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April 10, 2022
2022-0577

U.S. Tax This Week for April 8

Ernst & Young's U.S. Tax This Week newsletter for the week ending April 8 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

Biden Administration's FY2023 budget and Green Book renew some partnership-related proposals and add new ones

The Biden Administration's FY2023 budget and Treasury Green Book propose certain changes to the rules affecting partners and partnerships, such as limiting basis shifting between related partners and taxing carried interest as ordinary income. The 2022 Green Book generally includes in the baseline the revenue provisions of Title XIII of the Build Back Better Act, which passed the House of Representatives on November 19, 2021. This means the Green Book proposals do not repropose any provisions already included in the Build Back Better Act. EY Tax Alert 2022-0550 has details.

Biden Administration's FY 2023 budget proposes increasing income tax rates for high net-worth individuals, modifying estate and trust tax rules, and significantly expanding capital gain recognition

The Biden Administration's FY 2023 Budget and Treasury Greenbook, released March 28, 2022, propose changes to the rules for taxing certain individuals, estates and trusts, as well as broadening the circumstances under which capital gains become taxable. The Administration's Budget proposal folds most of the House-passed Build Back Better Act (BBBA) into the baseline and assumes it has been enacted, a move likely intended to avoid upsetting any blossoming negotiations later this spring or summer on a post-BBBA reconciliation bill after the House measure stalled in the Senate. This means most tax-related spending and other BBBA provisions are omitted; other major tax increase proposals are included, even though Congress has little appetite for passing some of them. Examples of these proposed tax hikes include increases in the corporate and individual tax rates that were previously proposed by the Administration or congressional Democrats but later rejected as the BBBA was put together in the House. EY Tax Alert 2022-0548 has details.

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EY Guides, Surveys, and Reports

Asean Mobility Spotlight (April 2022)
Following multiple waves of COVID-19 outbreaks in 2020 and 2021, jurisdictions in Southeast Asia have finally found their footing amid accelerated vaccination rates and are reopening their borders and relaxing entry and quarantine requirements. These steps are expected to boost international business travel and tourism, both key elements of Southeast Asian economies which have been almost non-existent over the last two years and help to drive overall economic growth.

In this edition of the Asean Mobility Spotlight, we highlight the measures introduced by governments in Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam, to support businesses and employees through the pandemic and beyond.

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Upcoming Webcasts

BEPS 2.0: Perspectives, practicalities and preparedness (April 12)
As countries deliberate and start to decide on how to implement the GloBE rules, what will this reality look like in practice and how (and when) should businesses prepare? During this EY Webcast, Ernst & Young professionals will discuss the implications of the latest developments and share perspectives on how businesses and administrations around the world are responding.

Indirect tax considerations of digital assets, Web3 and the metaverse (April 13)
Join our EY team of tax professionals for the first in a series of discussions focused on the evolving digital landscape of blockchain technology, digital assets, Web 3.0 applications and how those items may converge in a metaverse ecosystem. During this 75-minute EY Webcast, EY professionals will discuss this evolving landscape through a state & local and indirect tax lens.

Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (April 15)
During this EY Webcast, Ernst & Young professionals will provide updates on: (i) the US economy and tax policy; (ii) breaking developments; and (iii) what’s happening at the IRS.

Leverage data and AI to enable Finance and Tax to pioneer transformation throughout the organization (April 28)
During this EY Webcast, Ernst & Young professionals and Microsoft discuss how data and AI enable the transformation of the Finance and Tax functions to accelerate meaningful change and improve business outcomes..

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Recent Tax Alerts

Internal Revenue Service

— Apr 06: IRS rules when proration must be applied to accumulated deferred income taxes for setting rates (Tax Alert 2022-0559)

— Apr 05: IRS issues proposed premium tax credit regulations on affordability of minimum essential coverage for family members (Tax Alert 2022-0543)

— Apr 04: IRS issues annual APA report for 2021 (Tax Alert 2022-0527)

International

— Apr 07: EY Canada's Tax Matters @ EY for April 2022 (Tax Alert 2022-0571)

— Apr 07: Cypriot Tax Department publishes MDR FAQs (Tax Alert 2022-0567)

— Apr 06: Brazil removes pre-travel COVID-19 test requirement for vaccinated travelers (Tax Alert 2022-0562)

— Apr 06: Brazil modifies additional freight for merchant marine renewal rate (Tax Alert 2022-0560)

— Apr 06: EU Finance Ministers continue negotiations to adopt Pillar Two Directive in light of Poland’s remaining objection (Tax Alert 2022-0558)

— Apr 06: Indian Fiscal Budget 2022 includes key tax proposals for individuals (Tax Alert 2022-0557)

— Apr 06: Singapore's 2022 Budget Statement includes increase in top marginal personal income tax rates and updates to foreign workforce policies (Tax Alert 2022-0554)

— Apr 06: UK Parliamentary committee calls for development of UK Carbon Border policy (Tax Alert 2022-0551)

— Apr 05: Swedish Parliament to vote on new work permit legislation on April 20 (Tax Alert 2022-0547)

