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April 13, 2023

U.S. Tax This Week for April 14

Ernst & Young's U.S. Tax This Week newsletter for the week ending April 14 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

Proposed rules on IRS supervisory approval requirements clarify timing and authority

The IRS has issued proposed rules (REG-121709-19) on supervisory approval of certain penalties assessed by the IRS under IRC Section 6751(b). The proposed rules are aimed at addressing uncertainty that has arisen as the result of several judicial decisions. The proposed rules include the timing requirements for three types of penalties and define exactly who can give the approvals. The proposed rules would apply to penalties assessed on or after the date final rules are published in the Federal Register. EY Tax Alert 2023-0696 has details.

Tax Court rules IRS cannot assess penalties under IRC Section 6038(b) for willfully failing to report foreign income

The Tax Court held (Farhy v. Commissioner, 160 T.C. 6 (April 3, 2023)) that the IRS is not authorized to assess penalties under IRC Section 6038(b) against a taxpayer that willfully failed to report foreign income on Form 5471, Information Return of U.S Persons With Respect to Certain Foreign Corporations. As a result, the IRS cannot collect the penalties it assessed through a levy notice. The IRS may, however, collect the penalties through a civil action. EY Tax Alert 2023-0703 has details.

EY Guides and Publications

Updated EY publication includes income tax law changes enacted at the close of Q1 2023
An updated Quarterly Tax Developments for the quarter ended March 31 is attached below. This updated publication provides a quarterly overview of enacted tax legislation, as well as regulatory and other developments during the quarter. Certain enacted tax changes through March 31, 2023, are designated throughout this publication by a square after the country name.

EY TradeWatch | Issue 1, 2023
This publication outlines key legislative and administrative developments for customs and trade featuring insights and tax alerts from our network of Global Trade professionals trade around the world. In this first edition of the year, we see several of the trade trends that we identified in 2022 — supply chain disruption; a focus on environmental, social and governance (ESG) matters; and ongoing uncertainty around customs valuation — are still high on the agenda, and they are still presenting challenges and opportunities for businesses.

Upcoming Webcasts

What you need to know about the new Superfund Tax Proposed Regulations (April 19)
During this EY Webcast, Ernst & Young professionals focus on the recently released proposed regulations pertaining to the environmental taxes imposed by IRC Sections 4661 and 4671. Known commonly as the “Superfund Tax,” this excise tax is levied on certain chemicals that are either manufactured in the US or imported, and is imposed on imported chemical substances containing those chemicals; the tax is effective July 1, 2022.

Tax in a time of transition: Legislative, economic, regulatory and IRS developments (April 21)
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.

US corporate income tax compliance: Tax year 2022 readiness and planning for what’s next and beyond (April 26)
During this EY Webcast, Ernst & Young professionals will discuss how companies can continue to navigate the complexity and challenges of the ever-changing tax compliance landscape, while preparing for tax year 2022 and beyond.

Servitization: How to unlock the future of XaaS business models (April 27)
During this EY Webcast, Ernst & Young professionals will discuss service-led business models. Servitization represents a paradigm shift in the commercial and economic landscape — from the traditional buy or sell business model to a long-term lease, service, or subscription-based model. The potential impact of these new models crosses sectors and geography.

BorderCrossings... With EY transfer pricing and tax professionals (April 27)
During this EY Webcast, Ernst & Young professionals will talk about the results APMA reported in its 2022 APA Annual Statutory Report and discuss the challenges facing APMA and what the future holds.

EY Tax.Tech™ Ecosystem series: Preparing for OECD Pillar Two global minimum tax calculations, provision and compliance requirements (May 4)
During this EY Webcast, Ernst & Young professionals will discuss data requirements, processing steps and timeline necessary to meet upcoming BEPS 2.0 Pillar Two requirements. They will also highlight tools included on the Orbitax International Tax Platform that can help companies address issues related to the global minimum tax. These tools leverage Thomson Reuters integration to improve and automate your tax compliance preparation and review process. Finally, they’ll review the latest use cases and preview what’s ahead.

