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July 18, 2021
2021-1367

U.S. Tax This Week for July 16

Ernst & Young's U.S. Tax This Week newsletter for the week ending July 16 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

G20 Finance Ministers endorse key components of global tax changes and invite holdouts to back the agreement

On 9-10 July, the G20Finance Ministers and Central Bank Governors met in Venice. At the conclusion of the meeting, a joint communiqué (the communiqué) on key topics discussed at the meeting was issued. With respect to the ongoing G20/OECDproject on addressing the tax challenges arising from the digitalization of the economy (the "BEPS 2.0 project"), the Finance Ministers endorsed the key components of the two pillars on reallocation of profits and a global minimum tax as set out in the Statement released by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) on 1 July. They also called on the Inclusive Framework to swiftly address the remaining issues, finalize the design elements within the agreed framework and provide an implementation plan for the two pillars by the October G20 Finance Ministers meeting. In addition, they invited the Inclusive Framework member jurisdictions that have not yet joined the agreement to do so. EY Tax Alert 2021-1324 has details.

President Biden signs executive order on promoting competition in American economy, including four areas of health care On July 9, President Biden signed an Executive Order on Promoting Competition in the American Economy. In his remarks, President Biden said that the order is a "critical step towards an economy that works for everyone" and expressed his belief that "capitalism without competition isn't capitalism — it's exploitation." Among other items, he said that the order "commits the government to full and aggressive enforcement of antitrust laws," noting that it includes 72 initiatives across a dozen federal agencies and represents a "whole-of-government" effort. EY Tax Alert 2021-1336 has details.

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Upcoming Webcasts

US corporate income tax compliance: Tax year 2020 filing update and multi-year readiness (July 20)
During this Thought Center Webcast, Ernst & Young professionals will provide insights on preparing for 2020 US federal and state filings and multi-year considerations in this age of “continuous” compliance.

Taxation of the digital economy: What’s next (July 21)
During this Thought Center Webcast, Ernst & Young professionals will discuss the BEPS 2.0 update after the 30 June - 1 July OECD Inclusive Framework meeting and the 9-10 July G20 Finance Ministers and Central Bank Governors meeting.

2021 alternative and registered funds mid-year update (July 21)
During this Thought Center Webcast, Ernst & Young professionals will discuss the latest developments regarding accounting standards and tax legislation that impact alternative and registered fund companies. In this webcast, panelists will discuss: (i) Legislative tax updates; (ii) SEC regulatory updates; and (iii) Accounting and financial reporting updates.

Research credit: recent federal cases highlight an uncertain landscape (July 22)
During this Thought Center Webcast, Ernst & Young professionals will discuss the relevant facts of the cases and the courts’ reasoning on issues ranging from foundational IRC Section 41 qualification tests to procedural matters. The panelists will also address how taxpayers can respond to these decisions when substantiating current, amended, and future Section 41 claims. The webcast panel includes EY’s National Tax Department research credit leaders, as well as a member of our Tax Policy and Controversy practice.

Tax risk and controversy for companies operating in Asia-Pacific (July 26)
During this EY Webcast, Ernst & Young professionals will review key findings of the 2021 EY Tax risk and controversy survey and discuss why companies operating in Asia-Pacific should build their Tax Controversy Department of the Future without delay.

The indirect tax technology journey: Now. Next. Beyond. (August 5)
During this Thought Center Webcast, Ernst & Young professionals will share insights into how market-leading organizations are using technology to adapt to new legislation and market trends, and to effectively transform tax operations.

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Recent Tax Alerts

Internal Revenue Service

— Jul 14: IRS grants extension for partnership to file real property trade or business election (Tax Alert 2021-1357)

— Jul 13: IRS clarifies rules on changing depreciation for certain residential rental property, allows amended returns for partnerships making change (Tax Alert 2021-1343)

— Jul 12: Laboratory testing company operating in underserved communities doesn't qualify for IRC Section 501(c)(3) status, IRS concludes (Tax Alert 2021-1337)

— Jul 02: IRS rules that normalization rules do not protect cost of removal (Tax Alert 2021-1314)

— Jul 02: QUEST Economic Update highlights key US and global economic trends - July 2, 2021 (Tax Alert 2021-1313)

