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April 17, 2022
2022-0626

U.S. Tax This Week for April 15

Ernst & Young's U.S. Tax This Week newsletter for the week ending April 15 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

OECD releases public consultation document on draft rules regarding scope under Amount A for Pillar One

On 4 April 2022, the Secretariat of the Organisation for Economic Co-operation and Development (OECD) released a public consultation document with draft rules regarding scope under Amount A for Pillar One of the OECD/G20 project on Addressing the Tax Challenges Arising from the Digitalisation of the Economy (the BEPS 2.0 project). The new taxing right established through Amount A only applies to those Multinational Enterprise (MNE) Groups that fall within the defined scope of Amount A. The scope of Amount A is based on two threshold tests: i) a global revenue test; and ii) a profitability test. Both of these tests are to be met for a Group to be considered a Covered Group under the Amount A rules. EY Tax Alert 2022-0598 has details.

FY2023 Budget proposals may have state income tax implications for companies holding and transacting with digital assets
The Treasury Department's FY2023 explanation of President Biden's revenue proposals (Budget proposals) includes four provisions, described as "modernization rules," that would apply to digital assets. These proposals would: (i) Extend the nonrecognition rules for securities loans to loans of actively traded digital assets; (ii) Increase information reporting by certain financial institutions and digital asset brokers for purposes of exchanging information with other jurisdictions; (iii) Require taxpayers to report foreign digital asset accounts under IRC Section 6038D; and (iv) Amend the mark-to-market rules for dealers and traders to include digital assets. EY Tax Alert 2022-0623 has details.

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EY Guides and Publications

Updated EY publication includes income tax law changes enacted at the close of Q1 2022
An updated Quarterly Tax Developments for the quarter ended March 31 is available. This updated publication provides a quarterly overview of enacted tax legislation, as well as regulatory and other developments during the quarter. Certain enacted tax changes through March 31, 2022, are designated throughout this publication by a square after the country name.

QUEST Economic Update highlights key US and global economic trends - April 13, 2022
EY's Quantitative Economics and Statistics (QUEST) group has developed this publication summarizing the latest key economic and employment trends in a short, easy-to-read format. Developments such as growth trends in US gross domestic product (GDP), US employment and Federal Reserve activity are highlighted, as are economic trends outside the United States that may affect US businesses.

EY's 2021-22 Worldwide Personal Tax and Immigration Guide
Chapter by chapter, from Albania to Zimbabwe, we summarize personal tax systems and immigration rules in more than 150 jurisdictions. The content is current on July 1, 2021 with exceptions noted. Please note that only some of the chapters in this Guide reflect COVID-19 tax policy measures.

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Upcoming Webcasts

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.

Work reimagined: How to prepare for ‘renaissance and recommitment’ (May 17)
In this EY Webcast, we will explore the results of the newly released EY 2022 Work Reimagined Survey, which included more than 17,000 employees and 1,500 employers across 22 countries.

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Recent Tax Alerts

Internal Revenue Service

— Apr 13: IRS sending letters to some qualified opportunity funds and investors seeking compliance information (Tax Alert 2022-0613)

— Apr 11: What to do when submitting FATCA or CRS reports without taxpayer identification numbers (Tax Alert 2022-0597)

— Apr 08: IRS proposed regulations would base eligibility for premium tax credit on cost of covering employee's family (Tax Alert 2022-0582)

International

— Apr 14: PE Watch | Latest developments and trends, April 2022 (Tax Alert 2022-0621)

— Apr 13: Brazil to propose new transfer pricing system to align with OECD's transfer pricing guidelines (Tax Alert 2022-0612)

— Apr 13: Manitoba budget 2022-23 discussed (Tax Alert 2022-0610)

— Apr 13: Spain introduces new indirect tax on non-reusable plastic packaging as of 1 January 2023 (Tax Alert 2022-0609)

— Apr 13: Brazil to propose new transfer pricing system in line with OECD (Tax Alert 2022-0606)

