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January 10, 2021
2021-0045

U.S. Tax This Week for January 8

Ernst & Young's U.S. Tax This Week newsletter for the week ending January 8 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.

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Top of the Week

USTR announces modifications to tariffs on EU goods under Section 301 including punitive tariffs on new items of French and German origin

On 30 December 2020, the US Trade Representative (USTR) announced additional modifications to the punitive tariffs previously imposed on certain products originating from the United Kingdom (UK) and European Union (EU) under Section 301 of the Trade Act of 1974 (Section 301).The latest modifications, which include punitive tariffs on new items of French and German origin, will go into effect on 12 January 2021. EY Tax Alert 2021-0014 has details.

Consolidated Appropriations Act, 2021, contains expansion of certain real estate credits

The Consolidated Appropriations Act, 2021 (Act), signed by the President on December 27, 2020, addresses certain tax credits for community development to encourage continued investment, such as extending the New Markets Tax Credit (NMTC) and creating a minimum 4% interest rate for the low-income housing tax credit (LIHTC). EY Tax Alert 2021-0030 has details.

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EY Guides, Surveys, and Reports

Washington in 2021 | Democrats control White House and Congress
Democrats Jon Ossoff and Raphael Warnock won the Georgia runoff elections, giving Democrats control of the Senate beginning later this month. With the parties split 50-50 in the Senate, Vice President-elect Kamala Harris will break ties, allowing major priorities like stimulus, climate change, and health care, potentially paid for with tax increases, to be brought up and passed in the House and Senate. The party ratio in the chamber was going to be narrow under either Georgia runoff scenario, requiring bipartisan cooperation for much to get done, but Senate control affords Democrats additional options like budget reconciliation.

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Upcoming Webcasts

Tax in a Time of Global Disruption (January 12)
During this Thought Center Webcast, EY and the Tax Council Policy Institute cordially invite you to join a live, interactive webcast examining some of the challenges and opportunities that are ahead of us all as we navigate tax in 2021 and beyond.

Latin America ‘nearshoring’ webcast series: Mexico session (January 13)
During this Thought Center Webcast, Ernst & Young professionals will provide information and help answer questions about "nearshoring" (i.e., the transferring of a business operation to a nearby country from a more distant one) in Latin America. This latest session in the series will focus on Mexico.

New Section 162(m) final regulations: what do you need to know now? (January 19)
During this Thought Center Webcast, Ernst & Young professionals will provide an overview of the changes to the rules, including the expansion of the public issuer and covered employee definitions, and discuss areas where changes were made to the proposed regulations.

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Recent Tax Alerts

Internal Revenue Service

— Jan 06: IRS extends safe harbor for renewable energy projects offshore or on federal land (Tax Alert 2021-0029)

— Jan 06: IRS issues final regulations under IRC Section 45Q on carbon oxide sequestration (Tax Alert 2021-0025)

— Jan 06: IRS rules that subsidiary REIT of a publicly traded REIT is exempt from preferential dividend rule (Tax Alert 2021-0022)

— Jan 05: IRS establishes safe harbor for IRC Section 163(j) deductions for qualified residential living facilities (Tax Alert 2021-0017)

— Dec 23: IRS finalizes regulations updating simplified tax accounting rules for small businesses to reflect TCJA changes (Tax Alert 2020-2931)

International

— Jan 07: Argentina's tax authorities launch the "Régimen IPF" service to ensure compliance with mandatory disclosure regime (Tax Alert 2021-0038)

— Jan 07: Czech Republic approves changes in personal income tax rates and computation of employment income tax base (Tax Alert 2021-0036)

— Jan 06: Future social security coordination between the UK and EU discussed (Tax Alert 2021-0032)

— Jan 06: Spain approves State Budget Bill for 2021 (Tax Alert 2021-0026)

— Jan 06: Peru approves and ratifies double tax treaty with Japan (Tax Alert 2021-0024)

— Jan 06: Global labor and employment law strategic topics | December 2020 Edition (Tax Alert 2021-0020)

— Jan 05: Argentina issues decree on the promotional regime for the knowledge-based economy (Tax Alert 2021-0018)

— Jan 05: UK Government announces approach to UK MDR post UK-EU Brexit Agreement (Tax Alert 2021-0016)

— Jan 05: Polish Ministry of Finance publishes decree deferring certain provisions of the new withholding tax reform to 30 June 2021 (Tax Alert 2021-0015)

— Jan 05: USTR announces modifications to tariffs on EU goods under Section 301 including punitive tariffs on new items of French and German origin (Tax Alert 2021-0014)

— Jan 04: Egypt releases capital gains tax guidelines for nonresidents (Tax Alert 2021-0008)

— Jan 04: Jordan tightens corporate income tax filing process as of 2021 (Tax Alert 2021-0007)

— Jan 04: UK and EU reach trade agreement (Tax Alert 2021-0002)

— Dec 23: OECD releases guidance on transfer pricing implications of COVID-19 pandemic (Tax Alert 2020-2936)

— Dec 23: Egypt amends Unified Tax Procedures Law (Tax Alert 2020-2935)

— Dec 23: Luxembourg extends filing deadlines for tax returns (Tax Alert 2020-2934)

Legislation

— Jan 08: What to expect in Washington (January 8) (Tax Alert 2021-0051)

— Jan 06: Consolidated Appropriations Act, 2021, contains expansion of certain real estate credits (Tax Alert 2021-0030)

— Jan 06: Consolidated Appropriations Act, 2021, extends certain energy credits (Tax Alert 2021-0028)

— Jan 06: Major points of interest for tax-exempt organizations from the Consolidated Appropriations Act, 2021 (Tax Alert 2021-0027)

