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September 17, 2023

Americas Tax Policy: This Week in Tax Policy for September 15

This week (September 18 - 22)

Congress: The House and Senate are both in session. The Senate returns on Monday, September 18, at 3:00 p.m. and has scheduled a judicial nomination vote for 5:30 p.m. The chamber is expected to continue consideration of the minibus appropriations package on Military Construction/VA, Agriculture, and Transportation-HUD. The House is also back on Monday and leaders may continue to try to secure sufficient votes to consider the Department of Defense appropriations bill, along with trying to settle on an approach for a short-term government funding patch beyond September 30.

There is a Senate Finance Subcommittee on Health Care hearing set for Tuesday, September 19 at 10:00 a.m. on “Aging in Place: The Vital Role of Home Health in Access to Care.”

The House Ways & Means Committee has scheduled a hearing Tuesday, September 19 at 10 a.m. on “Reduced Care for Patients: Fallout from Flawed Implementation of Surprise Medical Billing Protections.”

The Committee has also scheduled a Trade Subcommittee hearing on “Reforming the Generalized System of Preferences to Safeguard U.S. Supply Chains and Combat China” for Wednesday, September 20 at 2 p.m.

Last week (September 11 - 15)

The big picture: Hopes for a 2023 tax bill that addresses TCJA pre-cliffs, tax extenders, and other items appear to hinge on Congress settling on a long-term approach to funding the government through FY2024. That effort is rife with divisions, as the Senate is proceeding in a bipartisan manner toward passing appropriations bills that adhere to FY2023 spending levels that both parties agreed to in the Fiscal Responsibility Act (FRA) debt limit agreement (and adding supplemental funds in some cases). At the insistence of conservatives, House appropriators have marked up FY2024 spending bills to FY2022 levels. Leaders of both chambers have cited a desire to pass their versions of each of the dozen annual appropriations bills in an attempt to gain the upper hand in negotiations. In contrast to the bipartisan support for how the appropriations process is unfolding in the Senate, the House last week was unable to secure sufficient votes to consider the Department of Defense (DoD) appropriations bill, nor much momentum toward agreement on a short-term continuing resolution (CR). The Washington Post reported that conservative Freedom Caucus members blocked progress on the DoD bill because they are “angry over what they say is a lack of information on top-line budget numbers.” In the short-term effort to try to put up a CR to fund the government beyond September 30, and in the longer-term process of passing appropriations bills through FY2024, Speaker Kevin McCarthy (R-CA) faces a Catch-22 dilemma of either adhering to conservative demands that would likely result in shutting down the government or aligning with Democrats and non-Freedom Caucus Republicans and having his Speakership threatened. The House workweek ended with Speaker McCarthy reportedly defiantly confronting conservatives over their threats to use a “motion to vacate” to oust him from the position.

However, behind the scenes, there are substantive efforts to craft a CR that can satisfy the various factions of the House Republican Conference that focus on adding what has long been seen as a likely ingredient to win support, which is additional border security funding and policy changes. The Post reported that the contours of a potential CR deal continue to be “an extension of current fiscal levels for one month that includes funding for disaster relief and border security,” and that “McCarthy warned his conference Thursday that if the House doesn’t pass any appropriations bills or a short-term funding bill to the Senate by the end of next week, the upper chamber will try to jam the House into swallowing whatever they deem appropriate to fund the government in the short-term.” The Wall Street Journal (WSJ) reported, “the Republican Study Committee, which represents a broad spectrum of conservatives, issued a position in favor of a short-term continuing resolution that would ‘address harms inflicted by Democrats and President Biden, such as bloated and inflationary spending levels and the ongoing immigration crisis.’ RSC Chairman Kevin Hern (R., Okla.) said that the border measure would consist of the GOP plan that previously passed the House and that would cut off migration at the southern border.”

Also last week, “Speaker Kevin McCarthy announced the House of Representatives is opening an impeachment inquiry into President Joe Biden,” which some observers said appeared to be an effort to appease conservatives amid the funding rancor. The impeachment inquiry is being led by House Oversight and Accountability Committee Chairman James Comer (R-KY), Judiciary Committee Chairman Jim Jordan (R-OH), and Ways and Means Committee Chairman Jason Smith (R-MO). It remains to be seen how tax committee involvement will impact the prospects for bipartisan cooperation on tax policy for the remainder of the year.

