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August 2, 2020

U.S. Tax This Week for July 31

Ernst & Young's U.S. Tax This Week newsletter for the week ending July 31 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

Senate Republicans unveil coronavirus proposal

Senate Republicans July 27 released a series of bills comprising their Health, Economic Assistance, Liability Protection and Schools ("HEALS") Act proposal for the next coronavirus bill, including health, tax, and liability protection components. The proposal is intended to be a counteroffer to the $3 trillion House-passed HEROES Act and will allow bipartisan negotiations to begin in earnest, with lawmakers facing a July 31 expiration of expanded unemployment benefits. EY Tax Alert 2020-1914 has details.

"Tested unit" standard in final GILTI regulations limits aggregating items of income, while proposed regulations would adopt the same standard for subpart F income high-tax exception

Final regulations under Internal Revenue Code (IRC) Section 951A(TD 9902), which were published in the Federal Register on July 23, 2020, implement an elective exclusion for high-tax global intangible low-taxed income (GILTI). Proposed regulations under IRC Section 954 (REG-127732-19), which were published simultaneously with the final regulations, propose changes to the existing subpart F income high-tax exception under IRC Section 954(b)(4). EY Tax Alert 2020-1912 has details.

Upcoming Webcasts

Final and proposed Treasury regulations on the GILTI high-tax exclusion and subpart F income high-tax exception (August 3)
During this Thought Center Webcast, Ernst & Young LLP thought leaders will discuss relevant aspects of the regulations.

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 30: New IRS proposed regulations provide simplified tax accounting rules for small businesses (Tax Alert 2020-1941)

— Jul 30: IRS extends certain rehabilitation credit deadlines under IRC Section 47, due to COVID-19 (Tax Alert 2020-1931)

— Jul 27: "Tested unit" standard in final GILTI regulations limits aggregating items of income, while proposed regulations would adopt the same standard for subpart F income high-tax exception (Tax Alert 2020-1912)

— Jul 27: IRS to recover overpayment of COVID-19 employer tax credits as underpayment of employment tax (Tax Alert 2020-1907)

— Jul 24: IRS issues temporary and proposed regulations on recapture of excess employment tax credits (Tax Alert 2020-1902)


— Jul 30: Brazil's proposed VAT on royalties and digital platforms/marketplace could affect technology, media & entertainment, and telecom sectors (Tax Alert 2020-1943)

— Jul 30: Uruguayan tax authority adjusts certain formalities relating to documentation of activities of taxpayers who are totally or partially exempt from taxes (Tax Alert 2020-1942)

— Jul 30: Panamanian Ministry of Commerce and Industries proposes creating special regime for manufacturing services (Tax Alert 2020-1937)

— Jul 30: Ecuador requires certain taxpayers to pay estimated income taxes for fiscal-year 2020 (Tax Alert 2020-1935)

— Jul 30: Luxembourg enacts deferral of MDR reporting deadlines for six months (Tax Alert 2020-1933)

— Jul 30: Brazil's first phase of tax reform would increase the federal VAT tax rates for the insurance sector (Tax Alert 2020-1932)

— Jul 29: Hong Kong enacts new legislation providing tax incentives for insurance-related businesses (Tax Alert 2020-1929)

— Jul 29: Ghana extends relief measures in response to COVID-19 (Tax Alert 2020-1924)

— Jul 29: Philippines requires transfer pricing information return (Tax Alert 2020-1922)

— Jul 29: OECD issues report to G20 Finance Ministers and Central Bank Governors and hosts webcast to provide update on tax work (Tax Alert 2020-1921)

— Jul 28: Kenya gazettes Double Taxation Avoidance Agreement with Mauritius (Tax Alert 2020-1920)

— Jul 28: Saudi Arabian Tax Authority clarifies rules on capital gains (Tax Alert 2020-1919)

— Jul 28: Oman's Majlis Al Shura approves VAT law (Tax Alert 2020-1918)

— Jul 28: Suriname announces new and amended tax measures to mitigate impact of COVID-19 (Tax Alert 2020-1917)

— Jul 27: New Swedish legislation requires equal treatment and protection of posted workers in Sweden (Tax Alert 2020-1911)

— Jul 27: Saudi Arabian Tax Authority implements electronic filing of contract information (Tax Alert 2020-1910)

— Jul 27: Italy's Constitutional Court confirms amendments limiting the power of tax authorities to recast Registration Tax treatment of corporate transactions (Tax Alert 2020-1909)

— Jul 27: Ecuador modifies transfer pricing rules (Tax Alert 2020-1906)

— Jul 24: Portugal publishes final legislation to implement Mandatory Disclosure Rules (Tax Alert 2020-1900)

— Jul 24: High Court of Kenya suspends VAT on insurance agency and insurance brokerage services (Tax Alert 2020-1899)


— Jul 31: What to Expect in Washington (July 31) (Tax Alert 2020-1949)

— Jul 30: Senate-proposed HEALS Act contains income tax relief for teleworkers and short-term business travelers (Tax Alert 2020-1938)

— Jul 28: Senate Republicans unveil coronavirus proposal (Tax Alert 2020-1914)

— Jul 27: President issues series of Executive Orders aimed at lowering drug prices (Tax Alert 2020-1905)


— Jul 30: Puerto Rico's sales tax holiday for school uniforms and supplies will run from July 29 through August 1 (Tax Alert 2020-1940)

— Jul 30: Oregon won't assert nexus for corporate excise and income tax for teleworkers in the state temporarily due to COIVD-19 (Tax Alert 2020-1939)

— Jul 30: West Virginia are not charging employer UI accounts with COVID-19 UI benefits (Tax Alert 2020-1936)

— Jul 29: California FTB holds fifth interested parties meeting to discuss next round of proposed amendments to its market-based sourcing rules (Tax Alert 2020-1926)

— Jul 29: Tennessee won't charge employer accounts for COVID-19 UI benefits through July 31, 2020 (Tax Alert 2020-1925)

— Jul 28: Pennsylvania hazard pay grants are taxable to employees but deductible to businesses (Tax Alert 2020-1916)

— Jul 24: Maryland will not charge COVID-19 UI benefits to employer accounts (Tax Alert 2020-1898)

Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

California "split roll" property tax measure qualifies for November 2020 ballot. California Proposition 15 (formerly Ballot Measure 19-0008A1) has qualified to appear on the statewide general election ballot on Nov. 3, 2020.

— Income/Franchise, Sales & Use, Business Incentives, Property Tax, Compliance & Reporting, Controversy, Payroll & Employment Tax, Global Trade

IRS Weekly Wrap-Up

Final Regulations

 TD 9904Recapture of Excess Employment Tax Credits Under the Families First Act and the CARES Act

Proposed Regulations

 REG-111879-20Recapture of Excess Employment Tax Credits Under the Families First Act and the CARES Act
 REG-112042-19Excise Taxes; Transportation of Persons by Air; Transportation of Property by Air; Aircraft Management Services

Revenue Rulings

 2020-15Section 1274.—Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property


 2020-58On March 13, 2020, the President of the United States issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act in response to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic
 2020-59This notice contains a proposed revenue procedure providing a safe harbor for a trade or business that manages or operates a qualified residential living facility, as defined in section 3.01 of the proposed revenue procedure, to be treated as a real property trade or business solely for purposes of qualifying as an electing real property trade or business under section 163(j)(7)(B) of the Internal Revenue Code (Code)

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.