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February 13, 2022
2022-0248

U.S. Tax This Week for February 11

Ernst & Young's U.S. Tax This Week newsletter for the week ending Feburary 11 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

Governors' budget proposals include tax relief measures and other tax changes

With 2022 underway, governors across the country have delivered their state-of-the-state addresses and presented proposed budgets for the upcoming fiscal year (collectively, "proposals"). As in prior years, many of these proposals include state tax law changes. With states reporting revenues beyond prior estimates due both to surprisingly robust tax receipts and federal funding in response to the COVID-19 pandemic, the proposals' overarching theme thus far appears to be providing tax relief to both individuals and businesses. This relief includes cutting income tax rates, eliminating certain taxes and providing one-time rebates to taxpayers, as well as targeted tax credits and incentives to support business development. Among these proposals, New Jersey's governor promised not to raise taxes, while the governors of California and Massachusetts each recommended tax relief that will be of keen interest to businesses. EY Tax Alert 2022-0245 has details.

IRS updates list of automatic accounting method changes

In Revenue Procedure 2022-14, the IRS updates the list of automatic method changes. Revenue Procedure 2022-14 makes numerous changes to existing automatic change guidance. EY Tax Alert 2022-0222 has details.

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Upcoming Webcasts

Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (February 18)
During this EY Webcast, Ernst & Young panelists will provide updates on: (i) the US economy and tax policy; (ii) breaking developments; and (iii) what’s happening at the IRS.

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.

BorderCrossings (February 24)
During this EY webcast, part of an ongoing monthly series, EY transfer pricing and tax professionals will help you stay informed and able to adopt a more proactive stance in developing and defending your transfer pricing policies and practices.

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 10: IRS suspends mailing certain automatic tax notifications due to backlog of unprocessed returns (Tax Alert 2022-0243)

— Feb 09: IRS rules payments to REIT based on lessee's adjusted revenue are not rents from real property, partially revoking earlier ruling (Tax Alert 2022-0236)

— Feb 09: IRS memorandum analyzes basis determination for assets held by former public charity (Tax Alert 2022-0234)

— Feb 08: IRS rules web-based property reservations business provided brokerage services under IRC Section 1202 (Tax Alert 2022-0226)

— Feb 07: IRS rules solar energy facility charging fixed rates is not public utility property (Tax Alert 2022-0217)

International

— Feb 10: Curaçao releases new guidance on innovation box regime (Tax Alert 2022-0241)

— Feb 10: PE Watch | Latest developments and trends, February 2022 (Tax Alert 2022-0240)

— Feb 09: Canada's Department of Finance releases draft legislation for 2021 budget measures (Tax Alert 2022-0231)

— Feb 08: Australia reopens international border from February 21 (Tax Alert 2022-0227)

— Feb 08: Indian Government releases restrictive interpretation of Most Favored Nation clause (Tax Alert 2022-0224)

— Feb 04: Chile enacts tax reform to fund pension reform (Tax Alert 2022-0216)

— Feb 04: Ghana Revenue Authority issues administrative guidelines on certain provisions of the VAT Amendment Act (Tax Alert 2022-0212)

— Feb 04: Cyprus Tax Authorities publish 10-year government bond yield rates for NID purposes (Tax Alert 2022-0211)

Legislation

— Feb 09: What to expect in Washington (February 9) (Tax Alert 2022-0230)

— Feb 08: Energy and Commerce hearing on FDA user fee reauthorization (Tax Alert 2022-0225)

— Feb 07: House Ways & Means health panel examines medicare’s 24-month waiting period, priority of extending telehealth waivers (Tax Alert 2022-0221)

— Feb 04: House passes $350 billion bill to spur competition with China, now moves to conference with Senate (Tax Alert 2022-0214)

States

— Feb 10: New requirement to begin disclosing unclaimed property compliance on 2021 California business tax returns could increase enforcement (Tax Alert 2022-0244)

— Feb 09: California governor signs bill restoring NOLs and R&D credits for 2022, modifies elective pass-through entity tax (Tax Alert 2022-0235)

— Feb 09: Indiana county income tax rates increase in some jurisdictions effective January 1, 2022 (Tax Alert 2022-0233)

— Feb 09: Puerto Rico's Treasury Department issues guidance on tax exemption revocations (Tax Alert 2022-0232)

— Feb 08: Massachusetts Department of Revenue will not recognize certain fringe benefit exclusions under temporary federal COVID-19 provisions (Tax Alert 2022-0228)

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Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

— California governor proposes to restore NOLs and R&D credits for 2022 On Jan. 25, 2022, California Governor Newsom and legislative leaders announced they reached an agreement that would support businesses impacted by the ongoing COVID-19 pandemic. The agreed to framework calls for the shortening, by one tax year, of a prior suspension of net operating losses (NOLs) for tax years tax years 2020 through 2022 and prior limits on the use of business tax credits, including the research and development (R&D) credit, for the same period.

—  Income/Franchise, Sales & Use, Business Incentives, Property Tax, Controversy, Payroll & Employment Tax, Miscellaneous Tax, Unclaimed Property, Value Added Tax, Unclaimed Property

ITS/Washington Dispatch
   Highlights of this edition include:

Legislation

  • Biden Administration looks to scaled- back Build Back Better legislation IRS news

Treasury and IRS news

  • Final regulations treat domestic partnerships as aggregates for applying certain subpart F provisions, and proposed regulations would apply a similar approach to PFICs
  • IRS changes to instructions for 2021 partnership Schedules K-2 and K-3 relevant to many partnerships, including private equity and private capital funds
  • IRS announces pilot fast-track program to resolve corporate letter ruling requests in 12 weeks

OECD Developments

  • BEPS 2.0 model rules commentary expected to be released soon
  • OECD developing BEPS 2.0 Pillar Two corporate minimum tax implementation framework
  • OECD publishes 2022 Transfer Pricing Guidelines
  • OECD releases eighth batch of Stage 2 peer review reports on dispute resolution

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IRS Weekly Wrap-Up

Revenue Procedures

 2022-14Changes in accounting periods and in methods of accounting

Internal Revenue Bulletin

 2022-07Internal Revenue Bulletin of February 14, 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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