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March 7, 2021

U.S. Tax This Week for March 5

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

Top of the Week

Senate COVID bill includes changes from House version

The Senate March 4 voted 51-50, with Vice President Kamala Harris voting in the affirmative in the tied Senate, to proceed to consideration of the budget reconciliation bill (H.R. 1319) reflecting President Biden's $1.9 trillion "American Rescue Plan" COVID-19 relief package. Following the vote, Senate Majority Leader Chuck Schumer (D-NY) offered a substitute amendment with an expansion of 162(m) compensation deduction limits and changes to health and government funding provisions. EY Tax Alert 2021-0486 has details.

OECD releases new transparency framework for Action 5 for 2021 through 2025 On 22 February 2021, the G20/Organisation for Economic Co-operation and Development (OECD) Inclusive Framework on Base Erosion and Profit Shifting (BEPS) published a renewed process for the BEPS Action 5 peer review of the transparency framework for the compulsory spontaneous exchange of certain types of tax rulings for the years 2021 through 2025 (the transparency framework). EY Tax Alert 2021-0447 has details.

Upcoming Webcasts

UBTI ‘siloing’ and exempt organization excess compensation final regulations (March 9)
The IRS recently issued final guidance on several of the changes affecting tax-exempt organizations enacted as part of the Tax Cuts and Jobs Act. This includes final regulations on the Section 4960 tax on excess executive compensation and Section 512(a)(6)’s siloing of unrelated business taxable income (UBTI). Join this Thought Center Webcast, as we review the final guidance and discuss how to address implementation challenges and prepare for upcoming filing deadlines.

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).

Latin America ‘nearshoring’ webcast series | Costa Rica session (March 16)
Recent disruptions to global supply chains have heightened interest in the concept of “nearshoring” (i.e., the transferring of a business operation to a nearby country from a more distant one). To provide information and help answer questions about nearshoring in Latin America, EY is sponsoring a series of webcasts featuring our local country professionals. This Thought Center Webcast, will focus on Costa Rica.

Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (March 19)
During this Thought Center Webcast, Ernst & Young professionals will provide updates on: (i) US economy, elections and tax policy; (ii) Breaking developments; and (iii) What’s happening at the IRS.

Accounting for income taxes: A quarterly perspective (March 23)
During this Thought Center Webcast, Ernst & Young professionals, moderated by Angela Evans, EY Americas Co-Director of Tax Accounting and Risk Advisory Services (TARAS), will discuss ongoing issues and regulatory trends in the tax accounting arena. Topics will include recent tax legislation with tax accounting implications and a review of current income tax accounting concepts.

Recent Tax Alerts

Internal Revenue Service

— Mar 02: IRS issues guidance on CARES Act employee retention credit for applicable dates in 2020 (Tax Alert 2021-0468)

— Feb 26: IRS adjusts housing expense limitations under IRC Section 911 for tax year 2021 (Tax Alert 2021-0449)


— Mar 04: Canada's International Experience Canada programs now open for 2021 (Tax Alert 2021-0485)

— Mar 04: EY Canada's Tax Matters @ EY for March 2021 (Tax Alert 2021-0484)

— Mar 03: UK Budget 2021 discussed (Tax Alert 2021-0478)

— Mar 03: UK issues 2021 Budget | Initial highlights (Tax Alert 2021-0476)

— Mar 03: OECD releases Kazakhstan Stage 1 peer review report on implementation of Action 14 minimum standard (Tax Alert 2021-0475)

— Mar 03: Irish Revenue issues guidance on transfer pricing legislation (Tax Alert 2021-0474)

— Mar 03: Singapore updates guidance on tax residence status and determination of a permanent establishment due to COVID-19 (Tax Alert 2021-0473)

— Mar 03: British Columbia's expanded Provincial Sales Tax registration requirements to take effect on April 1 (Tax Alert 2021-0472)

— Mar 01: Philippines provides guidelines and procedures for transfer pricing reporting (Tax Alert 2021-0462)

— Mar 01: OECD releases Bahrain Stage 1 peer review report on implementation of Action 14 minimum standard (Tax Alert 2021-0461)

— Mar 01: Hong Kong's 2021/22 Budget proposal discussed (Tax Alert 2021-0457)

