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May 4, 2023

U.S. Tax This Week for May 5

Ernst & Young's U.S. Tax This Week newsletter for the week ending May 5 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

Treasury releases proposed regulations on repatriation of intangible property subject to IRC Section 367(d)

The Treasury Department on May 2 released proposed regulations under IRC Section 367(d) (REG-124064-19; Proposed Regulations) that would govern certain "repatriations" of intangible property (IP). Following certain nontaxable transfers of IP to a foreign corporation, a US transferor generally must include in income annually amounts that are (1) contingent upon productivity, use and disposition of the IP; and (2) commensurate with the income that the transferee foreign corporation earns from the IP (Outbounded IP) during its useful life. EY Tax Alert 2023-9003 has details.

IRS interim guidance on review and acceptance of Advance Pricing Agreement submissions fundamentally changes early stages of the process

In an April 25, 2023 Memorandum for Treaty and Transfer Pricing Operations Employees (memo), the IRS's Acting Director of Treaty and Transfer Pricing Operations (TTPO) informed IRS employees of new internal procedures for APA prefiling meeting requests and the review and acceptance of APA submissions. The guidance implements a rigorous screening process whereby the Advance Pricing Mutual Agreement team (APMA) (along with other TTPO personnel) may shift taxpayers from the APA process to alternative workstreams. EY Tax Alert 2023-0800 has details.

Upcoming Webcasts

International tax talk quarterly series with the EY Global Tax Desk Network (May 9)
During this EY Webcast, our Global Tax Desk professionals will provide insights on recent significant tax developments in Australia, Brazil, India, Netherlands and Russia and explain how they might affect your businesses.

The current environment for R&D credit claims: A review of the latest guidance (May 17)
During this EY Webcast, Ernst & Young professionals will discuss original and amended return R&D credit claims, taxpayers under examination and taxpayers contemplating R&D credit claims in the future. Understanding the current judicial, examination and Appeals environment will help taxpayers anticipate what will be required to sustain an R&D credit.

Tax in a time of transition: Legislative, economic, regulatory and IRS developments (May 19)
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.

Recent Tax Alerts

Internal Revenue Service

— May 03: IRS interim guidance on review and acceptance of Advance Pricing Agreement submissions fundamentally changes early stages of the process (Tax Alert 2023-0800)

— May 02: IRS again rules that certain independent retirement living facilities focusing on residents' convenience and social lives are not health care facilities under REIT rules (Tax Alert 2023-0799)

— May 02: Our US employment tax rates and limits report for 2023 is updated through April 26, 2023 (Tax Alert 2023-0797)

— May 02: EY publication highlights 2023 Q1 tax policy developments across the Americas (Tax Alert 2023-0794)


— May 03: Sweden proposes to suspend applicants’ “right to request to conclude cases” for Swedish work permits and citizenship (Tax Alert 2023-0808)

— May 03: Australia outlines a new skilled migration strategy (Tax Alert 2023-0804)

— May 03: Japan lifts COVID-19 vaccination and testing requirements ahead of schedule (Tax Alert 2023-0802)

— May 02: Panama's Tax Authority sets the penalty for failing to timely file withholding tax return Form 03 (Tax Alert 2023-0798)

— May 02: Costa Rican Tax Authority modifies resolution on requests for and issuance of tax residence certificates (Tax Alert 2023-0796)

— May 02: Uganda issues Tax Amendment Bills for 2023 (Tax Alert 2023-0795)

— May 02: Saudi Arabia announces fourth wave of Phase 2 e-invoicing integration (Tax Alert 2023-0793)

— May 02: Argentine Central Bank issues new regulations on foreign exchange controls (Tax Alert 2023-0792)

— May 01: Hong Kong proposes safe harbor rules for onshore equity disposal gain (Tax Alert 2023-0788)

— May 01: Dubai Customs amends the grace period for Customs declaration submission (Tax Alert 2023-0787)

— Apr 30: Significant reform to Australia’s migration program underway (Tax Alert 2023-0803)

— Apr 27: Chilean appeals court considers whether Chile can tax Spanish resident's indirect transfer of Chilean company (Tax Alert 2023-0769)


— May 03: What to expect in Washington (May 3) (Tax Alert 2023-0801)

— Apr 28: House Ways and Means Oversight Subcommittee hearing on tax-exempt hospitals and the community benefit standard (Tax Alert 2023-0777)

— Apr 28: House Energy and Commerce Health Subcommittee considers 17 bills to lower health costs and increase transparency (Tax Alert 2023-0776)

— Apr 28: House Financial Services approves 14 bills intended to ease capital formation, plus CFPB reform package (Tax Alert 2023-0775)


— May 03: Iowa legislature approves elective pass-through entity tax (Tax Alert 2023-0809)

— May 03: Michigan Department of Treasury will allow employers to withhold at new reduced tax rate for 2023 (Tax Alert 2023-0807)

— May 02: Payroll Month in Review | April 2023 (Tax Alert 2023-0790)

— May 01: Arkansas law lowers top marginal personal income tax retroactive to January 1, 2023 (Tax Alert 2023-0779)

IRS Weekly Wrap-Up

Proposed Regulations

 REG-124064-19Section 367(d) Rules for Certain Repatriations of Intangible Property


 REG-105954-22Superfund Chemical Taxes; Correction


 2023-16Public Hearings on Proposed Regulations to Be Conducted in Person with Telephone Option Available

Internal Revenue Bulletin

 2023-18Internal Revenue Bulletin of May 1, 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.