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March 9, 2023
2023-0448

U.S. Tax This Week for March 10

Ernst & Young's U.S. Tax This Week newsletter for the week ending March 10 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

Texas Comptroller amends apportionment rule in response to recent litigation

The Texas Comptroller of Public Accounts (Comptroller) adopted, without changes to the proposed text, amendments to 34 Tex. Admin. Code Section 3.591 to reflect the Texas Supreme Court (Court) ruling in Sirius XM Radio, Inc. that gross receipts from the sale of services should be sourced based on an "origin-based" system. Thus, in determining whether services are performed in Texas for purposes of apportioning receipts, taxpayers should look to where their employees or equipment performed services. (See Tax Alert 2022-0539.) EY Tax Alert 2023-0438 has details.

Montana expected to adopt single sales factor apportionment, reduce top individual tax rate and net-long term capital gains deduction, increase business property tax exemption

The Montana legislature approved multiple pieces of legislation that were part of Governor Greg Gianforte's budget proposal. Once enacted, the legislation will adopt a single sales factor apportionment formula, reduce Montana's top individual income tax rate, replace the net-long term capital gain deduction with a tiered-rate system and increase the business equipment property tax exemption. The governor is expected to sign these bills in the coming days. EY Tax Alert 2023-0436 has details.

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Upcoming Webcasts

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.

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 03: EY-annotated Forms 990, 990-PF and 4720 highlight changes to 2022 forms, schedules and instructions (Tax Alert 2023-0416)

— Mar 02: IRS changes lookback period to allow taxpayers affected by certain COVID-19 postponements to claim refunds and credits (Tax Alert 2023-0400)

International

— Mar 09: Belgium extends single permit scheme and “search year” permit to eligible researchers (Tax Alert 2023-0447)

— Mar 09: Peruvian Tax Court holds international migration into Double Tax Treaty country does not prevent per se application of Double Tax Treaty benefits (Tax Alert 2023-0446)

— Mar 09: European Union postpones ETIAS launch to 2024 (Tax Alert 2023-0445)

— Mar 09: Canada's Underused Housing Tax Act may require Canadian entities to file new tax returns (Tax Alert 2023-0444)

— Mar 09: Costa Rican General Customs Directorate issues procedures for scanning of containers and goods at entry into the country (Tax Alert 2023-0443)

— Mar 09: Costa Rican Customs Authorities adjust Customs Information System (TICA) to eliminate 10% tax on imported beers (Tax Alert 2023-0442)

— Mar 09: Peru amends regulations temporary capital gain tax exemption for securities transferred through the Lima Stock Exchange by individuals (Tax Alert 2023-0441)

— Mar 09: Costa Rican General Customs Directorate issues procedures for scanning of containers and goods at entry into the country (Tax Alert 2023-0443)

— Mar 09: Costa Rican Customs Authorities adjust Customs Information System (TICA) to eliminate 10% tax on imported beers (Tax Alert 2023-0442)

— Mar 09: Peru amends regulations temporary capital gain tax exemption for securities transferred through the Lima Stock Exchange by individuals (Tax Alert 2023-0441)

— Mar 08: Brazil's Federal Revenue Office publishes Normative Instruction on early adoption of new Brazilian transfer pricing rules (Tax Alert 2023-0437)

— Mar 08: Manitoba's budget 2023-24 discussed (Tax Alert 2023-0434)

— Mar 08: Uruguay removes COVID-19-related travel restrictions for all individuals (Tax Alert 2023-0433)

— Mar 07: Brazil modifies taxation of fuels and crude oil (Tax Alert 2023-0429)

— Mar 07: Belgian Finance Minister launches proposal for tax reform (Tax Alert 2023-0428)

— Mar 07: Kenya introduces Common Reporting Standards Regulations, 2023 (Tax Alert 2023-0427)

— Mar 07: Costa Rican Tax Authority modifies requirements for transportation services of goods destined for export to qualify for VAT exemption (Tax Alert 2023-0426)

— Mar 07: UK and EU amend Northern Ireland Protocol with Windsor Framework (Tax Alert 2023-0424)

