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February 7, 2021
2021-0261

U.S. Tax This Week for February 5

Ernst & Young's U.S. Tax This Week newsletter for the week ending February 5 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

CBO releases updated economic outlook

On February 1, the Congressional Budget Office (CBO) released a report, An Overview of the Economic Outlook: 2021 to 2031, an updated economic outlook for the US economy. The CBO expects the economic expansion that began in mid-2020 to continue, as it expects vaccinations to greatly reduce the number of new COVID-19 cases and reduce social distancing. According to the report, the CBO "projects a stronger economy than it did in July 2020, in large part because the downturn was not as severe as expected and because the first stage of the recovery took place sooner and was stronger than expected." EY Tax Alert 2021-0240 has details.

OECD Inclusive Framework political leaders promote global consensus following OECD's public consultation on Pillar One and Two Blueprints

On January 27 and 28, the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) held a public meeting to provide an update on its ongoing international tax work. The agenda included discussion of the future of international taxation in connection with the ongoing G20/OECD project titled "Addressing the Tax Challenges of the Digitalisation of the Economy" (the BEPS 2.0 project). At the meeting, finance ministers from six jurisdictions stressed the importance of reaching a consensus solution by mid-2021 and expressed their confidence that a positive outcome will be achieved. EY Tax Alert 2021-0234 has details.

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Upcoming Webcasts

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.

EY Tax.Tech™ webcast series - The intelligent tax function: Data management and intelligent automation (February 23)
During this Thought Center Webcast, Ernst & Young professionals will focus on the very important aspect of data management and intelligent automation. Throughout this discussion, we will be featuring demos as we cover some of the tools and solutions that are relevant to this topic.

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Recent Tax Alerts

Internal Revenue Service

— Feb 02: CBO releases updated economic outlook (Tax Alert 2021-0240)

— Jan 29: IRS provides recordkeeping relief for corporations making charitable contributions before February 1, 2021, to aid disaster areas (Tax Alert 2021-0222)

— Jan 29: IRS updates FAQs on tax credits for paid sick leave and family leave (Tax Alert 2021-0218)

— Jan 29: IRS updates instructions for BBA partnerships filing administrative adjustment requests (Tax Alert 2021-0210)

International

— Feb 04: Turkey amends tax laws on deduction of financial expenses and withholding rates on multi-year construction works (Tax Alert 2021-0259)

— Feb 04: Cypriot Tax Department announces extension of deadlines for DAC6 submissions (Tax Alert 2021-0258)

— Feb 04: Rwanda issues general rules on transfer pricing (Tax Alert 2021-0257)

— Feb 04: EY Canada's Tax Matters @ EY for February 2021 (Tax Alert 2021-0255)

— Feb 03: OECD holds public consultation on review of minimum standard on dispute resolution under BEPS Action 14 (Tax Alert 2021-0252)

— Feb 02: Botswana's Government presents 2021 Budget to Parliament (Tax Alert 2021-0247)

— Feb 02: Mexico establishes threshold for reporting customized transactions under the mandatory disclosure regime (Tax Alert 2021-0244)

— Feb 02: Italy announces non-application of penalties for submission of mandatory disclosure reports made by 28 February 2021 (Tax Alert 2021-0243)

— Feb 02: Cyprus expands treaty network as of 1 January 2021 (Tax Alert 2021-0242)

— Feb 02: Dutch Senate passes bill amending the Mining Act related to the removal or re-use of mining works and investment deductions (Tax Alert 2021-0241)

— Feb 01: Peru modifies regulations for banks that report financial information to Peruvian tax authorities (Tax Alert 2021-0235)

— Feb 01: OECD Inclusive Framework political leaders promote global consensus following OECD's public consultation on Pillar One and Two Blueprints (Tax Alert 2021-0234)

— Feb 01: Indian Fiscal Budget 2021 | Key tax proposals impacting individuals and employers discussed (Tax Alert 2021-0232)

