April 20, 2023
U.S. Tax This Week for April 21
Ernst & Young's U.S. Tax This Week newsletter for the week ending April 21 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 regs address advanced manufacturing investment credit established by the CHIPS Act of 2022
In proposed regulations (REG-120653-22), the IRS would clarify key terminology and the practical operation of the advanced manufacturing investment credit (AMIC) under IRC Section 48D, which was enacted under the CHIPS Act of 2022, to incentivize businesses to manufacture semiconductors and semiconductor manufacturing equipment in the United States. The proposed regulations define a semiconductor as "an integrated electronic device or system most commonly manufactured using materials such as, but not limited to, silicon, silicon carbide, or III-V compounds, and processes such as, but not limited to, lithography, deposition, and etching." EY Tax Alert 2023-0713 has details.
Proposed rules on micro-captive transactions identify listed transactions and a transaction of interest, while accompanying Announcement obsoletes Notice 2016-66
In proposed rules (REG-109309-22), the IRS identifies certain micro-captive transactions that would be treated as listed transactions or transactions of interest under Treas. Reg. Section 1.6011-4(b). Material advisors and certain participants in these listed transactions and transactions of interest will be required to file disclosures with the IRS or face penalties. Listed transactions are those that the IRS has determined to be abusive tax avoidance transactions within the meaning of Treas. Reg. Section 1.6011-4(b)(2). Transactions of interest are transactions that the IRS has determined have the potential for tax avoidance or evasion within the meaning of Treas. Reg. Section 1.6011-4(b)(6). EY Tax Alert 2023-0734 has details.
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
— Apr 17: Eaton Corp. challenges transfer pricing adjustments in Tax Court (Tax Alert 2023-0719)
Internal Revenue Service
— Apr 20: Tax M&A Update for March 2023 (Tax Alert 2023-0744)
— Apr 20: IRS issues guidance on safe harbor accounting method for capitalizing certain natural gas transmission and distribution property costs (Tax Alert 2023-0742)
— Apr 19: Proposed rules on micro-captive transactions identify listed transactions and a transaction of interest, while accompanying Announcement obsoletes Notice 2016-66 (Tax Alert 2023-0734)
— Apr 18: IRS revokes a long-standing revenue ruling on correcting missed deductions for R&E expenses (Tax Alert 2023-0722)
— Apr 14: Proposed regs address advanced manufacturing investment credit established by the CHIPS Act of 2022 (Tax Alert 2023-0713)
— Apr 20: Poland implements amendments to the Act on Foreigners (Tax Alert 2023-0743)
— Apr 20: German Finance Ministry releases discussion draft on pending introduction of e-invoice (Tax Alert 2023-0741)
— Apr 20: European Parliament approves EU Emission Trading System reform and new EU Carbon Border Adjustment Mechanism (Tax Alert 2023-0740)
— Apr 20: Russian authorities require exiting foreign companies to pay 'contributions' at 5% or 10% of market value - implications for US multinationals (Tax Alert 2023-0738)
— Apr 19: Greece announces new requirements for Golden Visas (Tax Alert 2023-0732)
— Apr 18: Costa Rican Executive Branch publishes regulations to law aimed at attracting film investment to Costa Rica (Tax Alert 2023-0731)
— Apr 18: Costa Rica | Inactive Entities Informative Return, Form D-195, will be available on 24 April 2023 (Tax Alert 2023-0730)
— Apr 18: Nicaragua National Assembly approves creation of Foreign Trade Platform (Tax Alert 2023-0729)
— Apr 18: El Salvador's Bill for the Promotion of Innovation and Technological Manufacturing encourages investment in tech companies, includes tax benefits (Tax Alert 2023-0728)
— Apr 18: Digital nomads not taxable on their earnings for days working in Romania (Tax Alert 2023-0727)
— Apr 18: Canadian federal budget | Changes to the definition of 'financial service' under the Excise Tax Act (Tax Alert 2023-0724)
— Apr 18: The Latest on BEPS and Beyond | April 2023 (Tax Alert 2023-0723)
— Apr 18: Kenya issues VAT (Electronic, Internet, and Digital Marketplace Supply) Regulations, 2023 (Tax Alert 2023-0721)
— Apr 17: Rwanda gazettes new Tax Procedures Law (Tax Alert 2023-0720)
— Apr 17: Canadian Government workers possible strike may cause immigration delays (Tax Alert 2023-0717)
— Apr 14: Italy announces draft legislative framework for major tax reform (Tax Alert 2023-0712)
— Apr 20: Ways & Means holds Green Energy hearing as debt limit bill released (Tax Alert 2023-0739)
— Apr 20: House Financial Services Committee questions SEC's Gensler on crypto, climate risk rule, brisk pace of rulemaking (Tax Alert 2023-0737)
— Apr 19: Senate Budget, House Small Business Committees hold tax hearings (Tax Alert 2023-0735)
— Apr 19: What to expect in Washington (April 19) (Tax Alert 2023-0733)
State and Local Tax Weekly
Highlights of this edition include:
— Proposed Superfund Tax regulations address many issues, but leave others open. On March 27, 2023, the IRS published an advanced copy of proposed regulations (REG-105954-22) on the Superfund Chemical Tax and Superfund Imported Substance Tax (hereafter, Superfund Tax), which are excise taxes that apply to certain chemicals and certain imported substances effective July 1, 2022 (see Tax Alert 2021-2059).
— Unclaimed property holders that want to participate in California's Voluntary Compliance Program can now submit an interest form to receive an application. The California State Controller's Office (SCO) announced on its website that holders of unclaimed property (Holders) may complete an interest form for the voluntary compliance program (VCP) enacted by AB 2280 in Sept. 2022.
— Income/Franchise, Sales & Use, Business Incentives, Property Tax, Controversy, Compliance & Reporting, Payroll & Employment Tax, Miscellaneous Tax, Upcoming Webcasts
IRS Weekly Wrap-Up
| ||REG-120653-22||Advanced Manufacturing Investment Credit; Correction|
| ||2023-21||Examination of returns and claims for refund, credit or abatement; determination of tax liability|
| ||2023-09||Section 1274 - Determination of issue price in the case of certain debt instruments issued for property|
| ||2023-30||Conservation easements - Safe Harbor deed language for extinguishment and boundary line adjustment clauses|
| ||2023-33||Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates|
Internal Revenue Bulletin
| ||2023-16||Internal Revenue Bulletin of April 17, 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.