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November 22, 2020

U.S. Tax This Week for November 20

Ernst & Young's U.S. Tax This Week newsletter for the week ending November 20 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

EU publishes list of US products subject to additional duties following WTO authorization

The World Trade Organization (WTO), on 13 October 2020, authorized the European Union (EU) to impose countermeasures on United States (US)-origin products due to illegal US subsidies granted to the US aircraft industry. The WTO determined that the level of countermeasures "commensurate with the degree and nature of the adverse effects determined to exist" amounts to nearly US$4 billion annually. EY Tax Alert 2020-2706 has details.

IRS posts new, taxpayer-favorable FAQs on the interaction between Paycheck Protection Program loans and the employee retention credit

The IRS has posted two new employee retention credit (ERC) FAQs on its website addressing the interaction of the ERC and Paycheck Protection Program (PPP) loans in the context of mergers and acquisitions (M&A). The FAQs provide taxpayer-favorable answers to questions that have been plaguing employers for months, clarifying the conditions under which the ERC would remain available following the acquisition of a target company that previously received a PPP loan. EY Tax Alert 2020-2725 has details.

EY Guides and Publications

How US executives are reshaping their corporate strategy post-election
The US election has added another variable into how executives are rethinking their strategy. Executives are responding to uncertainty from the potential changes in and the regulatory and policy environment after the US election by rethinking their corporate strategies in the US and abroad, according to the Ernst & Young LLP (EY) Election Pulse Survey. Learn more in this recent EY article.

Upcoming Webcasts

US corporate income tax compliance (December 1)
During this Thought Center Webcast, Ernst & Young professionals will discuss navigating the challenges of complying with the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Tax Cuts and Jobs Act and preparing for Tax Year 2020 (TY20) and beyond.

Navigating recent TCJA regulations and US election impacts for life sciences (December 2)
During this Thought Center Webcast, Ernst & Young professionals will discuss the potential impacts of the election and what that could mean for life sciences companies, as well as insights and opportunities based on what we’re seeing across the sector.

2020 employment tax year in review (December 3)
The COVID-19 national emergency has created a historic flurry of federal, state and local responses with significant impacts on employers. Changes to federal employment tax returns and a sudden rise in telework are just some of the pandemic-related challenges facing employment tax professionals as they undertake year-end tasks. Join us to hear our team of Ernst & Young LLP professionals discuss these and other federal and state payroll/employment tax developments affecting 2020 year-end and 2021.

Domestic tax quarterly webcast series: A focus on state tax matters (December 9)
For our fourth quarterly webcast in 2020, panelists from the Indirect Tax practice of Ernst & Young LLP will focus on state and local tax policy issues related to the 2020 general election and continued state responses to the coronavirus (COVID-19) pandemic. We will also highlight the most important developments affecting state income, sales and use, and property taxes as well as federal and state business credits and incentives.

Recent Tax Alerts


— Nov 19: Court upholds government's denial of energy grants (Tax Alert 2020-2732)

— Nov 16: Tax Court holds physician actively participated in numerous restaurant businesses, substantial losses could offset nonpassive income (Tax Alert 2020-2705)

Internal Revenue Service

— Nov 19: IRS issues final regulations on how an exempt organization determines if it has more than one unrelated trade or business and how to calculate UBTI (Tax Alert 2020-2729)

— Nov 19: IRS releases '2020-2021 Priority Guidance Plan' (Tax Alert 2020-2728)

— Nov 18: IRS posts new, taxpayer-favorable FAQs on the interaction between Paycheck Protection Program loans and the employee retention credit (Tax Alert 2020-2725)

— Nov 18: IRS issues procedural guidance for applying bonus depreciation regulations, including the making and/or revoking of certain elections (Tax Alert 2020-2719)

— Nov 16: IRS clarifies that contribution to single-employer defined benefit plan due January 1, 2021 under CARES Act extension will be timely if paid by January 4, 2021 (Tax Alert 2020-2702)

