June 26, 2022
U.S. International Tax This Week for June 24
Ernst & Young's U.S. International Tax This Week newsletter for the week ending June 24 is now available. Prepared by Ernst & Young's International Tax Services group, this weekly update summarizes important news, cases, and other developments in international taxation.
Senate Majority Leader Chuck Schumer and Senator Joe Manchin met again on 22 June over a slimmed-down reconciliation package, but there is no clarity on if or when there will be a bill and what it would include. The press reported the following day that Senator Manchin said a deal is not particularly close and indicated he is non-committal on the extension of enhanced Affordable Care Act premium tax credits that are due to expire.
Earlier in the week, Biden administration officials called for a prescription drugs, energy, and deficit reduction package to fight inflation. In response to a question about whether a bill can be passed, National Economic Council Director Brian Deese said, "We're hopeful we can move forward on that and other priorities in Congress as well." He added that the Senate Majority Leader "is working with his caucus to try to get a final package in place and we're hopeful that we'll see progress on that in the coming weeks."
While Senate Democrats have generally declined to comment directly on any ongoing talks about a legislative package, Democrats generally appear focused on crafting a health-energy-deficit reduction bill that would reduce costs for families.
The Senate has now adjourned for the Fourth of July recess and will next convene on 11 July. The House has a Committee Work Week next week and is out the following week. The two-week congressional break comes amid an uncertain outlook for a budget reconciliation bill and the USICA-COMPETES competitiveness conference committee.
The US Supreme Court on 21 June agreed to hear Bittner v. United States, a Fifth Circuit case on applying non-willful penalties for failure to report foreign financial accounts on FinCEN Form 114, otherwise known as an "FBAR" filing. The Court will address whether the $10,000 penalty (as adjusted for inflation) imposed under 31 USC Section 5321 for non-willful violations of the statute applies per annual filing (i.e., a maximum of $10,000 per year as adjusted for inflation), or per account that should have been reported.
In Bittner, the Fifth Circuit held that a separate violation occurred for each foreign account not timely reported on an FBAR, and imposed a penalty of $2.72 million over five years. Bittner argues the penalty should apply on a per-filing basis, which would reduce the penalty to $50,000, consistent with the Ninth Circuit's decision in United States v. Boyd. In Boyd, the court held that the non-willful penalty applies on a per-filing basis, not on the number of foreign accounts.
An Internal Revenue Service (IRS) official in the Large Business and International Division this week was quoted as saying that the US plans to expand its transfer pricing audit coverage in terms of both companies and issues. The official said the audit expansion will depend on adding more personnel, disclosing that the IRS is currently hiring in transfer pricing. Another government priority is improving the Advance Pricing Agreement (APA) and Mutual Agreement Procedure programs, she said, with the former potentially including more selectivity in accepting APAs into the program. The official further said the IRS is working on updating its APA and competent authority revenue procedures, although no timeline was given.
Competent Authority procedures in cross-border controversy for new entrants (June 28)
During this EY Webcast, Ernst & Young professionals will discuss trends and developments in Advance Pricing Agreements (APAs) and Mutual Agreement Procedures (MAPs) in jurisdictions that are new entrants or have new developments.
Competent Authority procedures in cross-border controversy at hub jurisdictions (June 30)
During this EY Webcast, Ernst & Young professionals will discuss trends and developments in Advance Pricing Agreements (APAs) and Mutual Agreement Procedure (MAP) in hub jurisdictions for centralized business operating models.
BorderCrossings (June 30)
During this EY Webcast, Ernst & Young professionals will discuss the current scope and framework of the Pillar One and Pillar Two proposals, the impact on multinationals, a US legislative update on related matters, and next steps.
Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (July 1)
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.
Taxing crypto and other digital assets: Using practical scenarios to explore key tax concepts for individuals and businesses (July 21)
During this EY Webcast, Ernst & Young professionals will discuss recent digital assets' tax trends and the outlook for changes relevant to individuals and financial services companies.
Recent Tax Alerts
— Jun 20: US Customs and Border Protection releases operational guidance related to Uyghur Forced Labor Prevention Act implementation (Tax Alert 2022-0958)
— Jun 23: Tanzania’s Parliament passes Finance Bill 2022 (Tax Alert 2022-0972)
— Jun 23: Hong Kong proposes shipping-related tax concession regime (Tax Alert 2022-0973)
Canada & Latin America
— Jun 21: Supreme Court of Canada closes another door on equitable relief (Tax Alert 2022-0968)
— Jun 20: Luxembourg and the United Kingdom sign new double tax treaty (Tax Alert 2022-0960)
— Jun 20: EU Finance Ministers are unable to adopt Pillar Two Directive as Hungary changes position (Tax Alert 2022-0957)
— Jun 20: German Ministry of Finance issues report on extraterritorial taxation of intellectual property to German Parliament (Tax Alert 2022-0956)
— Jun 20: UK delays implementation of OECD Pillar Two to accounting periods beginning on or after 31 December 2023 (Tax Alert 2022-0954)
— Jun 21: Saudi Arabia relaunches tax amnesty initiative (Tax Alert 2022-0963)
— Jun 20: Türkiye's Country-by-Country Reporting Notification deadline is 30 June 2022 (Tax Alert 2022-0955)
IRS Weekly Wrap-Up
Internal Revenue Bulletin
| ||2022-26||Internal Revenue Bulletin of June 27, 2022|
Ernst & Young Client Portal, the leading source for news, analysis, and reference materials for corporate tax professionals, has a variety of content of interest to international tax practitioners, including:
— EY/Passport. EY/Passport is your guide to planning ventures in the global economy, offering a wealth of tax and business knowledge on more than 150 countries.
Because the matters covered herein are complicated, U.S. International 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.