November 14, 2021
U.S. Tax This Week for November 12
Ernst & Young's U.S. Tax This Week newsletter for the week ending November 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.
Top of the Week
Latest version of Build Back Better proposal would modify international tax proposals in House Ways and Means bill
The latest version of the Build Back Better Act (the BBBA Draft), which the House Rules Committee released on October 28, 2021, includes significant changes to the international tax provisions of the Internal Revenue Code (IRC). These and other tax changes are generally intended to fund expanded social programs such as health coverage, affordable housing, universal pre-kindergarten and childcare, clean energy and climate investments, among other proposed spending provisions. EY Tax Alert 2021-2040 has details.
IRS issues FAQs for pass-through entities and owner taxpayers on filing and reporting carried interests
On November 3, 2021, the IRS issued (IR-2021-215) frequently asked questions (FAQs) on tax reporting obligations of pass-through entities and "owner taxpayers" arising under IRC Section 1061 for certain partnership interests held in connection with the performance of services (i.e., carried interests). The FAQs include worksheets and tables that pass-through entities and owner taxpayers must use for years to which the final IRC Section 1061 regulations apply or if they elect into the final regulations. An owner taxpayer is the person subject to tax on the IRC Section 1061 "recharacterization amount" and could be an individual, estate or trust. The FAQs will be included in the next revision of Publication 541, Partnerships, which will be released in 2022, the IRS said. EY Tax Alert 2021-2043 has details.
K-2 and K-3 for partnerships and S corporations: Operating under the new schedules for tax year 2021 (November 16)
During this EY Webcast, Ernst & Young professionals will share insights and leading practices on the following topics: (i) Changes you can expect to your reporting; (ii) Modifications you need to consider in your processes, communications, and agreements; (iii) Timing of K-2 and K-3 deliverables; and (iv) Penalties and potential penalty relief under IRS Notice 2021-39.
2021 Forms 1099 and 1042-S: New Forms W-8 and what filers need to know this reporting season (November 17)
During this EY Webcast, Ernst & Young professionals will answer many questions on the new forms (945/1099 and 1042/1042-S) and discuss of how to manage filing information returns for 2021.
Biden tax reform and the Build Back Better Act (November 18)
During this EY Webcast, Ernst & Young professionals will discuss the latest version of the Build Back Better Act (H.R. 5376) reconciliation bill and what it could mean for your business. Topics to be discussed include: (i) Current state of the bill and its prospects for passage; (ii) Corporate minimum tax; (iii) International provisions (global intangible low-taxed income/subpart F, foreign tax credits, foreign-derived intangible income, base erosion and anti-abuse tax); (iv) Interest expense limitations; and (v) What companies should be doing now.
Tax in the time of COVID-19: update on legislative, economic, regulatory and IRS developments (November 19)
During this EY Webcast, Ernst & Young professionals will discuss how businesses can navigate the tax policy environment and continue to effectively operate their tax function in this time of crisis and change. Panelists will provide updates on: (i) the US economy and tax policy; (ii) breaking developments; and (iii) what’s happening at the IRS.
2021 Year-end tax planning and other hot topics for asset managers (December 2)
During this EY Webcast, our panel of distinguished asset management tax professionals will share their insights on what the Build Back Better reconciliation package means for PE and alternative fund asset managers and their investors.
2021 employment tax year in review (December 7)
In meeting their 2021 year-end employment reporting requirements, employers will need to address the unique challenges created by temporary federal and state COVID-19 provisions while also following other necessary procedures for closing the tax year. During this EY Webcast, Ernst & Young employment tax and benefits professionals will discuss several common areas of year-end employment tax concern.