— Jul 02: VEBA's exempt status won't be endangered by providing student loan servicing benefit (Tax Alert 2021-1312)

— Jul 02: EY publication highlights accounting implications of 2021 Q2 tax developments (Tax Alert 2021-1309)

International

— Jul 15: Peru implements new, stricter requirements for residence visa applications (Tax Alert 2021-1364)

— Jul 15: Nigerian Tax Authority issues guidance on Stamp Duties compliance (Tax Alert 2021-1358)

— Jul 15: German Ministry of Finance issues updated guidance on extraterritorial taxation of IP, extending deadline for applicability of retroactive exemption in “clear” treaty cases (Tax Alert 2021-1355)

— Jul 14: Canada's proposed changes to taxation of employee stock options now law (Tax Alert 2021-1356)

— Jul 14: Turkey issues Communiqué on Ultimate Beneficial Owner declaration requirement (Tax Alert 2021-1348)

— Jul 14: French Parliament approves Amending Finance Bill for 2021 (Tax Alert 2021-1347)

— Jul 14: Saudi Arabia clarifies GCC origin of goods (Tax Alert 2021-1345)

— Jul 14: Taiwan amends capital gains tax law for transfers of real property (Tax Alert 2021-1344)

— Jul 13: Brazil announces new entry rules for Venezuelan nationals, maritime crew and individuals who recovered from COVID-19 (Tax Alert 2021-1349)

— Jul 13: Canada's Bill C-208 includes changes to section 84.1 and section 55 (Tax Alert 2021-1339)

— Jul 13: Canada's 2021 budget implementation bill receives Royal Assent (Tax Alert 2021-1338)

— Jul 13: Russia's law on activities of foreign Internet companies in Russia signed by the President (Tax Alert 2021-1332)

— Jul 12: EY Canada's Tax Matters @ EY for July 2021 (Tax Alert 2021-1330)

— Jul 12: South Korea launches pilot project 'Electronic Travel Authorization' for visa-free entry for foreign nationals; official launch in September 2021 (Tax Alert 2021-1328)

— Jul 12: India releases significant international travel announcements (Tax Alert 2021-1327)

— Jul 12: PE Watch | Latest developments and trends, July 2021 (Tax Alert 2021-1325)

— Jul 12: G20 Finance Ministers endorse key components of global tax changes and invite holdouts to back the agreement (Tax Alert 2021-1324)

— Jul 05: Spanish National High Court overturns denial of withholding tax exemption on dividend payments to EU shareholder (Tax Alert 2021-1320)

— Jul 05: Ireland broadly supports OECD agreement with reservation on rate (Tax Alert 2021-1319)

— Jul 02: OECD announces conceptual agreement in BEPS 2.0 project (Tax Alert 2021-1308)

— Jul 02: China announces new Stamp Duty Law (Tax Alert 2021-1303)

— Jul 02: Poland introduces VAT option on financial services to be effective 1 January 2022 (Tax Alert 2021-1302)

— Jul 02: Nigeria’s Federal High Court Issues Practice Directions on tax matters related to the Federal Inland Revenue Service (Tax Alert 2021-1301)

Legislation

— Jul 15: Senate Finance subpanel holds competitiveness hearing (Tax Alert 2021-1361)

— Jul 15: Ways & Means subpanel holds housing hearing (Tax Alert 2021-1360)

— Jul 15: CMS issues proposed CY2022 medicare physician fee schedule (Tax Alert 2021-1359)

— Jul 14: What to expect in Washington (July 14) (Tax Alert 2021-1352)

— Jul 12: President Biden signs executive order on promoting competition in American economy, including four areas of health care (Tax Alert 2021-1336)

— Jul 02: Most Inclusive Framework countries endorse high-level agreement (Tax Alert 2021-1342)

— Jul 02: Biden Administration expects increased IRS enforcement to generate more revenue to fund infrastructure (Tax Alert 2021-1321)

— Jul 02: Revenue proposals detailed in Treasury Green Book would significantly affect international private companies and families (Tax Alert 2021-1317)

— Jun 29: Ways & Means subpanel holds education hearing (Tax Alert 2021-1341)

States

— Jul 15: Colorado continues to relieve employer accounts of regular COVID-19 UI benefits, 2022 SUI tax rates and wage base expected to increase (Tax Alert 2021-1365)