— Mar 07: Malaysia's indirect tax measures in Budget 2023 discussed (Tax Alert 2023-0423)

— Mar 06: Danish parliament debates bill proposing major immigration changes (Tax Alert 2023-0418)

— Mar 03: Nunavut's budget 2023-24 discussed (Tax Alert 2023-0414)

— Mar 03: British Columbia's budget 2023-24 discussed (Tax Alert 2023-0413)

— Mar 03: Yukon's budget 2023-24 discussed (Tax Alert 2023-0412)

— Mar 03: Alberta's budget 2023-24 discussed (Tax Alert 2023-0411)

— Mar 03: German Federal Parliament approves Single-Use Plastics levy, Federal Council approval is next step (Tax Alert 2023-0410)

— Mar 03: Hong Kong requires declaration of prior criminal convictions for Talent Admission Scheme applicants (Tax Alert 2023-0406)

— Mar 03: Singapore implements stricter verification requirements for Employment Pass applicants under the COMPASS framework (Tax Alert 2023-0405)

Legislation

— Mar 06: Senate Health, Education, Labor and Pensions Committee hearing on community health centers (Tax Alert 2023-0421)

— Mar 08: What to expect in Washington (March 8) (Tax Alert 2023-0431)

States

— Mar 09: West Virginia law retroactively lowers personal income tax rates effective January 1, 2023 (Tax Alert 2023-0439)

— Mar 08: Texas Comptroller amends apportionment rule in response to recent litigation (Tax Alert 2023-0438)

— Mar 08: Montana expected to adopt single sales factor apportionment, reduce top individual tax rate and net-long term capital gains deduction, increase business property tax exemption (Tax Alert 2023-0436)

— Mar 08: Ohio revisits Internal Revenue Code conformity (Tax Alert 2023-0435)

— Mar 07: Oklahoma SUI tax rates unchanged for 2023 but wage base increases; technology fund diversion does not apply in 2023; law reduces UI benefit weeks starting in 2023 (Tax Alert 2023-0425)

— Mar 03: Indiana enacts elective passthrough entity tax (Tax Alert 2023-0409)

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Recent Newsletters

State and Local Tax Weekly

   Highlights of this edition include:

— Indiana enacts elective passthrough entity tax On Feb. 22, 2023, Indiana Governor Eric Holcomb signed into law SB 2(Pub. Law 1), establishing an elective passthrough entity (PTE) tax, which allows electing entities to have adjusted gross income (AGI) tax imposed at the entity level.

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

ITS/Washington Dispatch
   Highlights of this edition include:

US Congress

  • President Biden delivers State of the Union address, proposes fourfold increase in stock buyback excise tax, ‘billionaire surtax’ 
  • House Ways and Means Committee Chairman calls BEPS Undertaxed Profits Rule ‘fundamentally flawed’

Treasury and IRS news

  • Proposed PTEP regulations to be released in latter half of 2023
  • IRS addresses deductions involving cryptocurrency in two Chief Counsel Advice memos

Transfer pricing

  • US Tax Court approves IRS/Eaton Corporation agreement resolving APA cancellation case

OECD developments 

  • OECD releases additional administrative guidance on BEPS 2.0 Pillar Two
  • OECD’s Pillar Two administrative guidance raises implications for US multinationals
  • OECD releases revised methodology for BEPS Action 14 peer reviews, updates on reporting of MAP and APA statistics

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IRS Weekly Wrap-Up

Corrections

 TD 9953Recapture of Excess Employment Tax Credits Under the American Relief Plan Act of 2021; Correction
 TD 9970Information Reporting of Health Insurance Coverage and Other Issues Under Sections 5000A, 6055, and 6056; Correction

Revenue Procedures

 2023-1726 CFR 601.601: Rules and Regulations

Notices

 2023-23Relief for Reporting Required Minimum Distributions for IRAs for 2023
 2023-24Section 45J Credit for Production of Electricity from Advanced Nuclear Power Facilities

Internal Revenue Bulletin

 2023-10Internal Revenue Bulletin of March 6, 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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