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January 5, 2023

U.S. Tax This Week for January 6

Ernst & Young's U.S. Tax This Week newsletter for the week ending January 6 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 limits audit protection for the treatment of specified research or experimental expenditures paid or incurred in tax years beginning after December 31, 2021

In Revenue Procedure 2023-11, the IRS has modified Revenue Procedure 2023-8 to limit audit protection for the treatment of specified research or experimental expenditures paid or incurred in tax years beginning after December 31, 2021. (For more information on procedures for automatically changing accounting methods to comply with amendments made to IRC Section 174 by the Tax Cuts and Jobs Act, see Tax Alert 2022-1910.) EY Tax Alert 2023-0015 has details.

IRS issues additional guidance for brokers on transfers of interests in publicly traded partnerships

In Notice 2023-8, the IRS provides additional guidance on the final regulations under IRC Section 1446(f) for withholding on dispositions of interests in publicly traded partnerships (PTPs). The Notice addresses (1) withholding requirements for non-US PTPs, (2) reliance on late documentation and (3) when the short-sale exception applies. The Notice does not delay the effective date of withholding, which remains January 1, 2023. EY Tax Alert 2023-0026 has details.

Upcoming Webcasts

BEPS 2.0: New OECD releases and ongoing implementation activity (January 12)
During this EY Webcast, Ernst & Young professionals will examine the latest OECD releases on both Pillars and explore the growing legislative activity as jurisdictions begin to incorporate global minimum tax rules into their domestic law. Please join EY professionals for this webcast.

Tax in a time of transition: Legislative, economic, regulatory and IRS developments (January 20)

Previously this Webcast was Tax in the time of COVID; same series, new name.

During this EY Webcast, Ernst & Young professionals will provide updates on: (i) the US economy and tax policy; (ii) what’s happening at the IRS; and (iii) breaking developments.

How life sciences tax departments are preparing for sustainability (January 24)
During this EY Webcast, Ernst & Young professionals will explore sustainability tax trends and global developments in the life sciences sector. EY teams of life sciences and sustainability tax thought leaders will discuss, and share their perspectives on emerging trends and hot topics relevant to this market.

Recent Tax Alerts

Internal Revenue Service

— Jan 04: IRS delays $600 reporting threshold for third-party settlement organizations until 2023 (Tax Alert 2023-0028)

— Jan 04: IRS issues additional guidance for brokers on transfers of interests in publicly traded partnerships (Tax Alert 2023-0026)

— Jan 03: IRS limits audit protection for the treatment of specified research or experimental expenditures paid or incurred in tax years beginning after December 31, 2021 (Tax Alert 2023-0015)

— Jan 03: IRS issues final revised qualified intermediary agreements effective beginning in 2023 (Tax Alert 2023-0011)

— Dec 22: EY publication highlights accounting implications of 2022 Q4 income tax developments (Tax Alert 2022-1941)


— Jan 04: UK announces new COVID-19 testing requirements for travelers arriving from China Mainland (Tax Alert 2023-0024)

— Jan 04: Argentina implements new mandatory disclosure regime for international transactions (Tax Alert 2023-0023)

— Jan 04: Uruguay's Ministry of Economy and Finance sets minimum non-taxable amount of Net Wealth Tax (Tax Alert 2023-0022)

— Jan 04: Uruguay updates list of countries or jurisdictions deemed low or no taxation (Tax Alert 2023-0021)

— Jan 04: Pre-arrival molecular COVID-19 test required to enter Canada for those traveling from China, Hong Kong or Macao (Tax Alert 2023-0020)

— Jan 04: US announces suspension of routine visa services and imposition of COVID-19 testing requirement affecting travel from People's Republic of China (Tax Alert 2023-0019)

— Jan 04: Hong Kong implements new immigration policies to attract overseas and mainland Chinese talent (Tax Alert 2023-0018)

— Jan 04: Peru extends temporary capital gain tax exemption for securities transferred through Lima Stock Exchange subject to certain restrictions (Tax Alert 2023-0017)

— Jan 04: Europe | A review of three key environmental tax changes to take place in 2023 (Tax Alert 2023-0012)

— Jan 03: Uruguay Government proposes tax incentives to attract IT professionals (Tax Alert 2023-0009)

— Jan 03: Uruguay introduces zero VAT rate on hotel-related services to resident tourists for the summer season (Tax Alert 2023-0008)

— Jan 03: Brazilian Government publishes Provisional Measure adopting arm’s-length principle (Tax Alert 2023-0006)

— Jan 03: Saudi Arabia Ministry of Finance issues Zakat Collection Rules for Investment Funds (Tax Alert 2023-0005)

