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December 20, 2020

U.S. Tax This Week for December 18

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

Top of the Week

Final and proposed PFIC regulations provide a mix of favorable and unfavorable provisions

In final and proposed regulations released on December 4, 2020, the United States Treasury Department (Treasury) and Internal Revenue Service (IRS) provide guidance on the passive foreign investment company (PFIC) rules under Internal Revenue Code Sections 1291, 1297 and 1298 (the final PFIC regulations and the 2020 proposed regulations, respectively). The final PFIC regulations are largely consistent with the proposed PFIC regulations released on July 10, 2019 (the 2019 proposed regulations) but contain several significant changes. EY Tax Alert 2020-2865 has details.

FinCEN further extends certain signature authority reporting (FBAR, Form 114) over foreign financial accounts

On December 11, 2020, the Financial Crimes Enforcement Network (FinCEN) released Notice 2020-1 (the Notice), further extending the filing deadline for certain individuals who previously qualified for an extension of time to file the Report of Foreign Bank and Financial Accounts (FBAR) with respect to signature authority under Notice 2019-1 and previous guidance. EY Tax Alert 2020-2866 has details.

EY Guides, Surveys, and Reports

Through the looking glass: How the election results will impact FIs
In the near term, we do not expect financial services issues to be at the top of the Biden administration's agenda. However, financial services firms must monitor developments closely as Washington debates the ongoing support for a post-pandemic economic recovery. The new administration's priorities will challenge the financial services industry to demonstrate how it can aid the economic recovery and confront other societal challenges in a sustainable, consumer-focused manner.

Upcoming Webcasts

Tax in the time of COVID-19 (January 8)
During this Thought Center Webcast, Ernst & Young professionals will provide updates on: (i) Elections, US economy and tax policy; (ii) What’s happening at the IRS; and (iii) Breaking developments.

Recent Tax Alerts

Internal Revenue Service

— Dec 17: IRS delays private foundations' mandatory e-filing of Form 4720 (Tax Alert 2020-2886)

— Dec 17: IRS announces third round of credits under IRC Section 48A for qualifying coal projects (Tax Alert 2020-2885)

— Dec 17: IRS extends time for signing forms by electronic or digital signature (Tax Alert 2020-2883)

— Dec 16: EY publication highlights accounting implications of 2020 Q4 tax developments (Tax Alert 2020-2880)

— Dec 15: IRS addresses REIT's leasing of space on signs attached to exterior of rental buildings (Tax Alert 2020-2872)

— Dec 14: IRS announces new round of qualifying advance coal project credits (Tax Alert 2020-2857)


— Dec 17: Chilean tax authorities released regulations for foreign pass-through investment vehicles (Tax Alert 2020-2884)

— Dec 16: Canada's employer obligation to remit GST/HST/QST on deemed supplies made to pension entities and master pension entities discussed (Tax Alert 2020-2879)

— Dec 16: Japan releases 2021 tax reform outline (Tax Alert 2020-2878)

— Dec 16: German Ministry of Finance issues new Administrative Principles regarding examination of income allocation between internationally associated enterprises (Tax Alert 2020-2877)

— Dec 15: Argentina provides further specifications on the definition of "final beneficiaries" and extends the obligation to report (Tax Alert 2020-2873)

— Dec 15: The latest on BEPS and Beyond for December 2020 (Tax Alert 2020-2870)

— Dec 15: Portugal's 2021 State Budget Law | Key tax measures impact real estate sector (Tax Alert 2020-2869)

— Dec 15: Luxembourg | Year-end tax considerations for 2020 and the start of 2021 (Tax Alert 2020-2868)

— Dec 14: FinCEN further extends certain signature authority reporting (FBAR, Form 114) over foreign financial accounts (Tax Alert 2020-2866)

— Dec 14: Final and proposed PFIC regulations provide a mix of favorable and unfavorable provisions (Tax Alert 2020-2865)

— Dec 14: US final and proposed regulations on passive foreign investment companies have both favorable and unfavorable implications for insurance companies (Tax Alert 2020-2864)

— Dec 14: Peru's tax authorities establish January 29, 2021 as the due date for the secondary filling of 2017, 2018 and 2019 CbC reports (Tax Alert 2020-2861)

— Dec 14: OECD publishes Revenue Statistics in Africa 2020 (Tax Alert 2020-2860)

— Dec 14: Tanzania Revenue Authority upgrades electronic financial data management system (Tax Alert 2020-2859)

— Dec 14: Vietnam issues guidance on related party transactions and transfer pricing (Tax Alert 2020-2858)

— Dec 11: Australian Taxation Office releases final guidance on outbound interest-free loans between related parties (Tax Alert 2020-2851)

— Dec 11: Ugandan Tax Appeals Court rules VAT is not due on supply of services by a branch to its head office (Tax Alert 2020-2850)

— Dec 11: Myanmar Tax Authority issues guidance on withholding tax reporting obligations (Tax Alert 2020-2849)

— Dec 11: Peru repeals agribusiness preferential tax regime (Tax Alert 2020-2847)

— Dec 11: Peruvian tax authorities establish guidelines for capital gains tax exemption applicable to transfers of shares through the Lima Stock Exchange (Tax Alert 2020-2845)


— Dec 16: What to expect in Washington (December 16) (Tax Alert 2020-2874)


— Dec 17: Delaware employers required to file and pay certain withholding taxes electronically effective in 2021; Forms W-2/1099 reminders for 2020 (Tax Alert 2020-2887)

— Dec 16: Philadelphia, Pennsylvania issues guidance concerning the imposition of nexus for business taxes for telework during the COVID-19 emergency (Tax Alert 2020-2875)

— Dec 15: Wilmington, Delaware issues guidance concerning its earnings and head tax requirements for teleworkers in light of COVID-19 (Tax Alert 2020-2871)

— Dec 14: Texas Comptroller proposes sweeping amendments to its franchise tax sourcing rule (Tax Alert 2020-2863)

— Dec 14: State minimum wage rates for 2021 (Tax Alert 2020-2862)

— Dec 11: Preliminary list of state unemployment insurance wage bases for 2021 (Tax Alert 2020-2848)

Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

Chicago budget includes rate increases. On Nov. 24, 2020, the Chicago City Council approved the city's 2021 budget (Ordinance O2020–5743), which includes various tax law changes.

— Income/Franchise, Sales & Use, Business Incentives, Controversy, Payroll & Employment Tax, Global Trade, Value Added Tax

IRS Weekly Wrap-Up

Final Regulations

 TD 9928Grandfathered Group Health Plans and Grandfathered Group Health Insurance Coverage
 TD 9939Qualified Transportation Fringe, Transportation and Commuting Expenses Under Section 274


 TD 9925Meals and Entertainment Expenses Under Section 274; Correction

Revenue Rulings

 2021-01Section 1274.—Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property


 2020-88Round 3 of Phase III of the § 48A Qualifying Advanced Coal Project Program
 2021-01Mandatory E-filing of Form 4720 by Private Foundations

Internal Revenue Bulletin

 2020-51Internal Revenue Bulletin of December 14, 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.