Tax News Update    Email this document    Print this document  

August 23, 2020

U.S. Tax This Week for August 21

Ernst & Young's U.S. Tax This Week newsletter for the week ending August 21 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

IRS rules on the application of the normalization rules for a utility company with respect to cost of removal and certain accounting method changes

The IRS ruled in PLR 202033002 that the normalization rules do not apply to a regulated gas and electric company's excess deferred taxes associated with either cost of removal (COR) or with mixed service costs that were capitalized after an IRC Section 481(a) change in tax method of accounting. EY Tax Alert 2020-2083 has details.

FUTA credit reduction outlook for 2020 and beyond

The U.S. Department of Labor (USDOL) recently released an updated federal unemployment tax (FUTA) credit reduction estimate for calendar year 2020. The estimate shows a potential 2020 FUTA credit reduction for Virgin Islands employers, should the territory still have a balance remaining from its 2009 federal unemployment insurance (UI) loan balance on November 10, 2020. The Virgin Islands is the only state/territory that has the potential of a FUTA credit reduction for 2020. EY Tax Alert 2020-2101 has details.

EY Guides, Surveys, and Reports

Post-2020 tax policy possibilities | A Biden presidency and Democratic Senate could bring change to the course of tax policy
The 2020 presidential election season has been anything but typical, with the unprecedented circumstances of the coronavirus pandemic and a focus on racial injustice. Mainstay election issues of the economy and health care are viewed through the lens of crisis: reopening the economy is at odds with curbing the spread of the virus, and that tension has created economic uncertainty that the nation is not likely to completely get beyond for some time. How tax and economic policy will be addressed if Democrats are in control in 2021 is gaining attention. EY's Washington Council Ernst & Young LLP examines these issues in the attached article.

Why calculating your company's carbon footprint matters
Company environmental, social and governance (ESG) policy and reporting has become increasingly important. This EY article, attached below, examines the sources of carbon dioxide (CO2) emissions throughout the US economy and highlights issues companies need to think about when determining their carbon footprint. It uses the EY Carbon Modeling Tool to show how a close examination of both direct and indirect carbon emissions embedded in a company's supply chain can help companies measure and understand their carbon footprint.

Upcoming Webcasts

Global trade: Gaining control over your trade function in a volatile environment (August 24)
During this Thought Center Webcast, Ernst & Young professionals will discuss how technology and appropriate use of services can help you gain more control over trade operations. Learn how market-leading organizations are using this strategy to free up key trade resources so they can focus on what matters most – value creation and strategic priorities.

BorderCrossings . . . With EY transfer pricing and tax professionals (August 27)
During this Thought Center Webcast, Ernst & Young professionals will discuss supply chain resilience from various tax perspectives, including tax policy, indirect and income tax.

Succeeding through disruption with data-driven agility: State and local tax insights from EY & Thomson Reuters (September 1)
During this Thought Center Webcast, Ernst & Young professionals will share how you can enable an end-to-end connected tax approach, leveraging the ONESOURCE suite and intelligent tax automation with Alteryx. We will incorporate real-world insights from companies that are revising their processes and leveraging automation to support remote operations. The webcast will highlight insights and technology focused on state and local tax amidst the Coronavirus Aid, Relief, and Economic Security (CARES) Act and Tax Cuts and Jobs Act (TCJA).

Domestic tax quarterly webcast series | A focus on state tax matters (September 2)
During this Thought Center Webcast, Ernst & Young professionals will focus on state and local tax issues related to the state tax authority responses to the COVID-19 emergency, the ensuing state fiscal impact created by government mandates to close businesses and the possible impact on state taxes of upcoming federal, state and local elections.

The evolving world of site selection | Corporate location in today’s rapidly changing environment (September 9)
During this Thought Center Webcast, Ernst & Young professionals will explore current trends in site selection domestically and abroad, how these trends are expected to change, and issues economic developers should consider..

