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February 6, 2022
2022-0205

U.S. Tax This Week for February 4

Ernst & Young's U.S. Tax This Week newsletter for the week ending February 4 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

Final regulations treat domestic partnerships as aggregates for applying certain subpart F provisions, and proposed regulations would apply a similar approach to PFICs

On January 25, 2022, the Treasury Department and the Internal Revenue Service published final regulations (T.D. 9960) treating domestic partnerships as aggregates (i.e., not as entities) for many subpart F purposes. These regulations finalize, with limited changes, regulations originally proposed in 2019 (See Tax Alerts 2019-1132 and 2019-1185.) Proposed regulations (REG-118250-20) also were issued that would extend the aggregate treatment of domestic partnerships to a "passive foreign investment company" (PFIC). These final and proposed regulations are relevant to any domestic partnership owning stock in a foreign corporation. S corporations generally are treated like domestic partnerships for the purposes of these final and proposed regulations. EY Tax Alert 2022-0203 has details.

Proposed regulations would expand scope of Subpart F rules on related person insurance income

In proposed regulations (REG-118250-20) (the Proposed Regulations) issued January 24, 2022, the Department of Treasury (Treasury) and the Internal Revenue Service (IRS) address, amongst other items, the Subpart F regime on related person insurance income (RPII).1 The Proposed Regulations would expand the scope of relationships giving rise to RPII, repropose an anti-abuse rule addressing certain cross-insurance arrangements, and provide for aggregate treatment of pass-through entities to characterize income as RPII. EY Tax Alert 2022-0182 has details.

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Upcoming Webcasts

How to respond to the continued evolution of hybrid work (February 8)
During this EY Webcast, Ernst & Young professionals will discuss hybrid working and how organizations are moving forward in the complicated world of travel disruption, vaccine requirements, changing government policies and fluctuating return-to-office plans.

International tax talk quarterly series…With the EY Global Tax Desk Network (February 8)
The European Commission recently published a legislative proposal for a directive to tackle the misuse of shell entities in the European Union (UNSHELL/ATAD 3). This EY Webcast, will address how implementation of these new requirements could affect businesses. At a high level, the webcast will also consider the impact these provisions are likely to have in other regions with respect to similar anti-abuse rules and reporting requirements, as well as these countries’ responses to increased tax transparency in recent years.

What India’s 2022-23 Budget could mean for its economy (February 9)
Join us for this EY Webcast, during which our senior EY tax and policy professionals will help decode the fine print of the 2022-23 India Budget, covering the macroeconomic and policy announcements, direct tax proposals and indirect tax proposals.

Domestic tax quarterly webcast series: A focus on state tax matters (February 23)
During this EY Webcast, Joe Crosby, CEO of MultiState, a full-service state and local government relations company, will join us to discuss important state and local tax policy considerations that are emerging in 2022. EY state and local tax professionals from around the country will join in these discussions, bringing unique insights from each region.

The indirect tax technology journey - Now. Next. Beyond. (March 2)
During this EY 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

— Feb 03: Final regulations treat domestic partnerships as aggregates for applying certain subpart F provisions, and proposed regulations would apply a similar approach to PFICs (Tax Alert 2022-0203)

— Feb 01: Proposed regulations would expand scope of Subpart F rules on related person insurance income (Tax Alert 2022-0182)

— Jan 28: IRS publishes '2022 Cumulative List of Changes in Section 403(b) Requirements' (Tax Alert 2022-0167)

International

— Feb 03: PE Watch | 2021 in review (Tax Alert 2022-0198)

— Feb 03: EY Canada's Tax Matters @ EY for February 2022 (Tax Alert 2022-0196)

— Feb 03: Updated US list of foreign currency futures contracts - starting point for IRC Section 1256 (Tax Alert 2022-0195)

— Feb 03: Danish Tax Administration publishes new guidance on submission deadline for Master Files covering income years as of 1 January 2021 (Tax Alert 2022-0193)

— Feb 03: UAE to introduce corporate tax for financial years starting 1 June 2023 (Tax Alert 2022-0192)

— Feb 02: Recent changes to Taiwan's tax legislation discussed (Tax Alert 2022-0191)

— Feb 02: CJEU rules that Spain’s penalty regime for failure to report overseas assets and rights to tax authorities is contrary to EU law (Tax Alert 2022-0188)

— Feb 02: Turkey enacts law to postpone inflation accounting and provides corporation tax exemption on gains related to conversions into Turkish Lira (Tax Alert 2022-0185)

— Feb 02: Turkey reduces its corporation tax rate by one point for certain corporations on specified income (Tax Alert 2022-0184)

— Feb 02: Kenya High Court rules that sale of copyrighted material is not a royalty and does not attract withholding tax (Tax Alert 2022-0183)

— Feb 01: Digital nomads now eligible to work from Brazil (Tax Alert 2022-0181)

— Jan 31: Peruvian tax authority establishes guidelines on using Peruvian banking system to pay for indirect transfers of shares (Tax Alert 2022-0177)

— Jan 31: Mexico suspends visa waivers for Brazilian and Venezuelan citizens (Tax Alert 2022-0176)

— Jan 31: OECD releases 2021 update on peer review of preferential tax regimes (Tax Alert 2022-0175)

— Jan 28: OECD Council opens accession discussions with Peru as a candidate for OECD membership (Tax Alert 2022-0166)

— Jan 28: German Ministry of Finance publishes guidance on German royalty deduction limitation rule (Tax Alert 2022-0165)

— Jan 28: Peruvian tax authority establishes guidelines for permanent establishments (Tax Alert 2022-0163)

— Jan 28: Spain’s Tax Authority issues ruling on remote workers and permanent establishments during and after COVID-19 restrictions (Tax Alert 2022-0162)

Legislation

— Feb 03: Senate Finance Committee hearing on hospital insurance trust fund and future of medicare financing (Tax Alert 2022-0197)

— Feb 02: What to expect in Washington (February 2) (Tax Alert 2022-0190)

States

— Feb 03: Georgia lowers electronic filing threshold for SUI returns | 2022 SUI tax (Tax Alert 2022-0199)

— Feb 02: North Dakota law changes electronic withholding tax payment and filing changes starting in 2022 (Tax Alert 2022-0194)

— Feb 02: North Dakota law changes electronic withholding tax payment and filing changes starting in 2022 (Tax Alert 2022-0194)

— Feb 01: Arizona 2022 SUI tax rates increase; act by February 28, 2022 to potentially lower your SUI tax rate (Tax Alert 2022-0187)

— Jan 31: California governor proposes to restore NOLs and R&D credits for 2022, while legislators propose significant tax increases to fund single-payer health care system (Tax Alert 2022-0178)

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Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

— Governor Murphy signs New Jersey Business Alternative Income Tax revisions into law. On Jan. 18, 2022, Governor Murphy signed into law New Jersey Senate Bill 4068 /Assembly Bill 6110(P.L. 2021, c. 419) (S. 4068), which revises significant aspects of New Jersey's elective pass-through entity (PTE) tax, known as the Business Alternative Income Tax (BAIT).

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

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IRS Weekly Wrap-Up

Revenue Procedures

 2022-12Individuals required to make returns of income
 2022-14Changes in accounting periods and in methods of accounting

Notices

 2022-082022 Cumulative List of Changes in Section 403(b) Requirements for Section 403(b) Pre-approved Plans

Internal Revenue Bulletin

 2022-05Internal Revenue Bulletin of January 31, 2022

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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