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December 4, 2022

U.S. Tax This Week for December 2

Ernst & Young's U.S. Tax This Week newsletter for the week ending December 2 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.

Top of the Week

IRS will consider applying the economic substance doctrine and related penalties more frequently in transfer pricing audits

According to a November 16, 2022 article in Tax Notes, Holly Paz, Acting Commissioner of the IRS's Large Business and International (LB&I) Division, told the American Bar Association Section of Taxation during its Philadelphia Tax Conference that the IRS will more frequently consider whether the economic substance doctrine applies in transfer pricing audits. EY Tax Alert 2022-1777 has details.

OECD holds Tax Certainty Day addressing MAP developments and tax certainty under Pillars One and Two

On 22 November 2022, the OECD held its fourth annual OECD Tax Certainty Day. Speakers at the virtual meeting included members of the OECD Secretariat, country delegates representing finance ministries and tax authorities, company tax executives and academics. During the event, the OECD released the 2021 statistics on MAPs and presented the 2021 MAP awards. There were also updates on other activities of the MAP Forum, the International Compliance Assurance Programme (ICAP) and the ongoing work on tax certainty under Pillars One and Two of the OECD/G20 project on addressing the tax challenges of the digitalization of the economy (the BEPS 2.0 project). EY Tax Alert 2022-1788 has details.

EY Guides, Surveys, and Reports

2022 Post-midterm election report | What to expect in health policy
This EY publication will explore expected leadership of the U.S. House of Representatives, U.S. Senate leadership and key congressional committees with jurisdiction over health care, as well as health policies to watch for potential inclusion in a year-end spending package and possible health policy priorities going forward.

Upcoming Webcasts

2022 year-end tax considerations and other hot topics for asset managers (December 5)
In a year filled with economic uncertainty and global political changes, year-end tax planning takes on elevated importance for asset managers. Issues at the federal, state, and local levels will play an important role in year-end planning and reporting. During this EY Webcast, Ernst & Young professionals will discuss what it may mean for asset managers and their investors.

How to navigate information requests in transfer pricing audits (December 6)
During this EY Webcast, Ernst & Young professionals will address various cross-border controversy topics and feature insights from professionals around the globe.

Domestic tax quarterly webcast series - A focus on state tax matters (December 7)
During this EY Webcast, please join our panel of Ernst & Young professionals for a discussion on the top-of-mind issues impacting state and local taxes.

Global Treasury: Key tax trends and topics to consider for 2023 (December 8)
During this EY Webcast, Ernst & Young professionals will discuss key tax trends and topics that will affect global treasury activity in 2023. This session will cover, in particular, multinationals’ cash management and risk management activities, as well as the potential effect of Pillar Two and the trends in financial transaction transfer pricing controversy.

2022 employment tax year in review (December 8)
During this EY Webcast, Ernst & Young professionals will discuss several common areas of year-end payroll and employment tax concerns.

Accounting for income taxes - a quarterly perspective (December 13)
During this EY Webcast, Ernst & Young professionals, moderated by Angela Evans, Partner, Tax Accounting and Risk Advisory Services (TARAS), will discuss ongoing issues and regulatory trends in the tax accounting arena. Topics will include recent tax legislation with tax accounting implications and a review of current income tax accounting concepts.

Omnishoring: Recent trends in supply chain, tax and global trade (December 13)
During this EY Webcast, Ernst & Young professionals will discuss the current factors that affect supply chain. This session will cover the macroeconomic, geopolitical and operational trends driving multinationals to reconsider the resilience of their supply chain across the manufacturing, logistics, distribution and sales functions.

Year-end reporting: What filers need to know this season (December 14)
What are this year’s newest challenges? What should filers think about so their information is complete and correct before filing? Join Ernst & Young LLP professionals during this EY Webcast for answers to these questions and a practical discussion of how to manage your information reporting process.

Tax in the time of COVID-19: update on legislative, economic, regulatory and IRS developmentse (December 16)
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.

Recent Tax Alerts

Internal Revenue Service

— Nov 29: IRS will consider applying the economic substance doctrine and related penalties more frequently in transfer pricing audits (Tax Alert 2022-1777)

— Nov 28: IRS rules again that solar facility is not public utility property (Tax Alert 2022-1770)

— Nov 21: Tax M&A Update for October 2022 (Tax Alert 2022-1751)

— Nov 21: QUEST Economic Update highlights key US and global economic trends - November 21, 2022 (Tax Alert 2022-1748)

— Nov 21: IRS rules proposed grant to charity constitutes 'unusual grant' that won't adversely affect its tax-exempt or public charity status (Tax Alert 2022-1746)

— Nov 18: IRS replaces Revenue Procedure 94-69 with new procedure for eligible taxpayers to file qualified amended returns to avoid accuracy-related penalties (Tax Alert 2022-1744)


— Dec 01: Ontario Immigrant Nominee Program (OINP) updates selection factors under Expression of Interest system (Tax Alert 2022-1790)

— Dec 01: Ontario launches Immigrant Nominee Program (OINP) Entrepreneur Success Initiative (Tax Alert 2022-1789)

