250, which allows an annual deduction to a domestic corporation for its foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) inclusion. The final regulations are scheduled for publication in the Federal Register on July 15, 2020. EY Tax Alert 2020-9038 has details.

Temporary regulations on NOL carrybacks address new split-waiver elections

On July 2, 2020, the Treasury Department (Treasury) and the IRS released two regulation packages, each under IRC Section 1502: proposed regulations (REG-125716-18) (Proposed Regulations) and temporary regulations (TD 9900) (Temporary Regulations) (which also serve as part of the Proposed Regulations). The Proposed Regulations generally address the absorption of consolidated NOL (CNOL) carryovers and carrybacks applicable to consolidated groups under the Tax Cuts and Jobs Act of 2017 (TCJA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. EY Tax Alert 2020-1745 has details.

Upcoming Webcasts

Impact of the changing global tax landscape on Asia-Pacific (July 15)
During this Thought Center Webcast, Ernst & Young's global tax policy and controversy leaders will share their insights on the myriad of developments that are happening globally and how multinational companies need to respond to all these competing priorities.

How companies are addressing impairment considerations on goodwill and other long-lived assets (July 16)
During this Thought Center Webcast, Ernst & Young professionals will examine leading practices that companies are adopting to address challenges in developing forecasts, recovering curves, valuation approaches and reconciliations to market capitalization.

US corporate income tax compliance (July 21)
During this Thought Center Webcast, Ernst & Young professionals will discuss how your company can continue to navigate the complexity and challenges of the CARES Act and TCJA compliance, while preparing for tax year 2019 (TY19) and tax year 2020 (TY20).

Teleworker tax implications for COVID-19 and beyond (July 28)
During this Thought Center Webcast, Ernst & Young professionals will help you identify the tax implications of telework arrangements.

Recent Tax Alerts

Internal Revenue Service

— Jul 09: IRS provides Form W-2 reporting instructions for qualified sick and family leave wages paid under the Families First Coronavirus Response Act (Tax Alert 2020-1755)

— Jul 08: Temporary regulations on NOL carrybacks address new split-waiver elections (Tax Alert 2020-1745)

— Jul 08: QUEST Economic Update highlights key US and global economic trends — July 8, 2020 (Tax Alert 2020-1744)

— Jul 08: IRS provides guidance on reporting qualified sick leave and family leave wages under the Family First Act (Tax Alert 2020-1743)

— Jul 06: IRS updates guidance for the CARES Act Social Security deferral to reflect legislative changes (Tax Alert 2020-1699)

— Jul 07: IRS issues proposed regulations for monitoring compliance with low-income housing credit (Tax Alert 2020-1698)

— Jul 07: IRS issues temporary and proposed regulations on carryovers and carrybacks of consolidated NOLs (Tax Alert 2020-1697)

— Jul 01: Deadline extended to July 15 for taxpayers to file Forms 1139 and 1045 to claim NOL carrybacks and AMT credits (Tax Alert 2020-1690)

— Jun 26: Final regulations allow RIC shareholders a 199A deduction for qualified REIT Dividends (Tax Alert 2020-1687)

— Jun 26: EY publication highlights accounting implications of 2020 Q2 tax developments (Tax Alert 2020-1682)

— Jun 26: IRS issues proposed regulations on qualified transportation fringe benefit expense deductions eliminated by TCJA (Tax Alert 2020-1680)

— Jun 26: IRS issues final regulations under IRC Section 199A on treatment of previously suspended losses and determining deductions for RICs and certain trusts (Tax Alert 2020-1677)


— Jul 09: Poland defers MDR deadlines for cross-border and other tax arrangements (Tax Alert 2020-1753)

— Jul 09: PE Watch | Latest developments and trends, July 2020 (Tax Alert 2020-1752)

— Jul 09: UK Tax Authority introduces temporary cut in VAT rate for hospitality and tourism sector (Tax Alert 2020-1751)

— Jul 09: Cyprus | Reduced VAT rate of 5% applies to hotel accommodation, restaurant and catering and transportation services on a temporary basis (Tax Alert 2020-1750)

— Jul 09: Canada delivers its 2020 Economic and Fiscal Snapshot (Tax Alert 2020-1747)

— Jul 08: OECD releases model rules for data reporting by platform operators for sellers in the sharing economy (Tax Alert 2020-1741)

— Jul 08: Indonesia issues implementing regulations for VAT collection on digital transactions (Tax Alert 2020-1740)

