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January 24, 2021
2021-0155

U.S. Tax This Week for January 22

Ernst & Young's U.S. Tax This Week newsletter for the week ending January 22 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 releases findings of Section 301 investigation on DST regimes of Austria, Spain and the UK, and 301 findings on Vietnam's currency valuation practices

On 14 January 2021, the United States (US) Trade Representative (USTR) released the findings in its Section 301 of the Trade Act of 1974 (Section 301) investigations of Digital Services Tax (DST) regimes of Austria, Spain and the United Kingdom (UK). The USTR concluded that each of the DST regimes discriminates against US companies, is inconsistent with prevailing principles of international taxation and burdens or restricts US commerce. In alignment with its 6 January 2021 report with respect to the DST regimes of India, Italy and Turkey, the USTR has similarly announced that no specific actions against Austria, Spain or the UK would be taken at this time. The USTR expects to announce the progress and/or completion of DST investigations into Brazil, the Czech Republic, the European Union (EU) and Indonesia in the near future. EY Tax Alert 2021-0148 has details.

Biden releases national strategy for COVID-19 response

On January 21, President Joe Biden released his "National Strategy for the COVID-19 Response and Pandemic Preparedness" and signed a series of executive orders aimed at ramping up COVID-19 testing and vaccinations, advancing an equitable response to the pandemic, and safely reopening schools and businesses. In releasing the plan, President Biden tried to manage expectations, saying that the COVID-19 death toll would likely top 500,000 in February, and that while "it's going to take months" to turn things around, "help is on the way" to defeat the pandemic. According to the strategy documents, their plan starts with "restoring public trust and mounting an aggressive, safe, and effective vaccination campaign. It continues with the steps we know that stop the spread like expanded masking, testing, and social distancing." EY Tax Alert 2021-0151 has details.

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Upcoming Webcasts

Update on federal tax credits and business relief following enactment of Consolidated Appropriations Act, 2021 (January 26)
During this Thought Center Webcast, Ernst & Young professionals will discuss the recently released final Treasury regulations that provide additional guidance for applying the Section 163(j) business interest expense limitation, including with respect to certain partnerships and controlled foreign corporations. The final regulations apply to tax years beginning on or after the date that is 60 days after the regulations are published in the Federal Register.

BorderCrossings ... With EY transfer pricing and tax professionals (January 28)
During this Thought Center Webcast, Ernst & Young LLP (US) and Ernst & Young LLP (India) transfer pricing professionals who have been involved in the US-India competent authority negotiations over the past several years will provide an update on the overall US-India tax authority relationship. They’ll also discuss results of the 2020 meetings between the two governments.

Post-inauguration, are you checking the box or changing the game? (February 2)
During this Thought Center Webcast, Ernst & Young professionals will share critical insights on what’s expected and how these policies will impact businesses now and beyond. Topics to be discussed include: (i) the new Congress and its potential impact on the regulatory landscape; (ii) implications to tax policy, global trade and supply chain; and (iii) shifting dynamics after the first 100 days: health, an inclusive economy and sustainability.

International tax talk quarterly series with the EY Global Tax Desk Network (February 9)
During this Thought Center Webcast, Ernst & Young professionals will discuss the most pertinent recent global tax developments affecting your business. Panelists will include representatives from our EY Global Desks and Global Tax Policy and will cover perspectives from the OECD, European Union, Latin America and Asia Pacific.

