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March 2, 2023
2023-0393

U.S. Tax This Week for March 3

Ernst & Young's U.S. Tax This Week newsletter for the week ending March 3 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

IRS provides welcome interim guidance for insurance providers on CAMT and invites comments

The IRS has issued interim guidance (Notice 2023-20) to help insurance companies and some other taxpayers comply with the new corporate alternative minimum tax (CAMT) until proposed regulations are issued. The notice addresses how to determine adjusted financial statement income (AFSI) with regard to (1) variable (and similar) contracts, (2) funds-withheld reinsurance and modified coinsurance agreements, and (3) the basis of certain assets held by previously tax-exempt entities that received a "fresh start" basis adjustment. The IRS requests comments on the notice by April 3, 2023. EY Tax Alert 2023-0384 has details.

US Supreme Court reaches pro-filer position in holding that the nonwillful FBAR penalty applies per report, not per account

On February 28, 2023, the US Supreme Court held in Bittner v United States that the $10,000 penalty1 for nonwillful failure to file FBAR reports imposed under 31 USC Section 5321 applies per annual report/filing, not per account. The 5-4 decision rejected the government's argument that the nonwillful penalty applies on a per account basis and resolves divergent positions held by two appellate courts. The Court did not address, except by way of dicta, the more serious penalty for willful failure to file. EY Tax Alert 2023-0394 has details.

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Upcoming Webcasts

The outlook for global tax policy and controversy in 2023 (March 7)
During this EY Webcast, Ernst & Young professionals discuss significant tax law trends, highlighting leading practices for organizations as they navigate tax developments around the world.

REIT Sector Trends and Economic Outlook (March 7)
During this EY Webcast, Ernst & Young professionals will discuss the economic outlook and how the latest capital markets landscape and new tax provisions are impacting the real estate investment trust (REIT) sector.

Are you Pillar Two-ready? | Banking and Capital Markets: Current industry insights (March 8)
During this EY Webcast, Ernst & Young professionals will examine the latest guidance from the Organisation for Economic Co-operation and Development (OECD) on the BEPS 2.0 project as it relates to the banking and capital markets industry.

Pillar Two administrative guidance and safe harbors: implications for US multinationals (March 9)
Recent administrative guidance from the Organisation for Economic Co-operation and Development (OECD) on the Global Anti-Base Erosion (GloBE) rules under Pillar Two addresses many critical issues for US multinationals but also raises many (unanswered) technical questions. The OECD’s transitional safe harbor rules, released at the end of 2022, could help relieve compliance burdens for US companies. During this EY Webcast, Ernst & Young professionals will provide a detailed discussion of these developments and practical approaches to help manage the reporting and tax-rate implications.

State & local tax developments in the real estate industry (March 10)
At the federal level, policymakers continue to debate the SALT deduction cap for US federal income tax purposes. At the same time, states continue to rapidly enact new pass-through entity taxes to address the SALT cap. State tax measures targeting high-net-worth individuals and corporate profits are also gaining steam with coordinated efforts by some state lawmakers. Please join, our panel of experienced SALT professionals for a discussion of these topics.

Latest clean-energy and manufacturing incentives and grants from the US and Europe (March 14)
During this EY Webcast, Ernst & Young professionals will take a deeper dive into next steps of realizing unprecedented government subsidies under the IRA (including Section 48C), IIJA and the EU.

EY Tax.Tech™ Ecosystem series: unlocking the power of data with tax function analytics (March 16)
During this EY Webcast, Ernst & Young professionals from EY and Alliance Partners Thomson Reuters and Alteryx discuss the latest in the tax analytics space, with updates on some market-leading tools.

Tax in a time of transition: legislative, economic, regulatory and IRS developments (March 17)
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; (iii) breaking developments.

Accounting for income taxes: A quarterly perspective (March 21)
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.

