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September 20, 2020
2020-2265

U.S. Tax This Week for September 18

Ernst & Young's U.S. Tax This Week newsletter for the week ending September 18 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.

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Top of the Week

Final BEAT regulations adopt proposed BEAT guidance with some changes

On September 2, 2020, the Treasury Department and IRS released final regulations (T.D. 9910) on the base erosion anti-abuse tax (BEAT) under IRC Section 59A (2020 final BEAT regulations). The regulations finalize proposed BEAT regulations that were issued on December 2, 2019 (2019 proposed BEAT regulations), and revise certain final BEAT regulations issued on the same date (2019 final BEAT regulations). More specifically, the 2020 final BEAT regulations generally adopt the aggregate group rules, the election to waive deductions and the partnership rules of the 2019 proposed BEAT regulations. The 2020 final BEAT regulations also provide generally taxpayer-favorable refinements to the nonrecognition transaction anti-abuse rule introduced by the 2019 final BEAT regulations. This Tax Alert discusses the 2020 final BEAT regulations in light of these changes. EY Tax Alert 2020-2232 has details.

US replaces 10% punitive tariff on Canadian-origin aluminum with quota limits; Canada suspends contemplated countermeasures

The United States (US) Trade Representative (USTR) announced on September 15, that the US would remove previously imposed punitive tariffs on non-alloyed, unwrought aluminum articles of Canadian origin. The 10% ad valorem tariff, levied under Section 232 of the Trade Expansion Act of 1962 (Section 232), went into effect on August 16. The duty-free treatment of the goods is retroactive to September 1. EY Tax Alert 2020-2251 has details.

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Upcoming Webcasts

Special purpose acquisition companies (SPACs): A popular alternative path to the public markets (September 23)
During this Thought Center Webcast, Ernst & Young professionals will review the latest trends driving this rise in SPAC transactions. We’ll also cover the basics of executing a SPAC, with key perspectives from our experienced financial accounting, tax and capital markets professionals.

BorderCrossings... With EY transfer pricing and tax professionals (September 24)
During this Thought Center Webcast, Ernst & Young professionals will discuss the FDII deduction and associated issues to consider, with a focus on operating model and transfer pricing interactions.

Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (September 25)
During this Thought Center Webcast, Ernst & Young professionals will provide updates on: (i) the US legislative and economic landscape; (ii) breaking developments – federal and state; and (iii) what’s happening at the IRS.

Accounting for income taxes: A quarterly perspective (September 29)
During this Thought Center Webcast, a panel of experienced Ernst & Young LLP professionals, moderated by Angela Evans, EY Americas Co-Director of Tax Accounting and Risk Advisory Services (TARAS), will discuss ongoing issues and regulatory trends in the tax accounting arena. Topics will include recent tax legislation with tax accounting implications and a review of current income tax accounting concepts.

Tax Tech Power Platform webcast series: Ensuring productivity through workflow and task management (September 29)
During this Thought Center Webcast, Ernst & Young professionals will leverage the outputs from session 1 and show how the Power Platform can initiate user workflow for the generation of quarterly estimated state payments that utilize the state apportionment data from session 1.

Tax Tech Power Platform webcast series: Conducting comprehensive reporting and data analytics to streamline the workflow review process (October 14)
During this Thought Center Webcast, Ernst & Young professionals will show how Power BI can be utilized to streamline the workflow reviews and signoffs of tasks from session 2 by providing analytics that highlight year over year apportionment factors, payments and workflow analytics.

Tax Tech Power Platform webcast series: Process optimization through forms/document automation and tax system integration (October 28)
During this Thought Center Webcast, Ernst & Young professionals will demonstrate how you can use the Power Platform to populate state estimated tax payment forms as well as integrate data back into tax systems for e-filings.

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Recent Tax Alerts

Internal Revenue Service

— Sep 17: IRS again delays applicability date for certain IRC Section 987 foreign currency regulations (Tax Alert 2020-2257)

— Sep 16: LB&I directive updates guidance on reviewing research-credit claims (Tax Alert 2020-2245)

— Sep 15: IRS issues final regulations on allocating IRC Section 47 rehabilitation credit over five years (Tax Alert 2020-2244)

— Sep 15: Tax M&A Update for August 2020 (Tax Alert 2020-2237)

— Sep 15: IRS issues final regulations on eligible terminated S corporations (Tax Alert 2020-2236)

— Sep 14: Final BEAT regulations adopt proposed BEAT guidance with some changes (Tax Alert 2020-2232)

— Sep 11: REIT's income from providing use of telecommunication infrastructure systems to wireless carriers constitutes rents from real property (Tax Alert 2020-2219)

— Sep 11: IRS expands list of forms that may be filed with e-signatures (Tax Alert 2020-2206)

