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February 14, 2021
2021-0328

U.S. Tax This Week for February 12

Ernst & Young's U.S. Tax This Week newsletter for the week ending February 12 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

Ways & Means approves COVID Reconciliation Bill

The House Ways & Means Committee February 11 approved 25-18 along party lines a package of provisions that comprise about half of President Biden's $1.9 trillion COVID relief plan and would provide direct payments, a child tax credit expansion in the form of direct payments, EITC and Child Care tax credit enhancements, an international tax change, COBRA subsidies and ACA tax credit enhancements, and relief for pension plans. The Ways and Means provisions represent the Committee's piece of an FY 2021 budget reconciliation bill. Other committees have considered or are considering their portions, and the combined package could be enacted within the next several weeks with solely Democratic support. EY Tax Alert 2021-0332 has details.

Final IRC Section 1061 carried interest regulations have implications for passthrough entities, including private equity and alternative funds, and their professionals

On January 19, 2021, the IRS published final carried interest regulations under IRC Section1061, as well as related partnership and holding period provisions (the Final Regulations). The Final Regulations generally follow the approach taken by proposed regulations published on August 14, 2020 (the Proposed Regulations),with several notable exceptions. EY Tax Alert 2021-0291 has details.

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EY Guides and Publications

EY publication explains how to correct federal errors on the 2020 Form W-2
Employers can now find guidance on how to correct federal errors on the 2020 Form W-2 in our special report, When, why and how to correct 2020 Form W-2 errors.

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Upcoming Webcasts

From liability to asset: Tax automation and data integrity for family offices and business owners (February 18)
During this Thought Center Webcast, Ernst & Young professionals share insights and best practices on the value of technology within the tax function. From global reporting to data integrity, our leaders will share real-life examples and industry-leading options for ensuring your tax function is maximizing its capabilities – manually and digitally.

Tax in the time of COVID-19: update on legislative, economic, regulatory and IRS developments (February 19)
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.

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 our discussion, we will be featuring demos as we cover some of the tools and solutions that are relevant to this topic.

Domestic tax quarterly webcast series: A focus on state tax matters (February 24)
For this first quarterly Webcast in 2021, Douglas L. Lindholm, President & Executive Director of the Council On State Taxation (COST) will join us to discuss important state tax policy developments, as well as federal tax developments that could affect state and local taxes.

The outlook for global tax policy and controversy in 2021 (February 25)
During this Thought Center Webcast, Ernst & Young professionals will discuss the findings reported in the upcoming EY 2021 Tax Policy & Controversy Outlook, focusing on the most significant tax law and administration trends and highlighting leading practices for companies as they navigate tax developments around the world in the year ahead.

Meals and entertainment (M&E) expenses and other fringe benefits (March 10)
During this Thought Center Webcast, Ernst & Young professionals will discuss the changes in rules governing the deductibility of M&E expenses under the Tax Cuts and Jobs Act (TCJA).

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Recent Tax Alerts

Courts

— Feb 11: Tax Court sustains Service's denial of R&E tax credits claimed for subsidiary's shipbuilding design and construction activities (Tax Alert 2021-0320)

Internal Revenue Service

— Feb 11: Self-charged management fees excluded from REIT income tests (Tax Alert 2021-0314)

— Feb 10: EY-annotated Form 990 highlights changes to 2020 Forms 990 and 990-PF, schedules and instructions (Tax Alert 2021-0302)

— Feb 08: Final IRC Section 1061 carried interest regulations have implications for passthrough entities, including private equity and alternative funds, and their professionals (Tax Alert 2021-0291)

— Feb 08: IRS publishes new form for individuals claiming tax credits for sick and family leave taken due to coronavirus (Tax Alert 2021-0284)

International

— Feb 11: German Ministry of Finance finalizes guidance on German extraterritorial taxation of intellectual property (Tax Alert 2021-0321)

— Feb 11: Uruguay modifies when goodwill is not considered in corporate restructurings (Tax Alert 2021-0318)

— Feb 11: Uruguay enacts budget law for 2020-2024 (Tax Alert 2021-0317)

— Feb 11: Uruguay's Executive Power suspends withholding tax obligations for temporary leases of real estate for tourism purposes (Tax Alert 2021-0315)

— Feb 11: Uruguayan tax authorities update list of low- or no-taxation countries and jurisdictions (Tax Alert 2021-0312)

— Feb 10: Uruguay modifies the 'tax holiday' regime (Tax Alert 2021-0311)

— Feb 10: Uruguay's Executive Power regulates certain aspects of the investments law (Tax Alert 2021-0310)