Recent Tax Alerts
Internal Revenue Service
— Nov 11: IRS Chief Counsel provides legal advice on information that IRS may require for a research credit claim to be considered valid (Tax Alert 2021-2063)
— Nov 09: IRS releases the qualified retirement plan limitations for year 2022: 401(k) pretax limit increases to $20,500; catch-up limit unchanged at $6,500 (Tax Alert 2021-2051)
— Nov 09: IRS clarifies how to calculate installment payments for deferred employment taxes (Tax Alert 2021-2049)
— Nov 08: IRS updates process for certain FAQs and will allow good-faith reliance on FAQs as defense against penalties (Tax Alert 2021-2038)
— Nov 11: Costa Rica's General Customs Directorate issues guidelines on processes and operations in free trade zones for public comment (Tax Alert 2021-2062)
— Nov 10: Canada's deadline to convert Health and Welfare Trusts to Employee Life and Health Trusts is imminent (Tax Alert 2021-2056)
— Nov 10: OECD releases Hong Kong Stage 2 peer review report on implementation of Action 14 minimum standard (Tax Alert 2021-2052)
— Nov 09: Finland announces new policies relating to Posted Workers (Tax Alert 2021-2048)
— Nov 09: UK Autumn Budget 2021 | Considerations for Japanese groups operating in the UK (Tax Alert 2021-2045)
— Nov 09: Indonesia passes wide-ranging tax law amendments (Tax Alert 2021-2039)
— Nov 05: Dominican Republic's Ministry of Finance and the General Directorate of Internal Taxes issue guidance on non-invoiced inventory outflows (Tax Alert 2021-2032)
— Nov 05: UK Plastic Packaging Tax | Legislation in UK Budget Finance Bill and consultation on new regulations (Tax Alert 2021-2027)
— Nov 05: Turkey enacts new tax law (Tax Alert 2021-2026)
— Nov 10: Reinstatement and expansion of superfund excise taxes under Infrastructure Investment and Jobs Act could mean taxpayers in multiple sectors must pay tax on products they manufacture or import (Tax Alert 2021-2059)
— Nov 10: House Education & Labor Committee approves retirement bill (Tax Alert 2021-2058)
— Nov 10: What to expect in Washington (November 10) (Tax Alert 2021-2057)
— Nov 09: CDFI announces opening of 2021 NMTC program award round (Tax Alert 2021-2044)
— Nov 05: Excise tax on stock buybacks included in House reconciliation manager's amendment (Tax Alert 2021-2033)
— Nov 05: Biden administration announces vaccination policies for large employers and health care workers, covering 100 million Americans (Tax Alert 2021-2031)
— Nov 06: House clears Senate's Bipartisan Infrastructure bill, 228-206 (Tax Alert 2021-2024)
— Nov 08: Congress passes infrastructure bill (Tax Alert 2021-2023)
— Nov 09: Colorado rescinds temporary COVID-19 paid sick leave requirement; regular paid leave requirement continues to apply (Tax Alert 2021-2050)
— Nov 09: Connecticut's tax amnesty program runs through January 31, 2022 (Tax Alert 2021-2047)
State and Local Tax Weekly
Highlights of this edition include:
— Louisiana's voluntary intercompany transfer pricing initiative begins November 1 The Louisiana Department of Revenue (LDR) announced a voluntary initiative allowing eligible corporate income taxpayers to resolve intercompany transfer pricing issues through the LDR's transfer pricing managed audit program (program).
— Income/Franchise, Sales & Use, Business Incentives, Property Tax, Controversy, Payroll & Employment Tax, Miscellaneous Tax, Unclaimed Property, Value Added Tax, Unclaimed Property
Highlights of this edition include:
- President Biden releases pared down budget reconciliation framework
- G20 leaders confirm commitment to global tax changes under BEPS 2.0
- Six country Joint Statement on transitional approach to existing unilateral measures during period before Pillar One is in effect
Treasury and IRS news
- IRS rules gains and losses arising from commodity hedges may be sourced by reference to the underlying hedged inventory property
- IRS revises Forms W-8ECI, W-8BEN-E, W-8BEN
- FinCEN provides FBAR relief to victims of recent natural disasters giving them until 31 December 2021 to file
Transfer pricing news
- IRS maintaining policy on 'telescoping' in APA and MAP cases while trying to alleviate administrative burden, official says
- Cyprus clarifies US-Cyprus CAA for exchange of CbC reports
- MLI Conference of the Parties issues two opinions re MAP implementation and entry into effect of arbitration rules
- OECD releases outcomes of fourth phase of peer reviews on BEPS Action 13
- OECD releases seventh batch of Stage 2 peer review reports on dispute resolution
- OECD releases PRC Stage 2 peer review report on implementation of Action 14 minimum standard
- UN releases MAP and Tax Dispute Resolution Handbook
IRS Weekly Wrap-Up
| ||2021-47||Examination of returns and claims for refund, credit or abatement; determination of correct tax liability.|
| ||2021-45||Tax forms and instructions|
Internal Revenue Bulletin
| ||2021-46||Internal Revenue Bulletin of November 15, 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.