August 25, 2023
U.S. Tax This Week for August 25
Ernst & Young's U.S. Tax This Week newsletter for the week ending August 25 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
ACA affordability percentage is reduced again, putting some plans at risk of noncompliance
In Revenue Procedure 2023-29, the IRS announced the new Affordable Care Act (ACA) affordability percentage of 8.39% for 2024 employer health care plans. This percentage has decreased by the greatest annual amount since its inception. This could make some health plans fail to meet an affordability safe harbor and expose employers to IRC Section 4980H(b) penalties. EY Tax Alert 2023-1444 has details.
Senators urge IRS and Treasury to increase oversight of tax-exempt hospitals
In letters dated August 7, 2023, Senate Finance Committee members Elizabeth Warren (D-Mass.), Raphael Warnock (D-Ga), Bill Cassidy (R-La.) and Charles Grassley (R-Iowa) urged the Treasury Inspector General for Tax Administration (TIGTA) and the IRS to evaluate and increase IRS oversight of tax-exempt hospitals. Based on a 2020 IRS study by the Government Accountability Office (GAO), more than half of the 5,000 tax-exempt hospitals in the United States enjoy tax exemptions worth an estimated $28 billion. In exchange for that benefit, US tax law requires tax-exempt hospitals to promote the health of the community as a whole in a charitable manner. EY Tax Alert 2023-1425 has details.
Insights into New York’s proposed Article 9-A corporate franchise tax regulations (August 30)
On August 9, the New York State (NYS) Department of Taxation and Finance issued proposed Article 9-A corporate franchise tax reform regulations and Article 33 insurance corporation franchise tax regulations that cover a wide range of issues and may impact NYS taxpayers in various industries. The guidance is the culmination of more than eight years of drafts, redrafts and input from taxpayers, industry groups and practitioners. The proposed regulations would implement comprehensive franchise tax reform for corporations, banks and insurance companies that was enacted in 2014, with technical and conforming amendments enacted in 2015 and 2016. During this EY webcast, panelists will discuss the regulation finalization process and deadlines for submitting comments, as well as other actions taxpayers may want to consider before the proposed regulations become final.
BorderCrossings ... With EY transfer pricing and tax professionals (August 31)
During this EY webcast, Ernst & Young professionals examine the difficulties in applying transfer pricing rules to attribute profits to permanent establishments considering both US and international tax treaties. Under US tax treaties, Article 7 governs profit attribution to permanent establishments and references the arm’s-length principle under Article 9. In response to a lack of clear and consistent interpretation of profit attribution under international tax treaties, the Organisation for Economic Co-operation and Development (OECD) developed the Authorized OECD Approach (AOA).
Domestic tax quarterly webcast series: A focus on state tax matters (September 7)
During this EY webcast, Ernst & Young professionals will discuss (i) local tax issues, considerations, and pitfalls for the unwary, including local sales and use taxes in Colorado, local business taxes in California and a variety of other local taxes (e.g., bag taxes, personal property lease taxes); (ii) sales and use tax developments, including hot topics in navigating multistate compliance; (iii) latest trends in state business tax credits and incentives, including electric vehicles and battery incentives, jobs credits, investment credits.
International tax talk quarterly series with the EY Global Tax Desk Network (September 12)
Recent proposed tax changes across the globe may have significant implications for companies in the next quarter and beyond. Some of these changes are complex, so it is important that businesses understand them and try to prepare now – particularly for those that take effect in 2024. Please join our EY webcast for insights on recent developments in Australia, Brazil, Hong Kong, Mexico, Switzerland, and the United States and an analysis of how they might affect your businesses.