— Nov 13: IRS plans to issue proposed regulations on deductibility of certain state and local tax payments by partnerships and S corporations (Tax Alert 2020-2690)


— Nov 19: Costa Rica's President and Minister of Finance published a regulation updating the criteria for selecting people and items subject to customs control (Tax Alert 2020-2733)

— Nov 19: US and Mexico renew competent authority agreement on unilateral APAs for maquiladoras (Tax Alert 2020-2731)

— Nov 18: Germany's new entry registration and quarantine requirements discussed (Tax Alert 2020-2724)

— Nov 18: Virgin Islands is the only jurisdiction subject to a FUTA credit reduction in 2020 (Tax Alert 2020-2722)

— Oct 14: Australia enacts 2020-21 Federal Budget measures (Tax Alert 2020-2716)

— Nov 17: UK proposes to amend hybrid and other mismatches regime – implications for US multinationals (Tax Alert 2020-2712)

— Nov 17: The latest on BEPS and Beyond for November 2020 (Tax Alert 2020-2710)

— Nov 16: UK Government issues details of new Plastics Packaging Tax effective 1 April 2022 (Tax Alert 2020-2707)

— Nov 16: EU publishes list of US products subject to additional duties following WTO authorization (Tax Alert 2020-2706)

— Nov 16: Quebec Bill 42 receives Royal Assent; Mandatory disclosure requirements for nominee agreements come into effect (Tax Alert 2020-2704)

— Nov 13: Mexico introduces bill to amend labor and tax laws to prohibit outsourcing (Tax Alert 2020-2697)

— Nov 13: Kenya's Court of Appeals rules that withholding tax is due on payments to card companies and interchange fees (Tax Alert 2020-2696)

— Nov 13: Ghana announces extension of time for provision of relief packages in response to COVID-19 (Tax Alert 2020-2695)

— Nov 13: What's next for tax policy in Latin America (Tax Alert 2020-2691)


— Nov 18: What to expect in Washington (November 18) (Tax Alert 2020-2717)


— Nov 19: Colorado voters approve a retroactive reduction to the state's income tax rate; Governor Jared Polis must issue a proclamation concerning the effective date (Tax Alert 2020-2730)

— Nov 18: Virgin Islands is the only jurisdiction subject to a FUTA credit reduction in 2020 (Tax Alert 2020-2722)

— Nov 13: Changing state residency: Tax considerations when moving to Florida (Tax Alert 2020-2694) > —————————————————————————
Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

Various state and local tax-related ballot measures approved and rejected on November 3rd On Nov. 3, 2020, voters across the US considered various state and local tax related ballot measures. Both California's Proposition 15 (which would have amended the state's constitution to allow the regular reassessment of commercial and industrial property but retained Proposition 13 for residential property) and a proposed Illinois constitutional amendment (which would have allowed a graduated personal income tax) appear to have failed.

— New Jersey enacts technical and substantive changes to 2018 Corporation Business Tax reform

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

IRS Weekly Wrap-Up

Final Regulations

 TD 9923Guidance Under Section 529A: Qualified ABLE Programs

Proposed Regulations

 2020-25240IRS Review of Regulatory and Other Relief To Support Economic Recovery


 TD 9909Limitation on Deduction for Dividends Received From Certain Foreign Corporations and Amounts Eligible for Section 954 Look-Through Exception; Correction

Revenue Procedures

 2020-5026 CFR 1.168(k)-2: Additional first year depreciation deduction for property acquired and placed in service after September 27, 2017. (Also Part I, §§ 168, 446; 1.446-1, 1.1502-68)

Revenue Rulings

 2020-26Section 1274.—Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property


 2020-832020 Required Amendments List for Qualified Retirement Plans and § 403(b) Retirement Plans
 2020-82Implementation of the CARES Act Extended January 1, 2021 Due Date for Contributions to Defined Benefit Plans
 2020-81Administrative, Miscellaneous, and Procedural Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

Internal Revenue Bulletin

 2020-47Internal Revenue Bulletin of November 16, 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.