2023 tax bill: The TCJA deadline items that are the main focus of a potential tax bill relate to five-year amortization for R&D expenses rather than expensing under IRC Section 174 and the IRC Section 163(j) interest deduction limitation based on EBIT rather than EBITDA, changes unfavorable to businesses that took effect in 2022; and 100% expensing, which is phased down in increments after 2022. Separate from the government funding impasse, fixes to these provisions have long been held up over Democrats’ insistence that any bill addressing business tax provisions also include an expansion of the Child Tax Credit (CTC). Leaders made clear that Census data released this week showing that child poverty more than doubled in 2022, after the expiration of the expanded CTC for 2021, has deepened their commitment to make the credit more generous as a condition of moving a tax bill later this year that includes the business tax extenders. During a session of the Finance Committee unrelated to the TCJA issues, Senator Todd Young (R-IN) said the TCJA’s 2022 change to five-year amortization for R&D expenses means some employers can’t make payroll and may close their doors, and he encouraged Congress to take action this year to reinstate R&D expensing. Chairman Ron Wyden (D-OR) said the R&D issue is important but “we have also got to stand up for our kids,” alluding to the fact that Democrats insist upon a CTC expansion in conjunction with business tax provisions. Wyden was earlier quoted in Politico as saying, “Any end of year tax package must include expansions to the child tax credit.” Members of both parties from high-tax states are also pushing for relief from the TCJA $10,000 state and local deduction cap as a condition for supporting a tax bill, though, as Politico reported September 15, there has been no real movement on that effort.

Taiwan tax: The Senate Finance Committee September 14 approved 27-0 the US-Taiwan Expedited Double Taxation Relief Act to reduce tax on income received by Taiwan residents from the current 30% tax. Withholding tax on US-source interest, royalties, and gains paid to or received by a qualified resident of Taiwan would be reduced to 10%. Withholding tax on US-source dividends would be reduced to 15%, or a 10% rate for certain owners of at least 10% of the shares of stock in a corporation, subject to limitations. The provisions are contingent upon Taiwan enacting corresponding tax reductions for US residents. Both Chairman Wyden and Ranking Member Mike Crapo (R-ID) acknowledged the important role Taiwan plays in manufacturing semiconductor chips for consumer goods and defense technology. The only change to the bill was incorporation of a proposal by Senators Catherine Cortez Masto (D-NV) and Marsha Blackburn (R-TN) to prevent double taxation on entertainment income (with Las Vegas and Nashville being entertainment hubs). 

Senators Wyden and Crapo released a discussion draft in July with leaders of the House Ways & Means Committee, which may consider a bill on the issue but hasn’t announced plans. Next steps in the Senate aren’t clear either. The Foreign Relations Committee July 13 approved a separate bill calling for the US to enter into a tax agreement with Taiwan. Senator Crapo said he is confident in finding an appropriate path forward for each committee, a point that was echoed by Chairman Wyden. While voting to advance the Finance bill, Foreign Relations Chairman Bob Menendez (D-NJ) said the Finance bill alone is insufficient. He didn’t push for a vote on his amendment to sunset the bill after two years unless there’s a US-Taiwan tax agreement. Michael Plowgian, Deputy Assistant Treasury Secretary for International Tax Affairs, said from the witness table that a tax information exchange agreement with Taiwan is currently being negotiated.

IRA regulations: The IRS and the Treasury Department September 12 issued additional interim guidance (Notice 2023-64) clarifying the application of the corporate alternative minimum tax (CAMT), enacted under the Inflation Reduction Act of 2022. Notice 2023-64 describes rules the IRS intends to include in proposed regulations, which generally pertain to:

  • The determination of a taxpayer's applicable financial statement
  • The determination of adjusted financial statement income (AFSI) for members of a consolidated financial statement group
  • AFSI adjustments to prevent certain duplications and omissions
  • Tax consolidated groups
  • The application of IRC Section 56A(c) to certain foreign corporations
  • AFSI adjustments for certain income taxes, Qualified Wireless Spectrum Property and property to which IRC Section 168 applies

The Notice also includes rules on determining whether a corporation is an applicable corporation subject to the CAMT, as well as rules on aggregation under IRC Section 52, foreign-parented multinational groups, the treatment of investments in partnerships and the CAMT foreign tax credit.

