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May 25, 2023
2023-0939

U.S. Tax This Week for May 26

Ernst & Young's U.S. Tax This Week newsletter for the week ending May 26 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

G7 Finance Ministers welcome OECD progress report on tax cooperation and reiterate commitment to implementation of Pillars One and Two

On 11 May 2023, the OECD published a Progress Report (the Report) for the G7 Finance Ministers and Central Bank Governors' May 2023 meeting, which follows up on the OECD's May 2022 report by outlining progress on tax cooperation and identifying potential new areas for future consideration. The Report describes how the principles set out in the 2022 report are being incorporated into the design of Pillars One and Two under the so-called BEPS 2.0 project and how these principles are being translated into action. It also discusses capacity-building developments and plans. EY Tax Alert 2023-0920 has details.

Tax Court finds for partnership in dispute over whether income is excludable as a profits interest under Revenue Procedure 93-27

In ES NPA Holding, LLC v. Commissioner (T.C. Memo 2023-55), the Tax Court (court) held that Revenue Procedure 93-27 applies to a partnership's indirect receipt of a partnership interest, which is a profits interest and thus excludable from income. As such, the partnership did not have unreported income and was not liable for accuracy-related penalties under IRC Section 6662. EY Tax Alert 2023-0917 has details.

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EY Guides and Publications

QUEST Economic Update highlights key US and global economic trends - May 23, 2023
EY's Quantitative Economics and Statistics (QUEST) group has developed the attached publication summarizing the latest key economic and employment trends in a short, easy-to-read format. Developments such as growth trends in US gross domestic product (GDP), US employment and Federal Reserve activity are highlighted, as are economic trends outside the United States that may affect US businesses.

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Upcoming Webcasts

Domestic tax quarterly webcast series: A focus on state tax matters (June 7)
During this EY Webcast, Ernst & Young professionals will discuss important state tax policy developments, as well as international tax policy developments that could affect state and local taxes. Topics will include: (i) Potential US state and local tax implications of the OECD’s Model Rules for new global minimum taxes under Pillar Two of the BEPS 2.0 project; (ii) State income tax considerations of credits enacted under the federal Inflation Reduction Act; (iii) An update on state fiscal conditions; (iv) Highlights from the 2023 state legislative sessions; and (v) Other state tax policy considerations, including non-legislative developments.

BEPS 2.0: Pillar Two implementation and practical considerations (June 7)
During this EY Webcast, Ernst & Young professionals will examine the latest BEPS 2.0 Pillar Two implementation activity in countries around the world and highlight practical considerations with respect to the Pillar Two rules and guidance issued to date by the Inclusive Framework.

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.

Tax in a time of transition: Legislative, economic, regulatory and IRS developments (June 16)
Please join us for a fast-paced 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 EY 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.

Accounting for income taxes: A quarterly perspective (June 20)
During this EY Webcast, Ernst & Young professionals 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

— May 24: IRS releases Health Savings Account limits for 2024 (Tax Alert 2023-0936)

— May 24: IRS determines that healthcare sharing organization is not tax-exempt (Tax Alert 2023-0935)

— May 18: IRS issues guidance on domestic content bonus for clean energy project credits (Tax Alert 2023-0908)

International

— May 24: UK announces new restrictions to the Student visa route (Tax Alert 2023-0934)

— May 24: Qatar amends Executive Regulations to the Income Tax Law (Tax Alert 2023-0932)

— May 23: Hong Kong passes bill on tax concessions for Family-owned Investment Holding Vehicles (Tax Alert 2023-0927)

— May 22: Final regulations published for new EU Carbon Border Adjustment Mechanism (CBAM) and EU Emission Trading System revisions; CBAM transition period begins 1 October 2023 (Tax Alert 2023-0925)

— May 22: Israel's Tax Authority explains its stance on classification of SAFE instruments (Tax Alert 2023-0924)

— May 18: EU customs reform proposal embraces modern approach to e-commerce (Tax Alert 2023-0906)

— May 18: Italian Tax Authority rules effects of UK VAT groups not recognized for Italian VAT purposes (Tax Alert 2023-0905)

— May 18: Serbia to introduce Single Permits for work and residence authorization (Tax Alert 2023-0904)

Legislation

— May 24: What to expect in Washington (May 24) (Tax Alert 2023-0933)

— May 19: Senate Health, Education, Labor and Pensions Subcommittee on primary health and retirement security hearing on mental health and substance use disorder care (Tax Alert 2023-0918)

— May 19: What to expect in Washington (May 19) (Tax Alert 2023-0915)

— May 18: House Ways and Means Committee hearing on health care price transparency (Tax Alert 2023-0902)

— May 18: House Energy and Commerce Health Subcommittee markup of bills to lower health care costs and expand care access (Tax Alert 2023-0901)

States

— May 23: Montana repeals tax haven provisions (Tax Alert 2023-0931)

— May 22: Montana becomes the 35th jurisdiction to enact an elective pass-through entity tax (Tax Alert 2023-0926)

— May 22: Montana law gives nonresident income tax and withholding relief for short-term business travelers and their employers (Tax Alert 2023-0919)

— May 19: Arkansas law lowers unemployment insurance rate for new employers and makes other changes affecting employer SUI tax costs (Tax Alert 2023-0916)

— May 18: Idaho releases revised 2023 withholding tables reflecting new flat income tax (Tax Alert 2023-0907)

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Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

— New York governor signs budget legislation that includes various tax changes affecting businesses and individuals On May 3, 2023, New York's Governor signed into law the budget's revenue bill (A.3009-C/S.4009-C) and transportation bill (A.3008-C/S.4008-C). Of note, the final revenue bill extends the 7.25% business income base tax and the 0.1875% capital base tax for an additional three years, through tax year 2026.

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

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IRS Weekly Wrap-Up

Revenue Rulings

 2023-11Section 6621.—Determination of Rate of Interest

Internal Revenue Bulletin

 2023-21Internal Revenue Bulletin of May 22, 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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