Recent Tax Alerts

Internal Revenue Service

— Apr 11: IRS announces that Form 8940 must be filed electronically and the Business Master File will be terminated (Tax Alert 2023-0695)

— Apr 06: IRS releases guidance on definition of energy communities for bonus IRC Sections 45 and 48 credits (Tax Alert 2023-0675)


— Apr 12: Australian Treasury releases Exposure Draft Bill — Multinational tax transparency public country-by-country reporting (Tax Alert 2023-0702)

— Apr 11: Global Tax Policy and Controversy Watch | April 2023 edition (Tax Alert 2023-0697)

— Apr 11: Saudi Arabia approves amendments to the Transfer Pricing Bylaws to include zakat payers as part of covered entities (Tax Alert 2023-0694)

— Apr 11: UAE announces the creation of a new flexible work permit for freelancers “of all skill levels” (Tax Alert 2023-0692)

— Apr 11: Sweden set to implement major changes relating to EU Blue cards (Tax Alert 2023-0691)

— Apr 10: Argentine tax authorities suspend the validity of exemption certificates for income tax and VAT withholdings on imports of goods (Tax Alert 2023-0690)

— Apr 10: Uruguay enacts law with tax adjustments for PIT and Social Security Assistant Tax taxpayers (Tax Alert 2023-0688)

— Apr 07: India announces key tax proposals impacting individuals and employers in fiscal budget 2023 (Tax Alert 2023-0684)

— Apr 07: Luxembourg amends some procedural tax rules (Tax Alert 2023-0682)

— Apr 06: UK concludes negotiations to join Comprehensive and Progressive Agreement for Trans-Pacific Partnership (Tax Alert 2023-0677)

— Apr 06: EY Canada's Tax Matters @ EY for April 2023 (Tax Alert 2023-0674)

— Apr 05: OECD releases fifth annual peer review report on BEPS Action 6 relating to the prevention of treaty abuse (Tax Alert 2023-0671)

— Apr 05: Malaysia implements instant approval of employer submitted expatriate projection applications (Tax Alert 2023-0669)

— Apr 05: Singapore Enhanced medical insurance requirements for Work Permit and S Pass holders from July 1 (Tax Alert 2023-0668)

— Apr 05: Ireland launches consultation on EU Minimum Tax Directive and proposed legislative approach (Tax Alert 2023-0666)

— Apr 04: Albania introduces Single Permits and new Residence Permits for specific categories of foreign nationals (Tax Alert 2023-0665)

— Apr 04: Australian Treasury releases Exposure Draft Bill to deny deductions for payments by significant global entities to low-tax jurisdictions relating to intangible assets (Tax Alert 2023-0664)

— Apr 04: South Africa announces automatic extensions for eligible visa holders until December 31 (Tax Alert 2023-0663)

— Apr 04: Kenya High Court upholds that interchange fees are financial services exempt from VAT (Tax Alert 2023-0662)

— Apr 04: Bulgaria introduces new temporary obligation for solidarity contribution (Tax Alert 2023-0661)

— Apr 04: Canada Federal budget 2023/24: A made-in-Canada plan (Tax Alert 2023-0658)

— Apr 04: Singapore updates scoring criteria under the new Complementary Assessment framework (Tax Alert 2023-0655)

— Apr 04: Hong Kong requires applicants under four Talent Admission Schemes to submit visa and entry permit applications online (Tax Alert 2023-0652)


— Apr 12: CMS issues FY 2024 proposed Medicare inpatient and long-term care hospital payment rule (Tax Alert 2023-0699)

— Apr 06: CMS issues CY 2024 Medicare Advantage, Part D updates (Tax Alert 2023-0679)


— Apr 11: Mississippi law brings clarity to the application of state sales and use tax to computer software, exempts software maintained on an out-of-state server (Tax Alert 2023-0693)

— Apr 06: New York budget negotiations continue with extended budget deadline (Tax Alert 2023-0680)

IRS Weekly Wrap-Up

Proposed Regulations

 REG–109309–22Micro-Captive Listed Transactions and Micro-Captive Transactions of Interest
 REG-121709-19Rules for Supervisory Approval of Penalties

Revenue Rulings

 2023-8Section 174.— Amortization of Research and Experimental Expenditures


 2023-11Listed Transactions and Transactions of Interest
 2023-12Part III – Administrative, Procedural, and Miscellaneous


 2023-29Energy Community Bonus Credit Amounts under the Inflation Reduction Act of 2022

Internal Revenue Bulletin

 2023-15Internal Revenue Bulletin of April 10, 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.