— Apr 12: Paraguayan tax authority publishes requirements for preparing the local transfer-pricing technical-study report and eliminates conflict-of-interest provision for auditors (Tax Alert 2022-0603)

— Apr 13: European Commission proposes package of measures announced in Circular Economy Action Plan | Sustainable products to be the new mainstream in the EU (Tax Alert 2022-0600)

— Apr 12: OECD releases Consultation document | Crypto-Asset Reporting Framework and Amendments to the Common Reporting Standard (Tax Alert 2022-0599)

— Apr 12: OECD releases public consultation document on draft rules regarding scope under Amount A for Pillar One (Tax Alert 2022-0598)

— Apr 08: Newfoundland and Labrador budget 2022-23 discussed (Tax Alert 2022-0589)

— Apr 08: Costa Rica lifts all COVID-19-related entry requirements (Tax Alert 2022-0588)

— Apr 08: French Tax Authority releases new guidelines impacting trust reporting requirements (Tax Alert 2022-0584)

— Apr 11: Canada's Federal budget 2022-23 discussed (Tax Alert 2022-0583)

Legislation

— Apr 14: FY2023 Budget proposals may have state income tax implications for companies holding and transacting with digital assets (Tax Alert 2022-0623)

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

States

— Apr 14: New Jersey Division of Taxation changes its policy on the application of P.L. 86-272 to combined group members claiming its protection (Tax Alert 2022-0625)

— Apr 14: Due dates extended for taxpayers electing New Jersey Business Alternative Income Tax (NJ BAIT) (Tax Alert 2022-0624)

— Apr 14: Kentucky legislature overrides governor's veto of HB 8 to enact conditional income tax rate cuts, sales/use tax base expansion and tax amnesty program (Tax Alert 2022-0622)

— Apr 13: South Carolina extends COVID-19 nexus and income tax withholding relief for remote workers (Tax Alert 2022-0617)

— Apr 13: Nebraska enacts individual and corporate income tax rate cuts (Tax Alert 2022-0614)

— Apr 12: Mississippi law gradually lowers individual income tax rates starting in 2023 (Tax Alert 2022-0602)

— Apr 12: Puerto Rico's Department of State extends due date for filing annual reports and paying annual fees (Tax Alert 2022-0601)

— Apr 11: Kentucky legislation reduces 2022 SUI tax rates and taxable wage base; revised rate notices to be issued (Tax Alert 2022-0595)

— Apr 08: Puerto Rico's Treasury Department extends due date for certain income tax returns (Tax Alert 2022-0591)

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Recent Newsletters

State and Local Tax Weekly

   Highlights of this edition include:

— Texas Supreme Court clarifies that "origin-based" system applies to sourcing gross receipts from the sale of services for Texas apportionment purposes In Sirius XM Radio, Inc v. Hegar, the Supreme Court of Texas (Texas Supreme Court) ruled in favor of the taxpayer, holding that gross receipts from the sale of services should be sourced based on an "origin-based" system. Thus, taxpayers should look to where their employees or equipment performed services when determining whether those services are performed in Texas for apportioning receipts for Texas corporate franchise (margins) tax purposes.

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

Washington Dispatch
   Highlights of this edition include:

Legislation

  • Biden Administration releases FY2023 Budget with several new international tax proposals
  • Congress passes omnibus appropriations bill with no tax title; Democrats still hope for reconciliation package
  • Senate Finance Committee Chairman supports tax sanctions for Russia, Belarus

Treasury and IRS news

  • Final FTC regulations will be revisited to address BEPS 2.0 Pillar Two rules
  • Proposed PTEP regulations coming second half of 2022

Tax Treaties

  • Senate Foreign Relations Committee reports out proposed US-Chile tax treaty

OECD Developments

  • OECD releases Commentary and illustrative examples on Pillar Two Model Rules

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IRS Weekly Wrap-Up

Final Regulations

 TD 9959Guidance Related to the Foreign Tax Credit; Clarification of Foreign-Derived Intangible Income

Internal Revenue Bulletin

 2022-16Internal Revenue Bulletin of April 18, 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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