International

— Sep 17: Poland publishes draft bill amending corporate income tax rules (Tax Alert 2020-2262)

— Sep 17: UK issues response on consultation on duty-free and tax-free goods carried by passengers (Tax Alert 2020-2260)

— Sep 17: Turkey increases special consumption tax rates on passenger cars (Tax Alert 2020-2259)

— Sep 17: Poland implements new VAT reporting requirements (Tax Alert 2020-2258)

— Sep 16: Malaysia updates service tax guide on digital services (Tax Alert 2020-2253)

— Sep 16: Ghana revises Communication Service Tax rate (Tax Alert 2020-2252)

— Sep 16: US replaces 10% punitive tariff on Canadian-origin aluminum with quota limits; Canada suspends contemplated countermeasures (Tax Alert 2020-2251)

— Sep 16: European Court of Justice rules value of free of charge supplied software should be added to customs value (Tax Alert 2020-2250)

— Sep 16: Singapore's Foreign Manpower Policy updates provided (Tax Alert 2020-2247)

— Sep 15: Turkey issues guidance on transfer pricing documentation requirements (Tax Alert 2020-2243)

— Sep 15: Sweden prepares to tax foreign employees with a Swedish economic employer (Tax Alert 2020-2241)

— Sep 15: The Netherlands publishes 2021 budget proposals (Tax Alert 2020-2240)

— Sep 15: The latest on BEPS and Beyond for September 2020 (Tax Alert 2020-2239)

— Sep 14: No mandatory quarantine requirement for experts visiting Vietnam for less than 14 days (Tax Alert 2020-2231)

— Sep 14: UK secures first free trade agreement with Japan post Brexit (Tax Alert 2020-2228)

— Sep 11: Mauritian Finance Minister issues new regulations on social contributions (Tax Alert 2020-2221)

Legislation

— Sep 18: What to expect in Washington (September 18) (Tax Alert 2020-2270)

— Sep 11: Ways & Means subpanel holds hearing on COVID tax policy inaction (Tax Alert 2020-2222)

States

— Sep 17: President and director of Kentucky nonstock, nonprofit entity wasn't a shareholder and may not claim pass-through losses, Tax Court holds (Tax Alert 2020-2261)

— Sep 16: 2020-2021 federal per diem rates under the high-low substantiation method now available (Tax Alert 2020-2249)

— Sep 15: California Franchise Tax Board issues nexus guidance for employees teleworking in the state under the governor's COVID-19 "stay at home" order (Tax Alert 2020-2242)

— Sep 15: Michigan pending legislation would hold the SUI taxable wage base at $9,000 for calendar year 2021 (Tax Alert 2020-2238)

— Sep 14: Tennessee Department of Revenue issues guidance on the carryforward of business interest expense deduction limited by IRC Section 163(j) (Tax Alert 2020-2233)

— Sep 14: Washington proclamation order establishes COVID-19 paid sick leave requirement for food production workers (Tax Alert 2020-2230)

— Sep 14: Alabama employers must provide notice of availability of UI benefits to separated employees; other regulatory changes due to COVID-19 (Tax Alert 2020-2229)

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Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

— Tennessee Department of Revenue issues guidance on the carryforward of business interest expense deduction limited by IRC §163(j). In its Franchise and Excise Tax Notice #20-16, Interest Expense Carryforward (Aug. 2020) (Notice #20-16), the Tennessee Department of Revenue (Department) provides guidance on the carryforward and utilization of business interest expense (BIE) disallowed for Tennessee excise tax purposes as a result of the state's unique conformity rules with respect to the IRC § 163(j) limitation on BIE deductions for the 2018 and 2019 tax years.

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

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IRS Weekly Wrap-Up

Final Regulations

 TD 9905Limitation on Deduction for Business Interest Expense
 TD 9915Rehabilitation Credit Allocated Over a 5-Year Period

Proposed Regulations

 REG-107911-18Limitation on Deduction for Business Interest Expense; Allocation of Interest Expense by Passthrough Entities; Dividends Paid by Regulated Investment Companies; Application of Limitation on Deduction for Business Interest Expense to United States Shareholders of Controlled Foreign Corporations and to Foreign Persons With Effectively Connected Income
 REG-109755-19Certain Medical Care Arrangements; Hearing

Corrections

 REG-132766-18Small Business Taxpayer Exceptions Under Sections 263A, 448, 460 and 471; Correction

Notices

 2020-712020-2021 Special Per Diem Rates
 2020-72Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates
 2020-73Deferred Applicability Dates for Foreign Currency Guidance

Internal Revenue Bulletin

 2020-39Internal Revenue Bulletin of September 21, 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.

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

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