— Jul 08: Luxembourg enacts law amending CRS and FATCA laws and submits draft law extending 2019 reporting deadlines (Tax Alert 2020-1739)

— Jul 08: Sweden extends MDR reporting deadlines for six months (Tax Alert 2020-1738)

— Jul 08: Luxembourg publishes draft legislation extending MDR reporting deadlines for six months (Tax Alert 2020-1737)

— Jul 08: Germany announces no postponement of MDR reporting deadlines (Tax Alert 2020-1733)

— Jul 07: Poland introduces new levy on VOD platforms (Tax Alert 2020-1727)

— Jul 07: Poland's implementation of EU ATAD 2 anti-hybrid measures enters into force from 1 January 2021 (Tax Alert 2020-1726)

— Jul 07: Federal Court of Appeal rejects Crown appeal of Tax Court of Canada decision in Cameco transfer pricing case (Tax Alert 2020-1721)

— Jul 06: The Spanish Constitutional Court confirms minimum interim payment on account of Corporate Income Tax is unconstitutional (Tax Alert 2020-1718)

— Jul 06: Kenya enacts Finance Act, 2020 (Tax Alert 2020-1717)

— Jul 06: Dutch Tax Authority issues guidance on reportable cross-border arrangements (Tax Alert 2020-1706)

— Jul 06: Luxembourg introduces new law on company meetings in light of COVID-19 social distancing measures (Tax Alert 2020-1705)

— Jul 06: Austria publishes two draft bills: The Economic Strengthening Act 2020 and the Investment Premium Act (Tax Alert 2020-1704)

— Jul 06: Finland publishes official tax guidelines on Mandatory Disclosure Rules (Tax Alert 2020-1703)

— Jul 06: Germany's Presidency of the Council of the EU publishes its program (Tax Alert 2020-1702)

— Jun 26: Spanish Central Tax Court applies doctrine of ECJ Danish cases to deny withholding tax exemption on dividend payments to EU shareholders (Tax Alert 2020-1686)

— Jun 26: Rwanda presents National Budget for financial year 2020/2021 (Tax Alert 2020-1685)

— Jun 26: Netherlands issues new MAP decree (Tax Alert 2020-1684)

— Jun 26: USTR proposes carousel tariff retaliation on EU goods under Section 301 (Tax Alert 2020-1683)

— Jun 26: Colombia issues regulations on tax incentives for agricultural activities (Tax Alert 2020-1678)


— Jul 09: What to expect in Washington (July 9) (Tax Alert 2020-1748)

— Jul 02: House clears Senate bill allowing Paycheck Protection Program to accept applications until August 8 (Tax Alert 2020-1692)

— Jun 26: House Financial Services questions SEC Chairman Clayton on US attorney controversy, capital markets, emergency lending (Tax Alert 2020-1676)


— Jul 09: California "split roll" property tax measure qualifies for November 2020 ballot (Tax Alert 2020-1757)

— Jul 09: Sales and Use Tax Quarterly Update for July 2020 (Tax Alert 2020-1756)

— Jul 09: Iowa takes steps to avoid higher employer UI taxes due to COVID-19 UI benefit payouts (Tax Alert 2020-1754)

— Jul 09: State corporate income and franchise tax developments in the second quarter of 2020 updated to add developments from the last week of June 2020 (Tax Alert 2020-1749)

— Jul 08: New Oregon law makes significant changes to Corporate Activity Tax (Tax Alert 2020-1742)

— Jul 08: Seattle City Council approves new JumpStart payroll expense tax effective January 1, 2021 (Tax Alert 2020-1736)

— Jul 08: Illinois COVID-19 UI benefits will not be charged to employer accounts (Tax Alert 2020-1735)

— Jul 07: New Mexico will not charge employers accounts for COVID-19 UI benefits (Tax Alert 2020-1729)

— Jul 07: Ohio legislature enacts Commercial Activity Tax exclusion for forgiven Paycheck Protection Program loans (Tax Alert 2020-1728)

— Jul 07: Illinois Village of Lincolnwood opts in to Cook County paid sick leave ordinance (Tax Alert 2020-1725)

— Jul 07: Additional states request approval for federal loans to pay UI benefits, June UI benefit claim rate down from May (Tax Alert 2020-1724)

— Jul 07: Iowa decouples from GILTI and federal limitation on business interest expense deductions, retroactively conforms to PPP loan forgiveness, adopts partnership audit and adjustment rules (Tax Alert 2020-1723)