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Recent Tax Alerts

Courts

— Jan 21: Tax Court holds IRS properly denied deductions/credits to company that failed to file returns until after the IRS prepared substitutes (Tax Alert 2021-0145)

Internal Revenue Service

— Jan 21: IRS issues further deadline relief for Qualified Opportunity Zone funds and investors in response to COVID-19 pandemic (Tax Alert 2021-0143)

— Jan 21: IRS guidance extends time to repay 2020 deferred employee Social Security tax to December 31, 2021 (Tax Alert 2021-0142)

— Jan 20: IRS waives additions to tax for underpayment of estimated income tax by individuals affected by CARES Act changes to IRC Section 461 (Tax Alert 2021-0131)

— Jan 20: IRS provides additional relief to qualified opportunity funds and investors affected by COVID-19 (Tax Alert 2021-0130)

— Jan 20: IRS provides penalty relief for certain partnerships errors in reporting partners' capital account balances for 2020 tax years (Tax Alert 2021-0127)

— Jan 19: IRS extends payback period for employers that elected to defer employee withholding between September 1 and December 31, 2020 (Tax Alert 2021-0121)

— Jan 19: IRS will waive additions to tax for underpayment of estimated income tax by individuals affected by CARES Act changes to IRC Section 461 (Tax Alert 2021-0120)

— Jan 15: QUEST Economic Update highlights key US and global economic trends — January 15, 2021 (Tax Alert 2021-0114)

— Jan 15: IRS extends relief from certain requirements for qualified low-income housing projects and residential rental projects due to COVID-19 (Tax Alert 2021-0111)

— Jan 19: IRS issues final regulations on the deduction of fines, penalties and other amounts under IRC Sections 162(f) and 6050X (Tax Alert 2021-0108)

International

— Jan 21: Korea enacts 2021 tax reform bill (Tax Alert 2021-0149)

— Jan 21: USTR releases findings of Section 301 investigation on DST regimes of Austria, Spain and the UK, and 301 findings on Vietnam's currency valuation practices (Tax Alert 2021-0148)

— Jan 21: Ireland publishes updated Corporation Tax Roadmap (Tax Alert 2021-0147)

— Jan 21: Peru enacts new tax measures for 2021 (Tax Alert 2021-0140)

— Jan 20: Peru enacts new preferential tax regime for agribusiness (Tax Alert 2021-0136)

— Jan 20: Peru no longer requires certain recipients of corporate income from investment funds to keep accounting books and records (Tax Alert 2021-0135)

— Jan 20: Peru-Japan income tax treaty will apply beginning January 1, 2022 (Tax Alert 2021-0134)

— Jan 20: New regulations outline financial information banks must report to Peruvian tax authority (Tax Alert 2021-0133)

— Jan 20: Italian Tax Authorities issue final guidelines on Digital Services Tax (Tax Alert 2021-0132)

— Jan 20: Spain delays first reporting of Digital Services Tax and Financial Transaction Tax (Tax Alert 2021-0129)

— Jan 20: German Government issues draft law on modernization of withholding tax relief and various additional topics (Tax Alert 2021-0128)

— Jan 20: Zambian Government issues 2021 Tax Amendment Acts and Regulations (Tax Alert 2021-0125)

— Jan 19: The latest on BEPS and Beyond for January 2021 (Tax Alert 2021-0122)

— Jan 15: Poland introduces new obligation to publish reports on tax strategy (Tax Alert 2021-0113)

— Jan 15: Italian Government announces deferrals for DST payments for 2020 (Tax Alert 2021-0110)

— Jan 15: European Commission launches consultation on EU digital levy (Tax Alert 2021-0109)

— Jan 15: France introduces new tax and social security measures for 2021 (Tax Alert 2021-0107)

— Jan 15: Brazilian Superior Court of Justice addresses whether technical service fees are subject to withholding tax under treaty with Spain (Tax Alert 2021-0105)

Legislation

— Jan 21: Final regulations on executive compensation excise tax for tax-exempt organizations confirm, clarify and modify the proposed rules (Tax Alert 2021-0152)

— Jan 21: Biden releases national strategy for COVID-19 response (Tax Alert 2021-0151)

— Jan 21: What to expect in Washington (January 21) (Tax Alert 2021-0141)

— Jan 20: Biden maps out 'Day One' executive actions, agency review items (Tax Alert 2021-0126)