Recent Tax Alerts


— Aug 17: Real estate developer who donated land to town accurately reported value and properly claimed deduction, Tax Court holds (Tax Alert 2020-2090)

— Aug 14: Appellate Court lifts nationwide injunction on Public Charge Regulations, allowing regulations to again apply to certain immigration filings outside Second Circuit (Tax Alert 2020-2075)

Internal Revenue Service

— Aug 19: Taxable REIT Subsidiary not treated as operating or managing a health care facility (Tax Alert 2020-2104)

— Aug 17: IRS issues proposed regulations on extended rollover period for qualified plan loan offsets (Tax Alert 2020-2091)

— Aug 17: IRS rules on the application of the normalization rules for a utility company with respect to cost of removal and certain accounting method changes (Tax Alert 2020-2083)

— Aug 14: IRS issues guidance on normalization accounting method issues arising due to TCJA corporate rate decrease (Tax Alert 2020-2073)


— Aug 19: Argentine Congress approves bill establishing new tax settlement plan (Tax Alert 2020-2103)

— Aug 19: Australian Taxation Office issues compliance guidelines for outbound interest-free related party loans (Tax Alert 2020-2102)

— Aug 18: Peru simplifies procedure for foreign tourists to claim a VAT refund (Tax Alert 2020-2099)

— Aug 18: Rwanda announces requirements for VAT exemption applications on imported machinery, capital goods and raw materials (Tax Alert 2020-2097)

— Aug 18: Panama's National Assembly approves bill creating 'EMMA' special regime for manufacturing services (Tax Alert 2020-2094)

— Aug 17: Kenya amends recently gazetted DTA with Mauritius (Tax Alert 2020-2088)

— Aug 17: Australia | Detailed analysis on final taxation ruling and guidance on the Australian thin capitalization arm's-length debt test (Tax Alert 2020-2080)

— Aug 14: Ecuadorian Constitutional Court declares unconstitutional executive decree requiring estimated income tax payments for fiscal year 2020 (Tax Alert 2020-2072)

— Aug 14: USTR announces modifications to tariffs on EU goods under Section 301 (Tax Alert 2020-2071)

— Aug 14: India publishes detailed guidance on Mutual Agreement Procedure (Tax Alert 2020-2070)


— Aug 14: DOS issues guidance on qualifying criteria for national interest exceptions to Presidential Proclamations suspending entry of immigrants and non-immigrants (Tax Alert 2020-2074)


— Aug 20: San Francisco Board of Supervisors votes to place measures on November ballot (Tax Alert 2020-2107)

— Aug 20: Nebraska enacts new tax incentives program, fails to address eligibility of IRC Section 965(a) transition tax income and GILTI for state's dividends-received deduction (Tax Alert 2020-2106)

— Aug 20: Georgia emergency rule exempts employers from requirement to file partial UI benefit claims for part-time employees (Tax Alert 2020-2105)

— Aug 19: FUTA credit reduction outlook for 2020 and beyond (Tax Alert 2020-2101)

— Aug 18: Ohio COVID-19 local nonresident income tax legislation faces challenges (Tax Alert 2020-2098)

— Aug 17: Kansas won't charge employer accounts for COVID-19 UI benefits or add the fund-building surcharge to 2021 tax rates; annual statement of benefit charges to be delayed (Tax Alert 2020-2087)

— Aug 17: Delaware won't charge employer accounts for COVID-19 UI benefits (Tax Alert 2020-2084)

— Aug 14: Colorado paid family and medical leave insurance to appear on the November 2020 ballot (Tax Alert 2020-2076)

Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

Colorado home rule, self-collected municipalities begin adopting economic nexus and marketplace facilitator collection laws after launch of online centralized filing portal. In June 2020, the Colorado Department of Revenue (CO DOR) launched the first version of the new Sales and Use Tax Simplification program (SUTS). This online centralized filing portal enables a single point of remittance for (1) all state-collected sales and use taxes and (2) local sales and use taxes of home rule, self-collected municipalities that have agreed to participate in SUTS.

North Carolina announces transfer pricing resolution initiative for corporate taxpayers. The North Carolina Department of Revenue (NC DOR) implemented a voluntary transfer pricing resolution initiative for corporate taxpayers to expeditiously resolve intercompany pricing issues.

— Income/Franchise, Sales & Use, Business Incentives, Property Tax, Controversy, Payroll & Employment Tax, Miscellaneous Tax, Unclaimed Property, Global Trade, Value Added Tax

IRS Weekly Wrap-Up

Final Regulations

 TD 9614Certain Outbound Property Transfers by Domestic Corporations; Certain Stock Distributions by Domestic Corporations; Correcting Amendment

Proposed Regulations

 REG-116475-19Rollover Rules for Qualified Plan Loan Offset Amounts


 2020-64Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

Internal Revenue Bulletin

 2020-35Internal Revenue Bulletin of August 24, 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.