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September 27, 2020

U.S. Tax This Week for September 25

Ernst & Young's U.S. Tax This Week newsletter for the week ending September 25 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

CBO's long-term budget outlook indicates pandemic has worsened federal government's long-term fiscal imbalance

On September 21, 2020, the Congressional Budget Office (CBO) released its long-term budget outlook. The CBO reports that, due largely to the COVID-19 pandemic, the federal government's long-term fiscal imbalance has significantly worsened. EY Tax Alert 2020-2304 has details.

EY's state guide to COVID-19 payroll and employment tax provisions is updated through September 18, 2020 To contain the outbreak of COVID-19 in the US, numerous state and local governments temporarily closed nonessential businesses and issued "stay-at-home" orders, creating a historic disruption to the US workforce. Most states and localities have responded to the emergency by expanding their paid leave mandates; waiving certain reporting requirements; expanding unemployment insurance benefits; providing extensions for the due date of payroll tax returns, tax payments or both; and/or temporarily halting certain garnishment orders. EY Tax Alert 2020-2314 has details.

Upcoming Webcasts

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.

State & local tax developments in the real estate industry (October 20)
During this Thought Center Webcast, Ernst & Young professionals will discuss: (i) State responses to the COVID-19 pandemic; (ii) State income tax conformity to the CARES Act; (iii) Remote workforce issues, including wage withholding, business tax and individual income tax; and (iv) Recent SALT legislation and proposals, including California’s “split roll” property tax initiative, New York’s proposed recordation tax on mezzanine debt and preferred equity, realty transfer tax increases and more.

Latin America ‘nearshoring’ webcast series: Panama session (October 21)
As companies evaluate their global supply chains in light of recent disruptions, there is heightened interest in the concept of “nearshoring,” i.e., the transferring of a business operation to a nearby country from a more distant one. During this Thought Center Webcast, Ernst & Young is sponsoring a series of webcasts featuring our local country professionals. We will kick off the series with a session on Panama.

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.

Recent Tax Alerts

Internal Revenue Service

— Sep 24: Taxpayers affected by Hurricane Sally now have until January 15, 2021 to file returns and remit tax, IRS announces (Tax Alert 2020-2313)

— Sep 23: CBO's long-term budget outlook indicates pandemic has worsened federal government's long-term fiscal imbalance (Tax Alert 2020-2304)

— Sep 23: IRS finalizes rules on estate and non-grantor trust deductions not considered miscellaneous itemized deductions for which TCJA suspended deductibility (Tax Alert 2020-2303)

— Sep 23: IRS LB&I Division identifies campaign on the allocation of success-based fees without Revenue Procedure 2011-29 (Tax Alert 2020-2298)

— Sep 22: IRS announces no reporting forgiven PPP loans on Forms 1099-C (Tax Alert 2020-2293)

— Sep 22: IRS delays certain IRC Section 987 foreign currency regulations for additional year (Tax Alert 2020-2291)

— Sep 21: IRS issues final regulations clarifying estate and non-grantor trust deductions that aren't considered miscellaneous deductions (Tax Alert 2020-2285)

— Sep 18: QUEST Economic Update highlights key US and global economic trends — September 18, 2020 (Tax Alert 2020-2277)

— Sep 18: IRS issues final regulations on rehabilitation credits without change (Tax Alert 2020-2274)

— Sep 18: IRS issues final regulations for determining IRC Section 4968 excise tax on net investment income of private colleges and universities (Tax Alert 2020-2271)

— Sep 18: IRS LB&I launches four new compliance campaigns (Tax Alert 2020-2269)


— Sep 24: UK Government announces new COVID-19 support measures (Tax Alert 2020-2312)

— Sep 24: Kenya's Tax Appeals Tribunal issues landmark ruling on chargeability of Excise Duty on various income streams (Tax Alert 2020-2311)

— Sep 24: British Columbia announces tax incentives as part of its economic recovery plan (Tax Alert 2020-2309)

— Sep 23: Panama enacts law creating 'EMMA' special regime for manufacturing services (Tax Alert 2020-2305)

— Sep 23: Italian Government enacts legislation implementing 2018 EU directive on Posted Workers (Tax Alert 2020-2302)

— Sep 24: EY 39th International Tax Conference | Private Capital and Private Equity sector sessions on September 30 (Tax Alert 2020-2301)

— Sep 23: Denmark announces plan to exempt nonresident charitable organizations from dividend withholding tax (Tax Alert 2020-2300)

— Sep 23: Australia extends JobKeeper program to March 2021 (Tax Alert 2020-2299)

— Sep 22: Oman amends Income Tax Law (Tax Alert 2020-2290)

— Sep 22: Czech Republic publishes final bill amending Act on International Cooperation in Tax Administration to implement Mandatory Disclosure Rules (Tax Alert 2020-2289)

— Sep 21: Argentina establishes new reverse withholding regime applicable to certain purchases of foreign currency, and goods and services from abroad (Tax Alert 2020-2286)

— Sep 18: Turkey extends dividend distribution limitations until 31 December 2020 (Tax Alert 2020-2275)

— Sep 18: Argentina issues regulations on new tax settlement plan (Tax Alert 2020-2273)

— Sep 18: Mexico's President submits 2021 economic proposal to Congress (Tax Alert 2020-2272)


— Sep 25: What to expect in Washington (September 24) (Tax Alert 2020-2321)

— Sep 23: House passes continuing resolution to fund government through Dec. 11, 359-57 (Tax Alert 2020-2297)

— Sep 21: Congress returns with election on the horizon (Tax Alert 2020-2284)


— Sep 24: EY's state guide to COVID-19 payroll and employment tax provisions is updated through September 18, 2020 (Tax Alert 2020-2314)

— Sep 24: Latest EY Payroll Perspectives: Continued coverage of COVID-19 federal and state COVID-19 developments (Tax Alert 2020-2310)

— Sep 22: San Francisco gross-receipts tax updates (Tax Alert 2020-2292)

— Sep 22: Most states are paying the added weekly unemployment benefit as part of COVID-19 relief through the Lost Wages Assistance program (Tax Alert 2020-2281)

Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

Various tax measures to be voted on during the upcoming November 3, 2020 election. On Nov. 3, 2020, voters across the United States will cast votes for federal, state and local officials; and, in some states, they will also be asked to vote on tax-related ballot measures that if approved, could make significant changes to state and local tax policy throughout the country.

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

IRS Weekly Wrap-Up

Final Regulations

 TD 9908Ownership Attribution Under Section 958 Including for Purposes of Determining Status as Controlled Foreign Corporation or United States Shareholder
 TD 9909Limitation on Deduction for Dividends Received From Certain Foreign Corporations and Amounts Eligible for Section 954 Look-Through Exception

Proposed Regulations

 REG-110059-20Ownership Attribution Under Section 958 for Purposes of Sections 367(a) and 954(c)(6)


 2020-74Extension of Replacement Period for Livestock Sold on Account of Drought

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.