— Jan 05: Consolidated Appropriations Act, 2021 modifies and extends key employment-related tax credits and creates new tax credit for employers in 2020 qualified disaster zones (Tax Alert 2021-0019)

— Jan 04: Senate votes 81-13 to override President's veto of defense authorization bill carrying money-laundering provisions (Tax Alert 2021-0005)

— Dec 23: Consolidated Appropriations Act, 2021 extends many credits and other COVID-19 relief (Tax Alert 2020-2938)

— Dec 23: Consolidated Appropriations Act, 2021 applies TCJA depreciation provisions to all residential rental real estate (Tax Alert 2020-2932)

States

— Jan 07: Updated EY publication includes income tax law changes enacted at the close of Q4 2020 (Tax Alert 2021-0042)

— Jan 07: Connecticut reminds employers to register for paid family and medical insurance program, start employee payroll deductions on January 1, 2021 (Tax Alert 2021-0041)

— Jan 07: ImagiNE Nebraska Act in effect January 1, 2021 (Tax Alert 2021-0040)

— Jan 07: Sales and Use Tax Quarterly Update for First Quarter of 2021 (Tax Alert 2021-0039)

— Jan 07: Texas adopts sweeping amendments to sourcing rule for franchise tax (Tax Alert 2021-0035)

— Jan 06: Ohio legislature passes bill reducing Financial Institutions Tax for “de novo” banks and excluding mortgage bankers from Commercial Activity Tax (Tax Alert 2021-0031)

— Jan 06: Most states conform with federal requirement to report nonemployee compensation on Form 1099-NEC starting in tax year 2020 (Tax Alert 2021-0023)

— Jan 05: Federal mileage rates decrease in 2021, luxury vehicle limit is increased (Tax Alert 2021-0013)

— Jan 05: 2021 state income tax withholding tables, supplemental withholding and highest tax rates (Tax Alert 2021-0012)

— Jan 04: Montana water's-edge election due March 31, 2021, for calendar-year taxpayers (Tax Alert 2021-0009)

— Dec 23: Washington employer workers' compensation rates will not increase for 2021 (Tax Alert 2020-2937)

— Dec 23: State corporate income and franchise tax developments in the fourth quarter of 2020 (Tax Alert 2020-2930)

— Dec 23: California 2021 unemployment, disability and employment training tax rates and limits (Tax Alert 2020-2929)

— Dec 23: Indiana county income tax rate changes effective January 1, 2021; 2020 Form W-2 reminders (Tax Alert 2020-2928)

— Dec 23: Michigan legislation reinstates COVID-19 UI benefit provisions after state Supreme Court rules governor's executive orders are unconstitutional (Tax Alert 2020-2927)

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Recent Newsletters

ITS/Washington Dispatch
   Highlights of this edition include:

Legislation

  • US Congress passes coronavirus stimulus and omnibus spending package that includes extension of CFC look-through

IRS news

  • IRS issues final and proposed PFIC regulations that provide mix of favorable and unfavorable provisions
  • Final and proposed regulations on passive foreign investment companies have both favorable and unfavorable implications for insurance companies
  • Treasury to focus on other international projects, tax treaties as TCJA guidance nears completion
  • Treasury's FinCEN further extends certain signature authority reporting (FBAR, Form 114) over foreign financial accounts

Transfer Pricing News

  • Transfer pricing enforcement remains priority even while TCJA provisions may negate adjustments
  • IRS APMA seeing more queries on transfer pricing consequences of coronavirus pandemic

OECD Developments

  • OECD issues guidance on transfer pricing implications of COVID-19, hard- to-value intangibles
  • OECD releases fourth peer review report on BEPS Action 5 on the Exchange of Information of Tax Rulings
  • OECD's FTA hosts virtual meeting of tax administration leaders

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IRS Weekly Wrap-Up

Final Regulations

 TD 9942Small Business Taxpayer Exceptions Under Sections 263A, 448, 460 and 471
 TD 9937Rollover Rules for Qualified Plan Loan Offset Amounts
 TD 9941Taxable Year of Income Inclusion Under an Accrual Method of Accounting and Advance Payments for Goods, Services, and Other Items

Revenue Procedures

 2021-08Rulings and determination letters
 2021-09Rules and regulations
 2021-10Appeals functions

Revenue Rulings

 2021-01Section 1274.—Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property
 2021-02This ruling obsoletes Notice 2020-32, 2020-21 I.R.B. 837 (May 18, 2020), and Rev. Rul. 2020-27, 2020-50 I.R.B. 1552 (Dec. 7, 2020), due to the enactment of § 276(a) of the COVID-related Tax Relief Act of 2020 (Act), enacted as Subtitle B of Title II of Division N of the Consolidated Appropriations Act, 2021, Public Law 116-260, 134 Stat.1182 (Dec. 27, 2020)

Notices

 2021-01Mandatory E-filing of Form 4720 by Private Foundations
 2021-02This notice provides the optional 2021 standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes
 2021-03Extension of Temporary Relief from the Physical Presence Requirement for Spousal Consents Under Qualified Retirement Plans
 2021-04Final Extension of Temporary Relief for Fuel Removals Destined for Nontaxable Use Due to West Shore Pipeline Shutdown
 2021-05Beginning of Construction for Sections 45 and 48; Extension of Continuity Safe Harbor for Offshore Projects and Federal Land Projects
 2021-07COVID-19 Relief for Employers Using the Automobile Lease Valuation Rule

Internal Revenue Bulletin

 2021-01Internal Revenue Bulletin of January 4, 2021

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.

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

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