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July 26, 2020

U.S. Tax This Week for July 24

Ernst & Young's U.S. Tax This Week newsletter for the week ending July 24 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 GILTI/FDII regulations under IRC Section 250 include guidance on IRC Section 962 elections, pass-through FDII reporting

The final regulations on the IRC Section 250 deduction for global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII) (TD 9901) (the Final Regulations) significantly affect individuals and certain trusts that hold direct and indirect interests in controlled foreign corporations (CFCs) and make elections under IRC Section 962. IRC Section 962 elections allow individuals and certain trusts that are US shareholders of CFCs to be taxed on GILTI and subpart F income as if they were a domestic corporation. EY Tax Alert 2020-1859 has details.

G20 Finance Ministers and Central Bank Governors' meeting communiqué reiterates commitment to addressing the tax challenges of digitalization of the economy

On July 18, the G20 Finance Ministers and Central Bank Governors met via videoconference. At the conclusion of the meeting, a joint communiqué (the communiqué) on key topics discussed at the meeting was issued. The communiqué stresses the importance of continuing to advance the work on addressing the tax challenges of the digitalization of the economy and reaffirms the G20's commitment to reaching a global, consensus-based solution. EY Tax Alert 2020-1868 has details.

Upcoming Webcasts

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.

BorderCrossings ... With EY transfer pricing and tax professionals (July 30)
During this Thought Center Webcast, Stig Sollund, the Chair of the Transfer Pricing Subcommittee of the UN Committee of Experts on International Cooperation in Tax Matters, will help unpack the role the UN Manual plays and the significance of the recent revisions.

Beyond the pandemic: Building a future proof payroll operation (August 12)
During this Thought Center Webcast, Ernst & Young professionals discuss the challenges faced by payroll operations in today’s disruptive environment, the opportunities for transformation, and actions you can take to navigate the landscape and plan for beyond.

Recent Tax Alerts

Internal Revenue Service

— Jul 23: EY publication highlights 2020 Q2 tax policy developments across the Americas (Tax Alert 2020-1883)

— Jul 22: FIRST IMPRESSIONS | Final and proposed GILTI regulations deliver few benefits and more than a few surprises (Tax Alert 2020-1871)

— Jul 21: Final GILTI/FDII regulations under IRC Section 250 include guidance on IRC Section 962 elections, pass-through FDII reporting (Tax Alert 2020-1859)

— Jul 21: IRS releases new draft partnership Schedules K-2 and K-3 for international tax reporting (Tax Alert 2020-1851)

— Jul 20: Tax M&A Update for June 2020 (Tax Alert 2020-1841)

— Jul 17: IRS issues draft forms for calendar-year 2020 ACA employer reporting (Tax Alert 2020-1828)


— Jul 23: South Africa's Constitutional Court addresses tax-deductible allowance for future expenditure on contracts (Tax Alert 2020-1888)

— Jul 23: Dutch Government issues Decree with tax authorities' guidance on reportable cross-border arrangements (Tax Alert 2020-1887)

— Jul 23: Australia Jobkeeper 2.0 – wage subsidy extended with modified entitlements and eligibility tests (Tax Alert 2020-1886)

— Jul 23: UK Tax Authority publishes Mandatory Disclosure Regime Guidance (Tax Alert 2020-1885)

— Jul 23: Tanzania issues new transfer pricing guidelines (Tax Alert 2020-1884)

— Jul 23: Costa Rican tax authorities delay VAT collection on cross-border digital services until October 1 (Tax Alert 2020-1876)

— Jul 23: Canada redesigns and extends the Canada Emergency Wage Subsidy (CEWS 2.0) (Tax Alert 2020-1874)

— Jul 22: UK Government publishes draft clauses for Finance Bill 2020-21 alongside new tax consultations (Tax Alert 2020-1870)

— Jul 22: European Council adopts conclusions on recovery plan and EU budget for 2021-2027, including agreement on introduction of new taxes (Tax Alert 2020-1869)

— Jul 22: G20 Finance Ministers and Central Bank Governors' meeting communiqué reiterates commitment to addressing the tax challenges of digitalization of the economy (Tax Alert 2020-1868)

— Jul 22: Russia proposes amendments to Tax Code regarding international taxation (Tax Alert 2020-1867)

— Jul 22: Russia proposes draft bill limiting VAT exemption for foreign entities licensing software and databases (Tax Alert 2020-1866)

— Jul 22: France extends Mandatory Disclosure Rules reporting deadlines for six months (Tax Alert 2020-1862)

— Jul 22: Italy publishes decree regarding consumption tax on lubricating oils and preparations (Tax Alert 2020-1861)

— Jul 21: Brazilian Government proposes new federal VAT as first phase of comprehensive tax reform (Tax Alert 2020-1860)

— Jul 21: The latest on BEPS and Beyond for July 2020 (Tax Alert 2020-1857)

— Jul 21: Updates provided regarding entry of experts into Israel (Tax Alert 2020-1856)

— Jul 20: Hungary extends MDR reporting deadlines for six months (Tax Alert 2020-1847)

— Jul 20: Cyprus introduces changes regarding taxation of intangible assets (Tax Alert 2020-1846)