Recent Tax Alerts
— Aug 24: Seventh Circuit agrees basketball team owner may not deduct unpaid deferred compensation in tax year ending with team's sale (Tax Alert 2023-1446)
— Aug 22: Third Circuit upholds Tax Court's ruling that pharmaceutical company may deduct legal fees incurred in defending against patent infringement lawsuits (Tax Alert 2023-1437)
Internal Revenue Service
— Aug 24: ACA affordability percentage is reduced again, putting some plans at risk of noncompliance (Tax Alert 2023-1444)
— Aug 22: Tax M&A Update for July 2023 (Tax Alert 2023-1435)
— Aug 18: Senators urge IRS and Treasury to increase oversight of tax-exempt hospitals (Tax Alert 2023-1425)
— Aug 18: QUEST Economic Update highlights key US and global economic trends - August 18, 2023 (Tax Alert 2023-1424)
— Aug 24: Nigeria | Federal High Court upholds the Tax Appeal Tribunal's judgment on the taxation of non-freight income of foreign shipping companies in Nigeria (Tax Alert 2023-1445)
— Aug 24: Saudi Arabia announces eighth wave of Phase 2 e-invoicing integration (Tax Alert 2023-1443)
— Aug 24: Canada | Legislative update for the CCUS investment tax credit (Tax Alert 2023-1442)
— Aug 24: Hong Kong tax authority updates proposed asset disposal gain regimes (Tax Alert 2023-1441)
— Aug 23: Vietnam extends e-visa eligibility to nationals of all countries (Tax Alert 2023-1438)
— Aug 22: El Salvador's Congress approves bills to reform International Services Law and Free Trade Zones Law (Tax Alert 2023-1434)
— Aug 21: Spanish Supreme Court issues taxpayer-favorable decisions on domestic dividend withholding exemption with respect to EU holding structures (Tax Alert 2023-1432)
— Aug 21: Canada | Legislative details released for the new clean technology investment tax credit (Tax Alert 2023-1431)
— Aug 21: Costa Rica's Tax Authority issues resolution on declaring income from movable and immovable capital under the corporate income tax regime (Tax Alert 2023-1430)
— Aug 21: Australia considers CBAM to address carbon leakage (Tax Alert 2023-1428)
— Aug 18: Luxembourg enacts new reporting regime to combat VAT fraud (Tax Alert 2023-1423)
— Aug 18: European Commission adopts final Implementing Regulation for transitional phase of CBAM (Tax Alert 2023-1422)
— Aug 18: Canada releases further revisions to EIFEL proposals (Tax Alert 2023-1421)
— Aug 18: Dominican Republic establishes special transitional treatment for audit, management and recovery of tax debt (Tax Alert 2023-1420)
— Aug 22: House Ways and Means Committee seeks comments on tax-exempt organizations' political activities (Tax Alert 2023-1436)
— Aug 23: Nebraska law changes deadline for submitting unemployment insurance voluntary contributions (Tax Alert 2023-1439)
— Aug 22: New Jersey will display public list of employers that do not comply with state wage, benefit and tax obligations (Tax Alert 2023-1433)
— Aug 21: Connecticut budget includes middle-class income tax cuts effective January 1, 2024 (Tax Alert 2023-1429)
State and Local Tax Weekly
Highlights of this edition include:
— New York's proposed regulations implementing corporate franchise tax reform from 2014 are largely the same as prior drafts and include some notable changes. On Aug. 9, 2023, the New York State (NYS) Department of Taxation and Finance (Department), in accordance with the NYS State Administration and Procedures Act (SAPA), proposed regulations under Article 9-A corporate franchise tax (Parts 1-9) and Article 33 insurance corporation franchise tax (Part 32).
— Texas approved property tax relief and increased franchise tax exemption require voter approval in order to take effect. On July 22, 2023, Texas Governor Greg Abbott signed into law two bills — SB 3, which would increase the franchise tax exemption, and SB 2, which would provide property tax relief.
— Income/Franchise, Sales & Use, Business Incentives, Property Tax, Compliance & Reporting, Controversy, Payroll & Employment Tax, Miscellaneous Tax, Global Trade, Upcoming Webcasts
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 Insurance Contract Transactions; Hearing|
| ||2023-29||Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability|
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.