— Jan 19: US DOL publishes final rules on computing prevailing wages (Tax Alert 2021-0123)

— Jan 19: Yellen hearing held at Finance Committee; 1/21 Floor vote eyed (Tax Alert 2021-0119)

— Jan 15: Biden announces $1.9 trillion 'American Rescue Plan' (Tax Alert 2021-0101)

States

— Jan 21: New Jersey releases multiple technical bulletins and a notice in response to November 4, 2020 changes in corporation business tax law (Tax Alert 2021-0150)

— Jan 21: Employers not required to withhold new surcharge from high income individuals; Arizona releases state withholding Form A-4 (Tax Alert 2021-0146)

— Jan 21: Puerto Rico Treasury Department postpones deadline for filing December 2020 SUT return until January 25 (Tax Alert 2021-0144)

— Jan 19: Missouri issues proposed regulations for relief of 2020 income tax withholding liability on the wages of teleworkers during the COVID-19 emergency (Tax Alert 2021-0124)

— Jan 15: Connecticut releases 2021 income tax withholding tables and calculation rules, Forms W-2 reminders, new CT-W4 for 2021 (Tax Alert 2021-0106)

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Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

— Consolidated Appropriations Act, 2021 modifies and extends key employment-related tax credits and creates new tax credit for employers in 2020 qualified disaster zones. On Dec. 27, 2020, President Trump signed the Consolidated Appropriations Act, 2021 (P.L. 116-260) (Act), which includes a $1.4 trillion omnibus appropriations package to fund the government through fiscal year 2021, approximately $900 billion in coronavirus relief and a variety of important tax provisions.

— Consolidated Appropriations Act, 2021, extends certain energy credits. The Consolidated Appropriations Act, 2021 (P.L. 116-260) (Act), signed by President Trump on Dec. 27, 2020, extends several energy credits, including those for renewable energy sources such as wind, solar and offshore wind facilities.

— Income/Franchise, Sales & Use, Business Incentives, Property Tax, Compliance & Reporting, Controversy, Payroll & Employment Tax, Global Trade

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IRS Weekly Wrap-Up

Final Regulations

 TD 9946Denial of Deduction for Certain Fines, Penalties, and Other Amounts; Related Information Reporting Requirements
 TD 9948Excise Taxes; Transportation of Persons by Air; Transportation of Property by Air; Aircraft Management Services
 TD 9945Guidance Under Section 1061
 TD 9947Section 199A Rules for Cooperatives and Their Patrons
 TD 9938Tax on Excess Tax-Exempt Organization Executive Compensation
 TD 9943Additional Guidance Regarding Limitation on Deduction for Business Interest Expense

Revenue Rulings

 2021-03Section 401. — Qualified Pension, Profit-Sharing, and Stock Bonus Plans
 2021-04Section 1274.—Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property

Notices

 2021-08Relief from Addition to Tax for Underpayment of Estimated Income Tax by Individuals Affected by Amendment to Section 461(l)(1)(B)
 2021-09Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates
 2021-10Extension of Relief for Qualified Opportunity Funds and Investors Affected by Ongoing Coronavirus Disease 2019 Pandemic
 2021-11Additional Relief with Respect to Employment Tax Deadlines Applicable to Employers Affected by the Ongoing Coronavirus (COVID-19) Disease 2019 Pandemic
 2021-12Because of the Coronavirus Disease 2019 (COVID-19) pandemic, the Department of the Treasury and the Internal Revenue Service issued Notice 2020-53, 2020-30 I.R.B. 151, to provide temporary relief from certain requirements under § 42 of the Internal Revenue Code (Code) for qualified low-income housing projects and under §§ 142(d) and 147(d) of the Code for qualified residential rental projects.
 2021-13Relief for Partnerships from Certain Penalties Related to the Reporting of Partners’ Beginning Capital Account Balances

Internal Revenue Bulletin

 2021-03Internal Revenue Bulletin of January 19, 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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