May 11, 2023
U.S. Tax This Week for May 12
Ernst & Young's U.S. Tax This Week newsletter for the week ending May 12 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
United States | Proposed regulations would turn off IRC Section 367(d) following certain repatriations of IP
In proposed regulations (REG-124064-19; Proposed Regulations) released 2 May 2023, the United States (US) Department of Treasury (Treasury) and the Internal Revenue Service (IRS) would apply new rules to "repatriations" of intangible property (IP) subject to IRC Section 367(d). In certain circumstances, the Proposed Regulations would permit the annual inclusions that IRC Section 367(d) and its regulations require to cease. The Proposed Regulations would be effective only for IP repatriations occurring on or after the date on which the final regulations are published. Comments on the Proposed Regulations must be received by 3 July 2023. EY Tax Alert 2023-0843 has details.
New York governor signs budget legislation that includes various tax changes affecting businesses and individuals
On May 3, 2023, Governor Kathy Hochul signed into law revenue legislation (A3009-C/S4009-C, hereafter Final Bill) that is a necessary component of the 2023 — 2024 budget. The Final Bill includes a variety of tax law changes that will affect corporate and individual taxpayers across various industries. Most notably, it extends the expiration dates of the increased tax rate on Article 9-A taxpayers and the business capital base tax. Governor Hochul also signed the transportation bill (A.3008-C/ S.4008-C), provisions of which increase the MCTMT rate for employers in the counties of Bronx, Kings, New York, Queens and Richmond (Staten Island). EY Tax Alert 2023-0823 has details.
EY Guides and Publications
Asean Mobility Spotlight (May 2023)
In this edition of EY's Asean Mobility Spotlight, attached below, we take a deep dive into the immigration rules for short-term business travelers (STBTs) as jurisdictions in Southeast Asia open borders to a near normal state, bouncing back from the COVID-19 pandemic resulting in an increase of travels for business purposes. This includes the following: (i) General entry requirements; (ii) Permitted activities; and (iii) Adherence to regulatory guidelines.
The current environment for R&D credit claims: A review of the latest guidance (May 17)
Recent court decisions underscore the growing importance of detailed, comprehensive documentation in sustaining an R&D credit claim. This EY Webcast is relevant to taxpayers with 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 discuss overview of recent tax and economic developments designed to help you stay on top of changes in today’s shifting economic, legislative and regulatory environment. In this regularly occurring webcast series, panelists will provide updates on: (i) the US economy and tax policy; (ii) what’s happening at the IRS; and (iii) breaking developments.
Private equity and private capital quarterly tax webcast (June 8)
During this EY Webcast, Ernst & Young professionals will discuss recent global private equity (PE) industry trends and the outlook for changes relevant to PE and alternative funds, transactions, fund professionals, and portfolio companies.
Recent Tax Alerts
— May 05: Tax Court holds that deadline for electronic filing is according to time zone where it is located (Tax Alert 2023-0829)
Internal Revenue Service
— May 08: IRS addresses taxation of digital currency (Tax Alert 2023-0839)
— May 10: Deadline extended for UK nationals to apply for right to reside in Denmark (Tax Alert 2023-0858)
— May 09: Hong Kong launches consultation to revise foreign-sourced disposal gain rule (Tax Alert 2023-0851)
— May 09: Costa Rica establishes new inspection procedures for goods at Nicaragua border (Tax Alert 2023-0850)
— May 09: Egypt introduces VAT guidelines for nonresident providers of remote digital and electronic services (Tax Alert 2023-0848)
— May 08: Costa Rica Independent Worker Law published in the Official Gazette (Tax Alert 2023-0844)
— May 08: South Africa | New reporting requirements for trusts (Tax Alert 2023-0842)
— May 08: Poland's implementation of the Single-Use-Plastics Directive getting closer (Tax Alert 2023-0841)