— Jul 06: New Mexico law waives interest and penalties till April 2021 for withholding tax due March-July 2020 for COVID-19 (Tax Alert 2020-1716)

— Jul 06: California FY 2021 budget act requires employer accounts not be charged for COVID-19 UI benefits (Tax Alert 2020-1715)

— Jul 06: Idaho employers may apply for bonuses to be paid to employees who return to work from COVID-19 shutdowns (Tax Alert 2020-1714)

— Jul 06: Eugene, Oregon payroll tax start date delayed from July 1, 2020 to first-quarter 2021 (Tax Alert 2020-1713)

— Jul 06: Montgomery City, WV City Service Fee increases effective July 1, 2020 (Tax Alert 2020-1711)

— Jul 06: Ohio County, Kentucky occupational license tax rate increases effective July 1, 2020 (Tax Alert 2020-1710)

— Jul 06: Missouri announces UI benefits paid under a work-share program will not be charged to employer accounts through December 26, 2020 (Tax Alert 2020-1709)

— Jul 06: Philadelphia nonresident Wage Tax increases effective July 1, 2020 (Tax Alert 2020-1701)

— Jul 06: San Francisco Mayor and Board of Supervisors propose new round of revenue-raising business tax overhauls for November 2020 ballot (Tax Alert 2020-1700)

— Jul 01: California adopts 2020–2022 NOL suspension and business tax credit limitation (Tax Alert 2020-1691)

— Jun 26: San Francisco Mayor and Board of Supervisors propose new round of revenue-raising business tax overhauls for November ballot (Tax Alert 2020-1688)

— Jun 26: State corporate income and franchise tax developments in the second quarter of 2020 (Tax Alert 2020-1681)

Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

  • Senate introduces modified Mobile Worker Relief bill to protect workers temporarily working in states due to COVID-19. On June 18, 2020, US Senator John Thune (R-SD), chairman of the Senate Finance Subcommittee on Taxation and IRS Oversight, issued a press release announcing that he and US Senator Sherrod Brown (D-OH) have introduced the Remote and Mobile Worker Relief Act (S. 3995).
  • Income/Franchise, Sales & Use, Business Incentives, Property Tax, Payroll & Employment Tax, Unclaimed Property, Global Trade, Value Added Tax, Upcoming Webcasts

ITS/Washington Dispatch
   Highlights of this edition include:


  • US Supreme Court declines to hear Altera case

Digital taxation

  • US Treasury Secretary calls for 'pause' in BEPS 2.0 Pillar 1 discussions
  • USTR initiates investigations into digital services taxes either adopted, or under consideration, by 10 jurisdictions

IRS news

  • IRS LB&I official offers insights to TCJA compliance campaign
  • IRS seeks 2020 — 2021 Priority Guidance Plan recommendations

OECD news

  • OECD releases Platform for Collaboration on Tax toolkit on taxation of offshore indirect transfers of assets

IRS Weekly Wrap-Up

Final Regulations

 TD 9900Carryback of Consolidated Net Operating Losses

Proposed Regulations

 REG-123027-19Section 42, Low-Income Housing Credit Compliance-Monitoring Regulations
 REG-125716-18Consolidated Net Operating Losses


 REG-112339-19Credit for Carbon Oxide Sequestration; Correction

Revenue Procedures

 2020-3726 CFR 601.105: Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability


 2020-52COVID-19 Relief and Other Guidance on Mid-Year Reductions or Suspensions of Contributions to Safe Harbor § 401(k) and § 401(m) Plans
 2020-53In response to the ongoing Coronavirus Disease 2019 (COVID–19) pandemic, this notice provides temporary relief from certain requirements under § 42 of the Internal Revenue Code (Code) for qualified low-income housing projects and under §§ 142(d) and 147(d) of the Code for qualified residential rental projects
 2020-54Guidance on Reporting Qualified Sick Leave Wages and Qualified Family Leave Wages Paid Pursuant to the Families First Coronavirus Response Act

Internal Revenue Bulletin

 2020-27Internal Revenue Bulletin of June 29, 2020
 2020-28Internal Revenue Bulletin of July 6, 2020

Because the matters covered herein are complicated, U.S. Tax This Week should not be regarded as offering a complete explanation and should not be used for making decisions. Any decision concerning matters covered herein should be reviewed with a qualified tax advisor.