— Feb 11: Africa Union launches Africa Continental Free Trade Area: Status of trading among African countries (Tax Alert 2021-0309)

— Feb 10: PE Watch | 2020 in review (Tax Alert 2021-0308)

— Feb 10: Luxembourg formalizes extension of certain filing deadlines (Tax Alert 2021-0307)

— Feb 10: Romanian Tax Authority publishes DAC6 guidance regarding national legislation on Mandatory Disclosure Rules (Tax Alert 2021-0306)

— Feb 09: India's Finance Bill 2021 clarifies scope of e-commerce Equalization Levy (Tax Alert 2021-0299)

— Feb 09: Poland publishes new draft law on e-invoices (Tax Alert 2021-0298)

— Feb 09: Costa Rica's Ministry of Treasury submits to Congress a bill establishing dual and global income tax rules (Tax Alert 2021-0293)

— Feb 08: Argentina and US agree to exchange country-by-country reports on large multinationals (Tax Alert 2021-0288)

— Feb 08: Denmark proposes defensive measures against countries on EU's list of non-cooperative jurisdictions for tax purposes (Tax Alert 2021-0287)

— Feb 08: Poland announces consultation period for regulations on premium to be imposed on advertising activity (Tax Alert 2021-0286)

— Feb 08: Taiwan amends Transfer Pricing Regulations (Tax Alert 2021-0285)

— Feb 05: Nigeria: Highlights of Finance Act 2020 (Tax Alert 2021-0280)

— Feb 05: Germany removes Tour Operators' Margin Scheme simplification for non-EU businesses (Tax Alert 2021-0279)

— Feb 05: Japan's immigration information as of February 3 provided (Tax Alert 2021-0278)

— Feb 05: Northwest Territories budget 2021–22 discussed (Tax Alert 2021-0269)

— 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)

Legislation

— Feb 12: What to expect in Washington (February 12) (Tax Alert 2021-0333)

— Feb 11: Ways & Means wraps first day of COVID Bill markup (Tax Alert 2021-0313)

— Feb 10: House Education & Labor Committee approves $357 billion in Reconciliation Bill provisions, including minimum wage increase (Tax Alert 2021-0305)

— Feb 09: US DHS delays effective date of H-1B selection final rule to December 31, 2021 (Tax Alert 2021-0297)

— Feb 09: Ways & Means COVID Bills are roughly half of Biden relief plan (Tax Alert 2021-0294)

— Feb 09: Summary of immigration actions the Biden administration has taken as of February 8 provided (Tax Alert 2021-0296)

— Feb 05: Treasury to consider reviving expired transfer pricing aggregation regulations (Tax Alert 2021-0276)

— Feb 05: Senate approves budget resolution, paving way for reconciliation (Tax Alert 2021-0268)

— 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)

States

— Feb 11: Massachusetts Governor again proposes "real-time" sales tax remittance by third-party payment processors (Tax Alert 2021-0319)

— Feb 11: Arizona 2021 SUI tax rates significantly increase, wage base unchanged; act by March 1, 2021 to potentially lower your SUI tax rate (Tax Alert 2021-0316)

— Feb 09: New Jersey clarifies how state law change redefining "taxpayer" to include a combined group will impact Corporation Business Tax returns (Tax Alert 2021-0295)

— Feb 08: New York legislation relieves employer unemployment insurance accounts of COVID-19 benefit charges (Tax Alert 2021-0289)

— Feb 05: Arizona DOR provides annual withholding tax filing extension and electronic filing waiver due to technical issues (Tax Alert 2021-0270)

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Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

— Colorado enacts legislation restoring certain CARES Act benefits On Jan. 21, 2021, Colorado Governor Jared Polis signed HB 21-1002, which allows taxpayers that accelerated certain federal income tax deductions under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to subtract the corresponding state income tax benefit starting in 2021. HB 21-1002 is intended to offset previous decoupling from certain provisions of the CARES Act.

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

ITS/Washington Dispatch
   Highlights of this edition include:

  • US Treasury Secretary says no new taxes for now, commits to OECD BEPS discussions
  • New final regulations address application of Section 163(j) limitation to CFCs and partnerships, while reserving on certain provisions
  • IRS allows remote signing and submission of authorization Forms 2848 and 8821
  • IRS official says guidance on worldwide interest expense allocation is a top priority, proposed FTC regs in 2021

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IRS Weekly Wrap-Up

Proposed Regulations

 REG-119890-18Section 42, Low-Income Housing Credit Average Income Test Regulations; Hearing

Internal Revenue Bulletin

 2021-06Internal Revenue Bulletin of February 8, 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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