— May 08: Saudi Arabia issues amendments to the Zakat Implementing Regulations (Tax Alert 2023-0834)
— May 05: Netherlands updates guidance on mandatory disclosure regime (Tax Alert 2023-0827)
— May 05: Panama introduces further changes to work permit regulations (Tax Alert 2023-0826)
— May 04: Dutch Finance Ministry proposes changes to Tax Arrangement between the Netherlands and Curaçao (Tax Alert 2023-0818)
— May 04: Panama's Tax Authority issues new guidance on obtaining installments arrangements due to the State of National Emergency (Tax Alert 2023-0817)
— May 04: Cyprus implements major changes to immigration regulations for investors (Tax Alert 2023-0815)
— May 04: South Africa's Department of Home Affairs invites comments on the upcoming Trusted Employers Scheme pilot (Tax Alert 2023-0813)
— May 04: UK updates sponsor and compliance duties regarding remote and hybrid working reporting requirements (Tax Alert 2023-0812)
— May 04: Poland to lift COVID-19 suspension for MDR deadlines by end of June 2023 (Tax Alert 2023-0811)
— May 10: What to expect in Washington (May 10) (Tax Alert 2023-0856)
— May 08: Senate Health, Education, Labor and Pensions Committee hearing on PAHPA reauthorization (Tax Alert 2023-0837)
— May 05: House Energy & Commerce Subcommittee examines gaps in federal data privacy laws (Tax Alert 2023-0825)
— May 05: Senate Finance Committee hearing on improving mental health provider directories (Tax Alert 2023-0824)
— May 11: Utah issues revised 2023 income tax withholding guide reflecting lower personal income tax rate (Tax Alert 2023-0861)
— May 10: Maryland Supreme Court dismisses taxpayer challenge to state's Digital Advertising Services Tax (Tax Alert 2023-0857)
— May 09: California law changes civil rights pay data reporting requirements; pay data reports now due the second Wednesday of May (Tax Alert 2023-0853)
— May 09: North Dakota law lowers personal income tax rates retroactive to January 1, 2023 (Tax Alert 2023-0849)
— May 08: New York law increases the Metropolitan Commuter Transportation Mobility Tax for certain New York counties effective July 1, 2023 (Tax Alert 2023-0840)
— May 05: Colorado Department of Revenue adopts and amends income tax rules (Tax Alert 2023-0833)
— May 05: Colorado makes Retail Delivery Fee collection optional for retailers, increases small-seller threshold (Tax Alert 2023-0832)
State and Local Tax Weekly
Highlights of this edition include:
— Colorado Department of Revenue adopts and amends income tax rules The Colorado Department of Revenue (CO DOR) has amended three administrative rules and adopted one new rule related to corporate income tax. These rules, which were adopted April 5, 2023, relate to (1) NOLs for corporations, individuals, estates and trusts, (2) Colorado's unique foreign source income exclusion and (3) IRC §78 dividends. The new, and amended, rules take effect May 30, 2023.
— Income/Franchise, Sales & Use, Business Incentives, Property Tax, Controversy, Payroll & Employment Tax, Miscellaneous Tax, Unclaimed Property, Value Added Tax, Unclaimed Property
Highlights of this edition include:
- House Republicans pass debt ceiling, spending bill; impasse continues
- IRS provides transition period for documentation requirements for FTC ‘single country exception’
- IRS updates crypto notice, virtual currency remains unavailable to generate FX gain or loss
- IRS addresses micro-captive transactions as listed transactions
- IRS releases general plan for spending $80 million over the next 10 years
- IRS interim guidance on APA submissions fundamentally changes early stages of process
- US Tax Court rules IRS cannot assess penalties under Section 6038(b) for willfully failing to report foreign income
- OECD releases fifth annual peer review report on BEPS Action 6 on prevention of treaty abuse
IRS Weekly Wrap-Up
| ||REG–108054–21||Information Reporting and Transfer for Valuable Consideration Rules for Section 1035 Exchanges of Life Insurance and Certain Other Life|
| ||2023-39||Arbitrage Treatment of Certain Guarantee Funds|
Internal Revenue Bulletin
| ||2023-19||Internal Revenue Bulletin of May 8, 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.