Blue Book: The Bloomberg Daily Tax Report (DTR) September 12 reported a member of the JCT staff as saying a “Blue Book” on legislation enacted in the 117th Congress could be released this fall. “’We’ve made significant progress,’ said Jared Hermann, legislation counsel at the non-partisan JCT, speaking at a virtual conference of the US branch of the International Fiscal Association. The JCT is aiming to release the blue book in the fourth quarter, he said.”

Cryptocurrency: The comment period closed last week for submissions to the Senate Finance Committee on “uncertainties surrounding the tax treatment of digital assets,” including issues related to cryptocurrency. Another DTR story said many in the industry would like to see a more comprehensive approach than the current piecemeal approach to crypto policy “shaped by a mix of IRS and Treasury guidance, Securities and Exchange Commission ‘regulation by enforcement,’ and court decisions.” The story said, “Many of the questions address issues covered in legislation that’s already been introduced, from Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.). Their bill, which has been lauded by the crypto industry, would clarify that taxpayers can’t claim a deduction relating to a loss incurred in a crypto asset sale and require crypto asset intermediaries to mark their crypto assets to market for accounting purposes at year end, among other tax provisions.”

An EY Tax Alert addressing recently released IRS regulations relating to basis reporting, entitled, “Proposed digital asset rules would redefine key terms and introduce new standards,” is available here.

Elections: Looking ahead to the 2024 presidential election, the Washington Post reported September 11, “As Donald Trump widens his lead over other Republican candidates in the GOP primary, the former president’s closest economic advisers are plotting an aggressive new set of tax cuts to push on the campaign trail and from the Oval Office if he wins a second term.” The report said, “Trump and his advisers have discussed deeper cuts to both individual and corporate tax rates that would build on his controversial 2017 tax law, which they see as a major accomplishment worth expanding... The cuts could be paid for, at least in theory, with a new 10 percent tariff on all imports to the United States that Trump has called for.” A potential new corporate tax rate has not been identified, it said.

IRA guidance tracker: This table describes select IRS guidance related to the Inflation Reduction Act.

Date – Guidance


Link for more information

11/29/22 – Notice 2022-61, prevailing wage and apprenticeship requirements; started clock for construction 60 days+ after guidance

applicable to advanced energy projects (IRC Section 48C), alternative fuel vehicle refueling (IRC Section 30C), carbon oxide sequestration (IRC Section 45Q), clean fuel production (IRC Section 45Z), clean hydrogen production (IRC Section 45V), energy efficient commercial buildings deduction (IRC Section 179D), renewable electricity production (IRC Section 45), energy investment (IRC Section 48) credits; wage requirements also apply to new energy efficient home (IRC Section 45l) and zero-emission nuclear (IRC Section 45U) credits

See Tax Alert 2022-1832

12/12/22 – Revenue Procedure 2022-42, IRC Section 30D(d)(3)

agreements between qualified vehicle manufacturers and Treasury regarding the production of automobiles eligible for a clean vehicle credit

12/19/22 – Notice 2023-06 provides guidance on the new sustainable aviation fuel (SAF) credits

primarily addresses the SAF credit requirements applicable to a qualified mixture

12/22/22 – Fact Sheet (FS-2022-40) on energy efficient home improvements and residential clean energy property credits

lists improvements eligible for credits, credit amounts, information on labor costs

12/27/22 – Notice 2023-2, corporate stock repurchase excise tax

rules and procedures for the 1% excise tax on the aggregate fair market value of stock repurchased by certain corporations

12/27/22 – Notice 2023-7, corporate alternative minimum tax (CAMT)

clarifies which corporations the CAMT applies to and how the alternative minimum tax is calculated

See Tax Alert 2023-0091

12/29/22 – FAQs on clean vehicle credits (FS-2022-42)

Updated in February (FS-2023-04)