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Recent Tax Alerts

Internal Revenue Service

— Mar 01: IRS allows private foundation to set aside funds for a construction project to meet qualifying distribution requirement (Tax Alert 2023-0389)

— Feb 28: IRS provides welcome interim guidance for insurance providers on CAMT and invites comments (Tax Alert 2023-0384)

— Feb 24: CBO releases updated budget and economic projections (Tax Alert 2023-0373)

— Feb 23: New IRS regulations on electronic filing requirements apply for 2024 returns (Tax Alert 2023-0356)

International

— Mar 01: Portugal proposes to discontinue issuance of new Golden Visas (Tax Alert 2023-0388)

— Mar 01: Czech Republic extends Temporary Protection status for Ukrainian citizens and residents until March 31, 2024 (Tax Alert 2023-0386)

— Feb 28: UK opens India Young Professionals Scheme visa ballot on February 28 (Tax Alert 2023-0383)

— Feb 28: Japan expands immigration routes for highly skilled professionals and top international graduates (Tax Alert 2023-0381)

— Feb 27: Pakistan to become a signatory to the Apostille Convention on March 9 (Tax Alert 2023-0375)

— Feb 24: Supreme Court of Mauritius rules on timing of deduction for passage benefits and application of deemed interest income on interest free loans (Tax Alert 2023-0366)

— Feb 24: Costa Rica implements Law for Attracting Foreign Investors, Rentiers and Pensioners (Tax Alert 2023-0365)

— Feb 24: Nicaragua's Ministry of Finance publishes new lists of products exempt from VAT (Tax Alert 2023-0363)

— Feb 24: Cyprus Tax Authority issues FAQs on new transfer pricing legislation (Tax Alert 2023-0362)

— Feb 24: Vietnam implements new online system for obtaining Entry Visa approval letters (Tax Alert 2023-0361)

— Feb 24: Singapore plans to implement GloBE Rules and Domestic Top-up Tax as of 1 January 2025 (Tax Alert 2023-0359)

— Feb 23: Hong Kong announces 2023/24 Budget (Tax Alert 2023-0358)

— Feb 23: OECD publishes Manual on Handling of Multilateral Mutual Agreement Procedures and Advance Pricing Arrangements (Tax Alert 2023-0355)

— Feb 23: Israel implements new online processes and electronic issuance of B-1 Work Visas (Tax Alert 2023-0354)

— Feb 23: ECOFIN removes Uruguay from Annex II list of pending commitments for tax purposes (Tax Alert 2023-0353)

Legislation

— Mar 01: What to expect in Washington (March 1) (Tax Alert 2023-0387)

States

— Mar 01: Montana water's-edge election due March 31, 2023, for calendar-year taxpayers (Tax Alert 2023-0392)

— Feb 27: IRS extends tax filing/payment deadline to October 16 for disaster-area taxpayers in California, Alabama and Georgia (Tax Alert 2023-0378)

— Feb 23: St. Louis payroll earnings tax does not apply to remote work outside the city, Missouri Circuit Court rules (Tax Alert 2023-0351)

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Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

— IRS and Treasury outline application process and other requirements for claiming IRC § 48C credits for qualifying advanced energy projects. In Notice 2023-18, the IRS and Treasury provided initial guidance establishing the IRC § 48C(e) program, which will eventually allocate $10 billion of credits for investments in eligible qualifying advanced energy projects, of which at least $4 billion will be for projects located in certain energy communities.

— Income/Franchise, Sales & Use, Business Incentives, Compliance & Reporting, Payroll & Employment Tax, Value Added Tax, Upcoming Webcasts

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IRS Weekly Wrap-Up

Final Regulations

 RIN 1210-AB97Annual Information Return/Reports

Proposed Regulations

 REG-122286-18Use of Forfeitures in Qualified Retirement Plans

Notices

 2023-21Lookback periods for claims for credit or refund for returns with due dates postponed by notice 2020-23 or notice 2021-21

Internal Revenue Bulletin

 2023-09Internal Revenue Bulletin of February 27, 2023

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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