— Dec 01: OECD holds Tax Certainty Day addressing MAP developments and tax certainty under Pillars One and Two (Tax Alert 2022-1788)

— Dec 01: Ethiopia introduces social welfare levy on imported goods (Tax Alert 2022-1786)

— Dec 01: EY Canada's Tax Matters @ EY for December 2022 (Tax Alert 2022-1785)

— Nov 30: Tax highlights of Ghana's 2023 Budget Statement and Economic Policy provided (Tax Alert 2022-1780)

— Nov 30: Uruguay establishes conditions for employees to work remotely under Free Trade Zone regime (Tax Alert 2022-1779)

— Nov 29: Spanish Tax Authority announces opening of registration site for new plastic packaging tax as of 1 December 2022 (Tax Alert 2022-1771)

— Nov 28: Italian Government approves 2023 Budget draft document and proposes further suspension of Sugar Tax and Plastic Tax for 2023 (Tax Alert 2022-1768)

— Nov 28: Kenya begins implementation of the Nairobi International Financial Center regime (Tax Alert 2022-1767)

— Nov 28: Mexico publishes MLI in Federal Official Gazette; timeline for entry into force will be triggered once instrument of ratification is deposited with OECD (Tax Alert 2022-1766)

— Nov 23: Ecuador enacts new regulations on Income Tax, including lower income tax rates for new investments (Tax Alert 2022-1762)

— Nov 23: Malaysia to issue new ePASS upon renewal of Employment and Dependent Passes (Tax Alert 2022-1760)

— Nov 22: Switzerland announces new quotas for Croatian nationals go into effect January 1, 2023 (Tax Alert 2022-1758)

— Nov 22: Colombian Congress approves tax reform bill (Tax Alert 2022-1757)

— Nov 22: UK Prime Minister makes immigration-related announcements in November 21 speech (Tax Alert 2022-1756)

— Nov 21: Hong Kong introduces bill to refine its foreign source income exemption regime (Tax Alert 2022-1749)

— Nov 18: South Africa | Overview of new administrative penalties for late submission of personal tax returns (Tax Alert 2022-1742)

— Nov 18: UK announces new Electricity Generator Levy (Tax Alert 2022-1734)

— Nov 18: China's MLI will be applicable to certain payments as of 1 January 2023 (Tax Alert 2022-1733)


— Nov 30: What to expect in Washington (December 2) (Tax Alert 2022-1798)

— Nov 25: Proposed foreign tax credit regulations offer relief from cost recovery and source-based attribution rules and include other key changes (Tax Alert 2022-1764)

— Nov 21: CDFI opens 2022 round of New Markets Tax Credit program allocations (Tax Alert 2022-1752)


— Dec 01: District of Columbia employers must offer employees clean-air transportation alternatives to parking benefits or a pay a compliance fee (Tax Alert 2022-1787)

— Nov 30: Ohio Supreme Court holds a motorsports company's receipts from licensing the rights to use certain intellectual property are not sourced to Ohio (Tax Alert 2022-1784)

— Nov 30: Colorado appeals court finds subsidiary includible in taxpayer's combined return (Tax Alert 2022-1783)

— Nov 28: Colorado appeals court allows individual taxpayers to amend returns after retroactive federal changes in CARES Act (Tax Alert 2022-1769)

— Nov 21: Texas appeals court allows taxpayer's use of cost-of-performance data to apportion its subscription receipts for services to Texas (Tax Alert 2022-1755)

— Nov 21: Oregon employers exempt from making contributions to the state's paid family and medical leave program must file by November 30, 2022 (Tax Alert 2022-1754)

— Nov 21: Massachusetts voters approve ballot measure on 'millionaires' tax (Tax Alert 2022-1750)

— Nov 21: Colorado voters approve measures to cut personal income tax rate retroactive to January 1, 2022, and to further limit standard and itemized deductions for highly paid starting in 2023 (Tax Alert 2022-1743)

Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

Various state and local tax-related ballot measures approved or rejected on November 8th. On Nov. 8, 2022, voters across the US considered various state and local tax-related ballot measures. Ballot measures to imposes additional income taxes were approved in Massachusetts but rejected in California. Voters in Colorado approved individual and corporate income tax rate cuts as well as a limit on the standard and itemized deduction for individuals with income over a certain amount.

— Income/Franchise, Sales & Use, Business Incentives, Property Tax, Controversy, Miscellaneous Tax, Upcoming Webcasts

IRS Weekly Wrap-Up

Proposed Regulations

 REG-112096-22Guidance Related to the Foreign Tax Credit


 TD 9967Section 42, Low-Income Housing Credit Average Income Test Regulations; Correction
 TD 9968Affordability of Employer Coverage for Family Members of Employees; Correction

Revenue Rulings

 2022-23Section 6621.—Determination of Rate of Interest


 2022-27Additional Qualified Disaster Zone Allocation Authority for Calendar Years 2021 or 2022


 2022-622022 Required Amendments List for Individually Designed Qualified and Section 403(b) Plans

Internal Revenue Bulletin

 2022-48Internal Revenue Bulletin of November 28, 2022
 2022-49Internal Revenue Bulletin of December 5, 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.