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November 8, 2020

U.S. Tax This Week for November 6

Ernst & Young's U.S. Tax This Week newsletter for the week ending November 6 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

Various state and local tax-related ballot measures approved or rejected on November 3rd

On Tuesday, November 3, voters across the US considered various state and local ballot measures on state and local taxes. Both California's Proposition 15 (which would have amended the state's constitution to allow the regular reassessment of commercial and industrial property) and a proposed Illinois constitutional amendment (which would have allowed a graduated income tax) appear to have failed.Voters in San Francisco, however, passed four tax-related ballot measures, including measures to reform the city's business tax and to implement a CEO-pay-ratio tax. Voters across the country also approved tax-rate changes (both increases and decreases), new marijuana taxes and various property-tax measures. Only a handful of the tax-related ballot measures were rejected. EY Tax Alert 2020-2635 has details.

OECD releases economic impact analysis of BEPS 2.0 project proposals

On October 12, the Organisation for Economic Co-operation and Development (OECD) Secretariat released an economic impact assessment report (the Report) on the international tax changes being developed in the ongoing project on addressing the tax challenges arising from the digitalization of the economy (the BEPS 2.0 project). The report was produced by the OECD Secretariat and it does not represent the consensus views of the members of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS). EY Tax Alert 2020-2611 has details.

EY Guides, Surveys, and Reports

Eye on the Election (November 6)
EY’s Washington Council Ernst & Young LLP looks at the status of the 2020 presidential and congressional elections as of November 6.

Upcoming Webcasts

How the US general election impacts the global corporate tax outlook (November 12)
During this Webcast, One of the top-of-mind issues shaping conversations between global business leaders is what to expect after the US Presidential election on 3 November. While the results seem unpredictable, and may not be known immediately, we do know there will be significant implications for tax. In this webcast, panelists discuss practical information and critical insights to help navigate through an already complex tax policy landscape.

Recent Tax Alerts

Internal Revenue Service

— Nov 05: IRS issues final regulations on life expectancy and distribution period tables for calculating required minimum distributions from qualified plans (Tax Alert 2020-2632)

— Nov 05: IRS TE/GE publishes FY 2021 program letter, listing priorities for the year (Tax Alert 2020-2631)

— Nov 04: IRS addresses REIT's leasing structure of health care properties to comply with state licensing requirements (Tax Alert 2020-2622)

— Nov 02: IRS releases instructions for Forms W-2 and W-2c reporting of employee deferral and repayment of Social Security taxes under IRS Notice 2020-65 (Tax Alert 2020-2609)

— Nov 02: IRS releases proposed regulations on implementing average income test for low-income housing tax credits (Tax Alert 2020-2608)


— Nov 05: Kenya's Tax Appeals Tribunal rules VAT is applicable on sale of commercial property, loan-related fees are not subject to excise duty (Tax Alert 2020-2634)

— Nov 05: EY Canada's Tax Matters @ EY for November 2020 (Tax Alert 2020-2628)

— Nov 03: Cyprus | Anticipated tax measures to be implemented including adoption of withholding taxes on payments made to EU non-cooperative jurisdictions (Tax Alert 2020-2617)

— Nov 03: Japan and UK sign Comprehensive Economic Partnership Agreement (Tax Alert 2020-2616)

— Nov 03: India releases implementation rules for Equalization Levy on e-commerce supply and services (Tax Alert 2020-2613)

— Nov 02: Poland and the Netherlands sign protocol to revise tax treaty (Tax Alert 2020-2612)

— Nov 02: OECD releases economic impact analysis of BEPS 2.0 project proposals (Tax Alert 2020-2611)

— Nov 02: Chile's IRS establishes new transfer pricing documentation requirements (Tax Alert 2020-2610)

— Nov 02: Canada Revenue Agency provides updates on CEWS and employee benefits (Tax Alert 2020-2606)

— Oct 30: OECD releases new methodology for peer reviews of BEPS Action 13 on Country-by-Country Reporting (Tax Alert 2020-2598)

— Oct 30: Initial reporting due date for Mexico MDR obligations is fast approaching (Tax Alert 2020-2594)

— Oct 30: French court rules taxes levied on capital gains on sale of French shares by non-EU companies is contrary to free movement of capital (Tax Alert 2020-2593)

— Oct 28: BREXIT | Status of UK citizens in Germany from January 1, 2021 discussed (Tax Alert 2020-2569)


— Nov 05: Various state and local tax-related ballot measures approved or rejected on November 3rd (Tax Alert 2020-2635)

— Nov 05: North Carolina issues guidance on the filing of Form W-2 and Form 1099 for tax year 2020; new Form 1099-NEC will be accepted (Tax Alert 2020-2630)

— Nov 04: Wisconsin issues guidance on income tax and nexus for employees working in the state temporarily due to COVID-19 (Tax Alert 2020-2624)

— Nov 03: San Francisco extends ordinance that requires employers of 100 or more to rehire employees laid off due to COVID-19 before hiring other applicants (Tax Alert 2020-2615)

— Nov 03: Read EY's state guide to payroll and employment tax provisions in response to COVID-19 (Tax Alert 2020-2604)

— Oct 30: Colorado voters to decide whether state's flat income tax rate should be retroactively reduced and if there should be paid family and medical leave insurance program (Tax Alert 2020-2597)

— Oct 30: Arizona voters to decide if an income tax increase should apply to high-income individuals (Tax Alert 2020-2595)

Recent Newsletters

ITS/Washington Dispatch
   Highlights of this edition include:

Top story

  • OECD releases Pillar 1 and Pillar 2 blueprints, invites public comments

IRS news

  • Final regulations under Section 1446(f) set forth rules on withholding on transfers of partnership interests
  • IRS concludes anti-abuse rule under Section 704(c) triggered in asset contribution to foreign partnership
  • IRS confirms some modifications to debt instruments, other contracts to reflect LIBOR discontinuation will not result in a deemed taxable exchange

Transfer pricing news

  • IRS ‘practice unit’ sets forth examination guidance on inclusion of stock based compensation in cost sharing arrangements
  • IRS announces plans to limit use of ‘telescoping’ in APA and MAP cases
  • IRS will consider amending existing APAs to reflect COVID-19 economic conditions

OECD Developments

  • OECD issues third batch of Stage review reports on dispute resolution
  • OECD to release COVID-19-related transfer pricing guidance

IRS Weekly Wrap-Up

Final Regulations

 TD 9901Deduction for Foreign-Derived Intangible Income and Global Intangible Low-Taxed Income; Correction
 TD 9919Gain or Loss of Foreign Persons From Sale or Exchange of Certain Partnership Interests

Proposed Regulations

 REG-122462-20Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency

Revenue Procedures

 2020-4926 CFR 601.601: Rules and Regulations. (Also: §§ 147, 1.147(f)-1)
 2020-4826 CFR 601.201: Rulings and determination letters. (Also: Part I, Sections 832, 846; 1.832-4, 1.846-1.)
 2020-46Rev. Proc. 2020-46


 2020-80Request for Comments Regarding Protection of Annuity and Spousal Rights Under Section 205 of ERISA with Respect to a Terminating § 403(b) Plan Funded Through the Use of Custodial Accounts

Internal Revenue Bulletin

 2020-46Internal Revenue Bulletin of November 9, 2020
 2020-45Internal Revenue Bulletin of November 2, 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.