— Jul 20: European Commission publishes action plan for fair and simple taxation: A detailed review (Tax Alert 2020-1845)

— Jul 20: European Commission publishes communication on intensifying the work on tax transparency and harmful tax competition by means of advocating Tax Good Governance in the EU and beyond (Tax Alert 2020-1844)

— Jul 20: European Commission proposes revision of Directive on administrative cooperation (Tax Alert 2020-1843)

— Jul 17: Italy's Supreme Court recognizes beneficial ownership of a Luxembourg sub-holding in light of CJEU Danish Cases (Tax Alert 2020-1833)

— Jul 17: The Dominican Republic's tax administration publishes General Norm 04-2020 to implement Law 46-20 on Transparency and Equity Revaluation (Tax Alert 2020-1832)

— Jul 17: East African Community implements trade and duty changes (Tax Alert 2020-1823)


— Jul 24: What to expect in Washington (July 24) (Tax Alert 2020-1896)


— Jul 23: Massachusetts does not adopt the favorable federal income tax treatment of employer-paid student loans under the CARES Act (Tax Alert 2020-1882)

— Jul 23: Pennsylvania offers time sensitive opportunity for employee hazard pay grants for COVID-19 (Tax Alert 2020-1881)

— Jul 23: Louisiana offers time-sensitive opportunity for employees to obtain hazard pay rebates for COVID-19 (Tax Alert 2020-1880)

— Jul 23: New Mexico tax department updates guidance on the waiver of interest and penalties for COVID-19 through April 2021 returns filed by July 25 (Tax Alert 2020-1879)

— Jul 23: New Hampshire SUI taxable wage base to significantly increase due to COVID-19, emergency power surcharge is added for first time since 2010 (Tax Alert 2020-1878)

— Jul 22: Massachusetts updates guidance concerning income tax withholding, paid family and medical leave insurance and nexus for employees working temporarily in the state due to COVID-19 (Tax Alert 2020-1865)

— Jul 22: Louisiana law waives penalty and interest for late income tax withholding tax returns and payments due to COVID-19 (Tax Alert 2020-1864)

— Jul 21: Delaware Chancery Court finds state's unclaimed property information requests too expansive, rejects enforcement of subpoena as abuse of court's process (Tax Alert 2020-1858)

— Jul 21: Colorado governor signs bill to require employers provide paid sick leave starting in 2021 (Tax Alert 2020-1854)

— Jul 21: Washington employers have a time-sensitive opportunity to apply for relief of some of their COVID-19 UI benefit charges (Tax Alert 2020-1853)

— Jul 20: Idaho revises withholding tax tables for 2020 and issues new state Form ID W-4 (Tax Alert 2020-1849)

— Jul 20: North Carolina updates information on the second-quarter 2020 SUI tax credit (Tax Alert 2020-1848)

— Jul 20: New York State issues draft regulations on net operating losses (Tax Alert 2020-1842)

— Jul 17: Oregon Corporate Activity Tax payment deadline July 31, 2020 (Tax Alert 2020-1834)

— Jul 17: Colorado incrementally increases the SUI taxable wage base, provides SUI solvency assessment relief for two years and adopts other measures to combat COVID-19 impact (Tax Alert 2020-1831)

— Jul 17: Rhode Island won't charge employer accounts for COVID-19 UI benefits through August 2, 2020 (Tax Alert 2020-1830)

— Jul 17: Ohio won't charge employers for COVID-19 UI benefits paid under its workshare program (Tax Alert 2020-1829)

— Jul 17: Kentucky issues guidance concerning income tax withholding and nexus for employees temporarily working in Kentucky due to COVID-19 (Tax Alert 2020-1826)

Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

Iowa decouples from GILTI and IRC §163(j), retroactively conforms to PPP loan forgiveness, adopts partnership audit and adjustment rules. On June 29, 2020, Iowa Governor Kim Reynolds signed HF 2641, containing Iowa tax law changes, including decoupling Iowa's income tax law from the global intangible low-taxed income (GILTI) and IRC Section 163(j) business interest expense limitation (BIE) provisions under federal tax law, conforming to certain provisions of the CARES Act, adopting Iowa partnership audit and reporting of federal adjustment reporting rules, and other administrative changes.

Significant Oregon Corporate Activity Tax legislative and rule changes. On June 30, 2020 Oregon Governor Kate Brown (D) signed HB 4202, which makes significant technical corrections to the Oregon Corporate Activity Tax (CAT).

— Income/Franchise, Sales & Use, Business Incentives, Property Tax, Controversy, Payroll & Employment Tax, Miscellaneous Tax, Value Added Tax, Upcoming Webcasts

IRS Weekly Wrap-Up

Final Regulations

 TD 9902Guidance Under Sections 951A and 954 Regarding Income Subject to a High Rate of Foreign Tax

Proposed Regulations

 REG-112339-19Credit for Carbon Oxide Sequestration; Hearing
 REG-127732-19Guidance Under Section 954(b)(4) Regarding Income Subject to a High Rate of Foreign Tax

Revenue Procedures

 2020-36Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability

Internal Revenue Bulletin

 2020-30Internal Revenue Bulletin of July 20, 2020
 2020-31Internal Revenue Bulletin of July 27, 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.