— Jul 14: New York income tax withholding changes apply to wages paid on and after July 1, 2021 (Tax Alert 2021-1354)

— Jul 13: New Jersey governor signs law revising state credit and incentives programs (Tax Alert 2021-1351)

— Jul 13: Supreme Court rules that California can no longer require charities to submit a list of contributors (Tax Alert 2021-1350)

— Jul 13: Louisiana law gives income tax relief to short-term business travelers and tax incentives to teleworkers moving to the state (Tax Alert 2021-1346)

— Jul 12: Sales and Use Tax Quarterly Update for third quarter of 2021 (Tax Alert 2021-1335)

— Jul 02: Ohio enacts tax changes, including individual rate reductions, excluding certain capital gains from income (Tax Alert 2021-1322)

— Jul 02: Colorado expands sales and use tax to cover digital goods, mainframe computer access, and packing and crating (Tax Alert 2021-1318)

— Jul 02: US Supreme Court declines to hear New Hampshire case against Massachusetts temporary teleworker income tax rules for COVID-19 (Tax Alert 2021-1316)

— Jul 02: City of Eugene, Oregon revises wage brackets subject to Community Safety Payroll Tax effective July 1, 2021 (Tax Alert 2021-1315)

— Jul 02: State corporate income and franchise tax developments in the second quarter of 2021 (Tax Alert 2021-1310)

— Jul 01: Arkansas will not charge regular COVID-19 benefits to employer SUI accounts; law prevents increase in SUI wage base for 2022 (Tax Alert 2021-1305)

— Jul 01: Texas reduces impact of COVID-19 on employer 2021 SUI tax rates; 2021 SUI tax rates unchanged from 2020 (Tax Alert 2021-1304)

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Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

— Connecticut budget bill includes business tax changes. The recently enacted budget bill (SB 1202) makes the following tax changes:

  • Extends the 10% corporation business tax surcharge for two years to 2021 and 2022 (this tax is imposed on corporations with gross income for the income year of $100 million or more)
  • Delays the start of the phase-out of the capital base tax, and extends the phase-out period (from 2021–2024 to 2024–2028)
  • Increases over a two-year period the cap on the amount of research and development (R&D) tax credits a taxpayer can claim each year from 50.01% of the taxpayer's annual tax liability to 60% for the 2021 income year and to 70% in the 2022 income year and each year thereafter
  • Reduces the number of years unused R&D tax credits can be carried forward to 15 years (from "until fully taken")
  • Increases the aggregate cap on InvestCT tax credits to $550 million (from $350 million), but retains the existing $40 million annual cap
  • Allows 78% of the film and digital media production tax credit to be claimed against the sales and use tax if there is common ownership of at least 50% between the taxpayer and the eligible production company that sold, assigned or otherwise transferred the credit, effective Jan. 1, 2022
  • Requires the Connecticut Department of Revenue Services to establish a tax amnesty program that will run from Nov. 1, 2021 through Jan. 31, 2022, under which eligible taxpayers will receive a 75% reduction in the amount of interest that otherwise would be due and the tax commissioner will not seek to collect any civil penalties from such eligible taxpayers

— Missouri enacts marketplace facilitator and remote seller nexus rules. On June 30, 2021, Missouri Governor Mike Parson signed SB 153, which establishes marketplace facilitator and remote seller nexus rules for Missouri sales and use tax purposes effective Jan. 1, 2023.

— Income/Franchise, Sales & Use, Business Incentives, Compliance & Reporting, Controversy, Payroll & Employment Tax, Miscellaneous Tax, Global Trade, Value Added Tax, Upcoming Webcasts

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IRS Weekly Wrap-Up

Final Regulations

 TD 9951Employee Benefits Security Administration

Proposed Regulations

 REG-107706-21Notice of proposed rulemaking

Revenue Procedures

 2021-28This revenue procedure provides guidance under Section 202 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (TCDTRA), enacted as Division EE of the Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, 134 Stat. 1182 (December 27, 2020).
 2021-29Administrative, Procedural, and Miscellaneous

Notices

 2021-44Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

Internal Revenue Bulletin

 2021-28Internal Revenue Bulletin of July 12, 2021
 2021-27Internal Revenue Bulletin of July 6, 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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