— Mar 01: Panama remains on EU list of non-cooperative jurisdictions with no immediate consequences (Tax Alert 2021-0456)

— Feb 26: OECD releases new transparency framework for Action 5 for 2021 through 2025 (Tax Alert 2021-0447)

— Feb 26: EU negotiations on public CbCR move forward as majority of Member States back proposal (Tax Alert 2021-0446)

— Feb 26: Cyprus announces non-application of administrative fines for DAC6 submissions up until 30 June 2021 (Tax Alert 2021-0445)

— Feb 26: Portugal publishes MDR guidance and reporting form (Tax Alert 2021-0444)

— Feb 26: Presidential proclamation rescinds suspension of entry of certain immigrant visa holders to the US (Tax Alert 2021-0443)

— Feb 26: Alberta budget 2021-22 discussed (Tax Alert 2021-0433)


— Mar 05: What to expect in Washington (March 5) (Tax Alert 2021-0495)

— Mar 04: Senate COVID bill includes changes from House version (Tax Alert 2021-0486)

— Mar 01: Washington legislation reduces 2021 SUI tax rates; revised rate notices issued to employers, other COVID-19 updates (Tax Alert 2021-0464)

— Mar 01: House approves COVID relief reconciliation bill (Tax Alert 2021-0451)


— Mar 02: Wisconsin Court of Appeals affirms circuit court decision allowing dividends received deduction for distribution received from foreign limited partnership treated as a corporation for federal income tax purposes (Tax Alert 2021-0469)

— Mar 01: Michigan 2021 SUI taxable wage base to increase; governor vetoes provision that would have bolstered the UI trust fund balance (Tax Alert 2021-0465)

— Mar 01: New Jersey enacts law affecting property tax obligations of tax-exempt hospitals (Tax Alert 2021-0463)

— Mar 01: FUTA credit reduction for Virgin Islands for 2021, the outlook for future years (Tax Alert 2021-0460)

— Mar 01: EY's state guide to COVID-19 payroll and employment tax provisions is updated through February 22, 2021 (Tax Alert 2021-0459)

— Mar 01: Pennsylvania 2021 SUI tax rate factors and taxable wage base to remain the same; COVID-19 benefits are not charged to employer accounts despite information sent to employers (Tax Alert 2021-0458)

— Feb 26: Oregon 2021 SUI tax rates increase; employers affected by COVID-19 may request interest and penalty free SUI payment plan arrangements (Tax Alert 2021-0450)

Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

  • Nebraska Department of Revenue limits application of its dividends received deduction on Subpart F income. In Revenue Ruling 24-21-1 (issued Feb. 17, 2021), the Nebraska Department of Revenue (NE DOR) stated that Subpart F income is generally not a dividend or deemed dividend for purposes of the Nebraska dividends received deduction (DRD). The revenue ruling is advisory in nature but is binding on the NE DOR.
  • Income/Franchise, Sales & Use, Business Incentives, Property Tax, Compliance & Reporting, Payroll & Employment Tax, Miscellaneous Tax, Value Added Tax, Upcoming Webcasts

ITS/Washington Dispatch
   Highlights of this edition include:


  • Congress poised to enact $1.9t COVID-relief bill with repeal of worldwide interest expense allocation — but what's next?

Transfer pricing news

  • Treasury to consider reviving expired transfer pricing aggregation regulations
  • IRS continues APA/MAP case closures despite COVID restrictions

OECD developments

  • OECD Forum on Tax Administration releases new handbook for International Compliance Assurance Programme (ICAP)
  • OECD holds public consultation on review of minimum standard on dispute resolution under BEPS Action 14
  • OECD releases 10th batch of peer review reports on BEPS Action 14 related to improving dispute resolution

IRS Weekly Wrap-Up


 TD 9936Guidance on Passive Foreign Investment Companies; Correction
 REG-111950-20Guidance on Passive Foreign Investment Companies and the Treatment of Qualified Improvement Property Under the Alternative Depreciation System for Purposes of Sections 250(b) and 951A(d); Correction

Revenue Procedures

 2021-15Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability

Revenue Rulings

 2021-06Section 6621.—Determination of Rate of Interest


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


 2021-20Guidance on the Employee Retention Credit under Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act

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.