— Jan 03: Saudi Arabia announces second wave of Phase 2 e-invoicing integration (Tax Alert 2023-0004)

— Jan 03: China Mainland to lift additional COVID-19-related restrictions on January 8 (Tax Alert 2023-0003)

— Jan 03: China Mainland further relaxes COVID-19-related travel restrictions (Tax Alert 2023-0002)

— Dec 23: Hong Kong introduces bill on tax concessions for family-owned investment holding vehicles (Tax Alert 2022-1950)

— Dec 23: OECD releases public consultation document on Pillar One Amount A and Digital Services Taxes (Tax Alert 2022-1948)

— Dec 22: Spain implements EU Country-by-Country Reporting Directive applicable as of 22 June 2024 (Tax Alert 2022-1944)

— Dec 22: Poland experiences increase in withholding tax collection due to introduction of "pay and refund" regime (Tax Alert 2022-1943)

— Dec 22: Canada introduces new Labor Market Impact Assessment exemption codes under International Mobility Program (Tax Alert 2022-1940)

— Dec 22: Canada passes prohibition on the purchase of residential property by non-Canadians (Tax Alert 2022-1939)

— Dec 22: UK issues updated technical note and draft legislation on Electricity Generator Levy (Tax Alert 2022-1938)

— Dec 22: OECD releases consultation document on tax certainty for the Pillar Two GloBE rules (Tax Alert 2022-1936)


— Jan 04: What to expect in Washington (January 4) (Tax Alert 2023-0016)


— Jan 04: 2023 state supplemental, flat tax and highest income tax withholding rates with hyperlinks to the latest withholding tables/instructions (as of January 4, 2023) (Tax Alert 2023-0027)

— Jan 04: State corporate income and franchise tax developments in the fourth quarter of 2022 (Tax Alert 2023-0025)

— Dec 22: Massachusetts exclusion amounts for transportation fringe benefits to conform to the federal limits starting in 2023 (Tax Alert 2022-1942)

Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

EY-COST study: state and local government tax revenue surge. Businesses paid more than $951 billion in state and local taxes in fiscal year 2021, an increase of 13.6% from fiscal year 2020, according to a study prepared by Ernst & Young LLP (EY US) for the Council On State Taxation (COST) and its affiliate, the State Tax Research Institute (STRI). The report, titled "Total State and Local Business Taxes: State-by-State Estimates for Fiscal Year 2021," shows that in 2021, business tax revenue accounted for 43.6% of all state and local tax revenue.

— Income/Franchise, Sales & Use, Payroll & Employment Tax, Miscellaneous Tax, Global Trade

IRS Weekly Wrap-Up

Final Regulations

 TD 9971Exception for Interests Held by Foreign Pension Funds

Proposed Regulations

 REG-146537-06Income of Foreign Governments and International Organizations; Comment Period Reopening
 REG-100719-21User Fees Relating to Enrolled Actuaries; Hearing Cancellation
 REG-100442-22Guidance on the Foreign Government Income Exemption and the Definition of Domestically Controlled Qualified Investment Entities
 REG-114666-22Use of an Electronic Medium To Make Participant Elections and Spousal Consents


 TD 9969Treatment of Special Enforcement Matters; Correction

Revenue Procedures

 2023-11Changes in accounting periods and in methods of accounting
 2023-1026 CFR 601.201: Rulings and determination letters


 2023-01Updated Reference Standard 90.1 for § 179D
 2023-02Transitional guidance under sections 6045 and 6045A with respect to the reporting of information on digital assets by brokers.


 2023-11Foreign Financial Institution Temporary U.S. Taxpayer Identification Number Relief
 2023-10Revised Timeline Regarding Implementation of Amended Section 6050W(e)
 2023-09Section 45W Commercial Clean Vehicles and Incremental Cost for 2023
 2023-08Additional Guidance Related to Transfers of Publicly Traded Partnership Interests under Section 1446(f)
 2023-07Initial guidance regarding the application of the corporate alternative minimum tax under Sections 55, 56a, and 59 of the Internal Revenue Code
 2023-06Sustainable Aviation Fuel Credit; Registration; Certificates; Request for Public Comments
 2023-05Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates
 2023-04Calculating the qualifying payment amounts in 2023
 2023-032023 Standard Mileage Rates
 2023-02Initial guidance regarding the application of the excise tax on repurchases of corporate stock under Section 4501 of the Internal Revenue Code
 2023-01Certain Definitions of Terms in Section 30D Clean Vehicle Credit

Internal Revenue Bulletin

 2023-01Internal Revenue Bulletin of January 3, 2023
 2022-52Internal Revenue Bulletin of December 27, 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.