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January 31, 2021

U.S. Tax This Week for January 29

Ernst & Young's U.S. Tax This Week newsletter for the week ending January 29 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

OECD Secretariat issues updated guidance on tax treaties and the impact of COVID-19 pandemic

On 21 January 2021, the Organisation for Economic Co-operation and Development (OECD) published on its website an Updated guidance on tax treaties and the impact of the COVID-19 pandemic (the guidance). This guidance revisits the guidance published on 3 April 2020by the OECD Secretariat. EY Tax Alert 2021-0189 has details.

Path to Senate power-sharing deal opens with McConnell statement

Senate Republican leader Mitch McConnell (R-KY) has issued a statement suggesting that comments by Democratic Senators Kyrsten Sinema (D-AZ) and Joe Manchin (D-WV) opposing filibuster repeal have provided assurances adequate for him to move ahead with a power-sharing agreement similar to 2001, the last time the Senate was split 50-50. EY Tax Alert 2021-0178 has details.

EY Guides and Publications

How Tax will play a vital role in the coming recovery
In this article, EY's Global Vice Chair - Tax, Kate Barton discusses how tax authorities have played a key part in the response to the global COVID-19 pandemic. According to the article, Tax has taken on an unexpected and expanded role in the world's response to the COVID-19 crisis. 

Upcoming Webcasts

How the new stimulus impacts entrepreneurs and private companies (February 1)
During this Thought Center Webcast, you will learn the new Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act, which provides $900 billion in additional COVID-19 relief funding. Our team will help you understand the programs, how they interact and what you may be eligible to receive.

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.

Decoding India Union Budget 2021-22: Impact and the way forward (February 5)
On February 1, India’s Finance Minister will present the Union Budget 2021. Please join us for this webcast as Tax leadership from Ernst & Young LLP (India) and Ernst & Young LLP (US) help decode the fine print of the India Budget 2020–21.

Tax in the time of COVID-19 (February 5)
During this Thought Center Webcast, Ernst & Young professionals will discuss coronavirus (COVID-19) and the resulting economic crisis – all occurring in an election year – have made reacting to tax and trade developments more complicated and more difficult. Panelists will provide updates on: (i) Elections, US economy and tax policy; (ii) What’s happening at the IRS; and (iii) Breaking developments.

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.

The new income recognition landscape series: Final Section 451 regulations (February 11)
The final Section 451 regulations provide taxpayers with guidance related to timing of income inclusion and advance payments for goods, services, and certain other items. Join this first webcast in the series, we will introduce and discuss the new concepts, highlight key areas that require taxpayer-specific analysis, and discuss key considerations as taxpayers navigate the new income recognition landscape.

Recent Tax Alerts

Internal Revenue Service

— Jan 28: December 2020 total nonfarm payroll declined for the first time since April 2020; employers face increased unemployment insurance costs due to federal loans (Tax Alert 2021-0202)

— Jan 27: Final IRC Section 45Q regulations on carbon oxide sequestration clarify requirements, reduce recapture period (Tax Alert 2021-0198)

— Jan 26: IRS allows remote signing and submission of Forms 2848 and 8821 (Tax Alert 2021-0184)

— Jan 25: IRS launches online option for tax professionals to obtain client signatures remotely and submit authorization forms electronically (Tax Alert 2021-0175)

— Jan 25: Early distribution from retirement plan gives rise to IRC Section 72(t) exaction, which is not a penalty, Tax Court holds (Tax Alert 2021-0174)

— Jan 25: Partnerships get penalty relief related to reporting of partners' capital account balances; updates to Form 1065 reporting (Tax Alert 2021-0171)

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


— Jan 28: Israeli Tax Authority releases final circular on payments to a parent company under cross-border recharge agreements for grant of stock-based compensation (Tax Alert 2021-0205)

— Jan 28: Saudi Arabia extends tax amnesty until 30 June 2021 (Tax Alert 2021-0204)

— Jan 27: Slovenian Tax Office clarifies social security and personal income tax implications on income received from foreign entity by Slovenian employees (Tax Alert 2021-0195)

— Jan 27: US extends travel restrictions to foreign nationals traveling from the UK, Ireland, Schengen Area, and Brazil; adds travel restrictions to foreign nationals traveling from South Africa (Tax Alert 2021-0193)

— Jan 27: Chile and the Netherlands sign double tax treaty (Tax Alert 2021-0191)

— Jan 26: Spanish Supreme Court issues favorable decision on reclaims by non-Spanish pension funds (Tax Alert 2021-0186)

— Jan 26: Gibraltar announces its approach to Gibraltar Mandatory Disclosure Rules post UK-EU Brexit Agreement (Tax Alert 2021-0185)

— Jan 25: Hong Kong provides clarifications for the concessionary tax regime for qualifying ship leasing activities (Tax Alert 2021-0172)

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


— Jan 27: President Biden's proposed US Citizenship Act discussed (Tax Alert 2021-0194)

— Jan 27: US COVID-19 travel restrictions discussed (Tax Alert 2021-0192)

— Jan 27: What to expect in Washington (January 27) (Tax Alert 2021-0187)

— Jan 22: President Biden's executive order reverses travel ban (Tax Alert 2021-0161)


— Jan 27: San Francisco and Los Angeles business tax filing deadlines are approaching fast (Tax Alert 2021-0199)

— Jan 27: Puerto Rico established amnesty period for annual corporate reports and LLC annual fees (Tax Alert 2021-0196)

— Jan 27: Nebraska revenue department revises GILTI guidance, while Legislature considers making GILTI and repatriated income eligible for state dividends-received deduction (Tax Alert 2021-0190)

— Jan 27: New York budget proposal includes a new wealth tax surcharge and suspension for tax year 2021 of the phase-in of the middle-class income tax cut (Tax Alert 2021-0188)

— Jan 26: Missouri affidavit form now available for claiming relief for 2020 income tax withholding shortages due to COVID-19 (Tax Alert 2021-0183)

— Jan 25: Rhode Island extends guidance for income tax withholding on the wages of teleworkers during the COVID-19 state of emergency (Tax Alert 2021-0173)


— Jan 26: Tax M&A Update for December 2020 (Tax Alert 2021-0181)

Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

Texas adopts sweeping amendments to its receipts sourcing rule for franchise tax On Jan. 4, 2021, final/adopted revisions to the Texas Comptroller of Public Accounts' sourcing rule under 34 Tex. Admin. Code § 3.591 (Section 3.591) for franchise tax receipts, were filed with the Texas Secretary of State (final rule). 

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

IRS Weekly Wrap-Up

Internal Revenue Bulletin

 2021-04Internal Revenue Bulletin of January 25, 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.