— Apr 05: Ontario increases nonresident speculation tax rate and extends application provincewide (Tax Alert 2022-0546)

— Apr 05: Japan enacts 2022 tax reform bill (Tax Alert 2022-0542)

— Apr 04: OECD releases fourth annual peer review report on BEPS Action 6 relating to prevention of treaty abuse (Tax Alert 2022-0538)

— Apr 04: Italy publishes draft IVASS Regulation regarding online comparison system between insurance undertakings operating in Italy in the motor liability insurance sector (Tax Alert 2022-0536)

— Apr 01: Peru's President amends rules for determining the fair market value of Peruvian shares in direct transfers (Tax Alert 2022-0532)

— Apr 01: Peru's President amends silent partnership rules (Tax Alert 2022-0530)

— Apr 01: USCIS announces new actions to reduce backlogs and expand premium processing (Tax Alert 2022-0526)

— Apr 01: Italy to introduce new rules for remote workers (Tax Alert 2022-0524)

— Apr 01: Colombia modifies regulations on ultimate beneficial owners (Tax Alert 2022-0523)

— Apr 01: Canada expands sanctions on Russia, announces prohibitions on exports of goods and technology (Tax Alert 2022-0520)

Legislation

— Apr 08: What to expect in Washington (April 8) (Tax Alert 2022-0581)

— Apr 07: EY publication highlights 2022 Q1 tax policy developments across the Americas (Tax Alert 2022-0573)

— Apr 07: Senate Health, Education, Labor & Pensions hearing on FDA user fee agreements | Advancing medical product regulation and innovation for the benefit of patients (Tax Alert 2022-0572)

— Apr 07: House Energy & Commerce Subcommittee on Health hearing on communities in need | Legislation to support mental health and well-being (Tax Alert 2022-0570)

— Apr 05: Biden Administration's FY2023 budget and Green Book renew some partnership-related proposals and add new ones (Tax Alert 2022-0550)

— Apr 05: Biden Administration's FY 2023 budget proposes increasing income tax rates for high net-worth individuals, modifying estate and trust tax rules, and significantly expanding capital gain recognition (Tax Alert 2022-0548)

— Apr 04: "Modernization" rules proposed in Treasury Green Book would affect taxpayers holding and transacting with digital assets (Tax Alert 2022-0540)

— Apr 04: House Committee on Energy and Commerce hearing on FDA user fee reauthorization | Ensuring safe and effective medical devices (Tax Alert 2022-0537)

— Apr 01: President's FY2023 budget includes proposals affecting accounting methods and calculation of taxable income (Tax Alert 2022-0533)

— Apr 01: Senate Finance Committee hearing on behavioral health care when Americans need it | Ensuring parity and care integration (Tax Alert 2022-0521)

States

— Apr 06: Kentucky Legislature passes bill including conditional cuts in income tax rate, expansion of sales/use tax base and tax amnesty program (Tax Alert 2022-0564)

— Apr 06: Minnesota 2022 SUI taxes to increase sharply due to impact of COVID-19 on the state's UI trust fund (Tax Alert 2022-0563)

— Apr 06: Recent state law developments for tax-exempt organizations (Tax Alert 2022-0561)

— Apr 06: Sales and Use Tax Quarterly Update for second quarter of 2022 (Tax Alert 2022-0556)

— Apr 05: Ohio Supreme Court declines to hear appeal of challenge to city's income tax provisions for remote workers (Tax Alert 2022-0549)

— Apr 05: Iowa Department of Revenue confirms changes to individual income tax provisions apply starting in 2023 (Tax Alert 2022-0545)

— Apr 05: State corporate income and franchise tax developments in the first quarter of 2022 (Tax Alert 2022-0544)

— Apr 04: Texas Supreme Court clarifies that "origin-based" system applies to sourcing gross receipts from the sale of services for Texas apportionment purposes (Tax Alert 2022-0539)

— Apr 01: California Franchise Tax Board issues ruling on assigning gross receipts from sales of services to business entities (Tax Alert 2022-0531)

— Apr 01: FY2023 Budget proposals could have state income tax implications (Tax Alert 2022-0528)

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Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

— California Franchise Tax Board issues ruling on assigning gross receipts from sales of services to business entities. In its Legal Ruling 2022-01, the California Franchise Tax Board (CA FTB) sets forth the "relevant considerations and proper analysis" that should be used to determine how to assign gross receipts from the sale of services to business entities under California Code of Regulations, title 18, section 25136-2 (Regulation 25136-2) for the purpose of the state's market-based sourcing rules (CA FTB Legal Ruling 2022-01).

— Income/Franchise, Sales & Use, Property Tax, Payroll & Employment Tax, Miscellaneous Tax, Value Added Tax, Upcoming Webcasts

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IRS Weekly Wrap-Up

Proposed Regulations

 REG-114339-21Affordability of Employer Coverage for Family Members of Employees

Internal Revenue Bulletin

 2022-15Internal Revenue Bulletin of April 11, 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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