— Feb 01: Canada announces new international travel measures and restrictions (Tax Alert 2021-0231)

— Feb 01: Italy's 2021 Budget Law: A review of key tax measures (Tax Alert 2021-0228)

— Jan 29: Greece extends deadline for submission of mandatory disclosure reports (Tax Alert 2021-0220)

— Jan 29: Mexico's mandatory disclosure tax return site is now available (Tax Alert 2021-0217)

Legislation

— Feb 04: President Biden's executive order on review of Trump immigration policies and appointment of new department of Homeland Security Lead discussed (Tax Alert 2021-0260)

— Feb 04: Senate approves organizing resolution (Tax Alert 2021-0254)

— Feb 03: House passes FY 2021 budget resolution, 218-212; Senate expected to follow suit later this week (Tax Alert 2021-0253)

— Feb 03: What to expect in Washington (February 3) (Tax Alert 2021-0250)

— Feb 02: Senate budget resolution released (Tax Alert 2021-0245)

— Feb 01: House budget resolution released (Tax Alert 2021-0229)

States

— Feb 04: Virgin Islands 2021 SUI tax rates to increase under a new payroll variation rating system (Tax Alert 2021-0256)

— Feb 03: Hawaii 2021 SUI tax rate schedule increases significantly; taxable wage base decreases (Tax Alert 2021-0251)

— Feb 02: Kansas provides relief from state income tax withholding shortages in connection with COVID-19 (Tax Alert 2021-0246)

— Feb 02: Philadelphia offers employers the option of requesting 2020 wage tax refunds on behalf of their nonresident employees (Tax Alert 2021-0239)

— Feb 01: Colorado enacts legislation restoring certain CARES Act benefits (Tax Alert 2021-0233)

— Feb 01: Kansas legislation extends or rescinds COVID-19 unemployment insurance relief provisions (Tax Alert 2021-0230)

— Feb 01: Minnesota Governor's proposed budget for COVID-19 recovery includes tax changes (Tax Alert 2021-0227)

— Jan 29: Michigan grants 33-day extension for income tax withholding returns and payments due on January 20, 2021 for certain taxpayers affected by COVID-19 closures (Tax Alert 2021-0219)

— Jan 29: EY's state guide to COVID-19 payroll and employment tax provisions is updated through January 25, 2021 (Tax Alert 2021-0216)

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Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

— The New Jersey Economic Recovery Act of 2020 signed into law. On Jan. 7, 2021, Governor Murphy signed into law the New Jersey Economic Recovery Act of 2020 (P.L. 2020, ch. 156 (A 4)) (Act), which includes enacting state tax credits aimed at supporting job creation, innovation, historic property reinvestment, brownfield development, small business assistance, food deserts, among other provisions.

— Income/Franchise, Sales & Use, Business Incentives, Property Tax, Payroll & Employment Tax, Miscellaneous Tax, Unclaimed Property

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IRS Weekly Wrap-Up

Proposed Regulations

 REG-119890-18Section 42, Low-Income Housing Credit Average Income Test Regulations; Hearing
 REG-115057-20Mandatory 60-Day Postponement of Certain Tax-Related Deadlines by Reason of a Federally Declared Disaster; Hearing

Revenue Procedures

 2021-11Wage limitation for the section 199A(g) deduction
 2021-12Examination of returns and claims for refund, credit or abatement; determination of correct tax liability
 2021-15Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability

Announcements

 2021-02Correction of Forms 1099-MISC for Certain CARES Act Subsidized Loan Payments

Notices

 2021-05Beginning of Construction for Sections 45 and 48; Extension of Continuity Safe Harbor for Offshore Projects and Federal Land Projects
 2021-06Waiver of Information Reporting Requirements with Respect to Certain Amounts Excluded from Gross Income

Internal Revenue Bulletin

 2021-05Internal Revenue Bulletin of February 1, 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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