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October 25, 2020

U.S. Tax This Week for October 23

Ernst & Young's U.S. Tax This Week newsletter for the week ending October 23 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

Pandemic causes record federal deficit for FY 2020 of $3.1 trillion

According to the Treasury, the FY 2020 deficit was $3.1 trillion, up by over 200% compared to its level of about $1 trillion in FY 2019. The FY 2020 deficit was 15.2% of GDP, the largest by far since 1945. EY Tax Alert 2020-2514 has details.

Senate test vote shows support for extending Paycheck Protection Program, though legislation does not advance

On October 20, the Senate held a test vote on legislation prepared by the Republican leadership that would have reopened the CARES Act's Paycheck Protection Program (PPP), which closed for new loan applications on August 9, extending it through the end of the year and increasing its lending authority from $659 billion to $779.6 billion. Republicans and some Democrats defeated a motion to kill the legislation, 40-57, but the maneuver did not advance the PPP bill. Among several other provisions, the amendment would have appropriated $257.6 billion in new funds for the Small Business Administration to guarantee first- and second-round PPP loans. EY Tax Alert 2020-2535 has details.

EY Guides, Surveys, and Reports

Eye on the Election (October 19)
EY’s Washington Council Ernst & Young LLP looks at the themes, mechanics, and polls of the 2020 presidential and congressional elections. They also outline significant post-election dates and activities.

Upcoming Webcasts

Tax implications of the election and pandemic for business owners (October 27)
During this Thought Center Webcast, Ernst & Young professionals will shed light on potential tax repercussions of the election, provide an outlook on the markets and discuss implications on personal investment and wealth planning strategies.

EY Tax.Tech™ webcast series: Building an intelligent tax function (October 28)
During this Thought Center Webcast, Ernst & Young professionals will help you understand what it takes to build an intelligent tax function – from tax transformation strategy to the latest tax technologies and game-changing applications.

Taxation of the digitalized economy: What’s next (October 28)
During this Thought Center Webcast, Ernst & Young professionals will provide insight into the latest developments, including the interaction of BEPS 2.0 and country DSTs, the US presidential election, and the likely next steps for the many stakeholders involved in this global debate.

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

— Oct 22: IRS's early draft instructions for Form 1065 revise instructions for partnerships required to report capital accounts to partners (Tax Alert 2020-2528)

— Oct 21: Tax M&A Update for September 2020 (Tax Alert 2020-2519)

— Oct 20: Pandemic causes record federal deficit for FY 2020 of $3.1 trillion (Tax Alert 2020-2514)

— Oct 20: IRS rules solar energy facility is not public property because rates are fixed (Tax Alert 2020-2512)

— Oct 16: IRS confirms that some modifications to debt instruments and other contracts to reflect LIBOR discontinuation will not result in a deemed taxable exchange (Tax Alert 2020-2498)

— Oct 16: Final consolidated net operating loss regulations provide welcome guidance on post-2020 insurance, farming, and SRLY determinations and limitations (Tax Alert 2020-2491)


— Oct 22: Russian Supreme Court addresses withholding tax on lease payments and classification for tax treaty purposes (Tax Alert 2020-2534)

— Oct 22: Indian Court rules on interaction between tax treaty provisions and Indian dividend distribution tax (Tax Alert 2020-2533)

— Oct 22: Egypt introduces unified tax procedures law (Tax Alert 2020-2532)

— Oct 22: Ireland issues Budget 2021 (Tax Alert 2020-2531)

— Oct 22: Japan | Post COVID-19 tax audit trends (Tax Alert 2020-2527)

— Oct 21: Argentina implements mandatory disclosure rules (Tax Alert 2020-2526)

— Oct 21: Uruguayan tax authority extends estimated tax payment deadlines due to COVID-19 (Tax Alert 2020-2523)

— Oct 21: Spanish Supreme Court confirms case law on limits to dynamic interpretation of tax treaties (Tax Alert 2020-2522)

— Oct 21: Luxembourg Draft Budget Law 2021: Tax measures affecting individuals (Tax Alert 2020-2521)

— Oct 21: Italy's Tax Authority rules reinsurance fees for Claims Handling Services are subject to VAT (Tax Alert 2020-2520)

— Oct 20: EU responds to WTO authorization to impose countermeasures on US products (Tax Alert 2020-2516)

— Oct 20: The latest on BEPS and Beyond for October 2020 (Tax Alert 2020-2513)

— Oct 20: Uruguay's tax authorities expand corporate income tax benefits for software providers (Tax Alert 2020-2511)

— Oct 20: OECD releases BEPS 2.0 Pillar Two Blueprint and invites public comments (Tax Alert 2020-2508)

— Oct 19: OECD releases BEPS 2.0 Pillar One Blueprint and invites public comments (Tax Alert 2020-2506)

— Oct 19: Calendar year 2019 FBARs extended to October 31st (Tax Alert 2020-2505)

— Oct 16: Luxembourg Draft Budget Law 2021 – A look at the tax measures affecting companies (Tax Alert 2020-2501)

— Oct 16: USTR issues Statement asserting lack of legal basis in response to WTO Authorization of EU Countermeasures on US goods under Aircraft Dispute (Tax Alert 2020-2500)

— Oct 16: Additional final regulations provide foreign tax credit guidance (Tax Alert 2020-2497)

— Oct 16: Spanish Parliament approves Law on Financial Transaction Tax (Tax Alert 2020-2496)

— Oct 16: Spanish DST is enacted, effective 2021 (Tax Alert 2020-2495)

— Oct 16: Israel's Tax Authority releases draft bill to significantly amend transfer pricing rules and regulations (Tax Alert 2020-2494)

— Oct 16: South Africa issues new regulations to implement the Common Reporting Standard (Tax Alert 2020-2493)

— Oct 16: Oman introduces VAT law (Tax Alert 2020-2492)


— Oct 23: What to expect in Washington (October23) (Tax Alert 2020-2542)

— Oct 22: Senate test vote shows support for extending Paycheck Protection Program, though legislation does not advance (Tax Alert 2020-2535)


— Oct 22: Dallas, Texas sick leave ordinance effective date delayed until further notice; Austin and San Antonio sick leave laws also on hold (Tax Alert 2020-2530)

— Oct 21: New York 2021 Employer Compensation Expense tax rate increases to 5%; employer voluntary election must be made by December 1, 2020 (Tax Alert 2020-2525)

IRS Weekly Wrap-Up

Final Regulations

 TD 9918Effect of Section 67(g) on Trusts and Estates
 TD 9914Eligible Terminated S Corporations

Revenue Procedures

 2020-46This revenue procedure modifies and updates Rev. Proc. 2016-47, 2016-37 I.R.B. 346. Section 3.02(2) of Rev. Proc. 2016-47 provides a list of permissible reasons for selfcertification of eligibility for a waiver of the 60-day rollover requirement.

Revenue Rulings

 2020-24Section 3405.—Special Rules for Pensions, Annuities, and Certain Other Deferred Income


 2020-40Announcement Regarding the Effective Date of Termination of the United States-Hong Kong Shipping Agreement

Internal Revenue Bulletin

 2020-43Internal Revenue Bulletin of October 19, 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.