Updated in March (FS-2023-08)

addresses how the credit applies to purchases of clean vehicles that are new, previously owned or commercial, defines qualified manufacturer

newly addresses situations in which vehicle’s classification changed

newly addresses whether credit can be split among multiple owners

12/29/22 – Notice 2023-1, definitions for IRC Section 30D credit for vehicles PIS after 12/31/2022

2/3/23 – Notice 2023-16 modifies Notice 2023-01

announcement that Treasury and the IRS intend to propose regulations on the definitions of the relevant terms under IRC Section 30D for new clean vehicles, and the critical mineral and battery component requirements under IRC Section 30D(e)

changing the vehicle classification standard by which vans, sport utility vehicles, pickup trucks and other vehicles are defined

See Tax Alert 2023-0076

12/29/22 – White Paper on

critical mineral requirements - % of value of minerals in battery extracted or processed in the US, FTA w/US, recycled in N. Amer.

= or >40% for a vehicle PIS in 2023 after the date of guidance. Increases annually to 50% in 2024, 60 % in 2025, 70% in 2026, and 80% after.

Similar for batteries: 50% in 2023 after the date of guidance, 60% in 2024-5, 70% in 2026, 80% in 2027, 90% in 2028, 100% after 2028

12/31/22 – Notice 2023-9, IRC Section 45W, safe harbor on incremental cost of commercial clean vehicles

for those placed in service in calendar year 2023 for purposes of the new credit for qualified commercial clean vehicles

2/13/23 – Notice 2023-17 Low-Income Communities Bonus Credit

applies to owners of certain solar and wind facilities placed in service in connection with low-income communities that are eligible for the IRC Section 48 energy investment credit

2/13/23 – Notice 2023-18, 48C advanced energy projects

5/31/23 – Notice 2023-44

program under IRC Section 48C(e) to allocate $10 billion in tax credits for qualified investments

information on “energy communities census tracts” and list of eligible census tracts 

See Tax Alert 2023-1012

2/17/23 – Notice 2023-20, interim guidance for insurance companies and others for the CAMT

guidance for the determination of adjusted financial statement income as it relates to (1) variable contracts and similar contracts, (2) funds withheld reinsurance and modified coinsurance agreements, and (3) the basis of assets held by certain previously tax-exempt entities with a “fresh start” basis adjustment

See Tax Alert 2023-0384

3/9/23 – Notice 2023-24, nuclear credit (45J)

(1) guidance for computing the credit, (2) the amount of unutilized NMCL, (3) the procedures for taxpayers to apply for, and the IRS to allocate, the unutilized NMCL, and (4) transfer of the IRC Section 45J credit to an “eligible project partner”

See Tax Alert 2023-0504

3/31/23 – Proposed regulations (REG-120080-22) on domestic sourcing requirements for 30D EV credit

sources of a single applicable critical mineral may have multiple procurement chains if one source of the applicable critical mineral undergoes the same extraction, processing, or recycling process in different locations

See Tax Alert 2023-0660

 4/4/23 – Notice 2023-29, “energy communities”

6/15/23 – Notice 2023-45 updates Notice 2023-29

6/15/23 – Notice 2023-47, energy community bonus

for purposes of the production tax credit (PTC) under IRC Sections 45 and 45Y and the investment tax credit (ITC) under IRC Sections 48 and 48E for electricity facilities

clarifies that it applies to taxpayers that begin construction on or after Jan. 1, 2023,

clarifies requirements brownfield site definition for the clean energy ITC and PTC:

Updates on eligibility for the bonus based on updated local unemployment rate data

See Tax Alert 2023-0675

See Tax Alert 2023-1083

5/12/23 – Notice 2023-38, domestic content bonus under IRC Sections 45, 45Y, 48, and 48E

addresses how to categorize common solar, wind and energy storage components for purposes of the manufactured products requirements

See Tax Alert 2023-0908

5/31/23 – Proposed regs (REG-110412-23) on Low-Income Communities Bonus Credit

definitions and requirements that would be applicable for the program allocating the calendar year 2023 capacity limitation

See Tax Alert 2023-1018

6/7/23 – Notice 2023-42, CAMT

waives addition to tax under Section 6655 for a corporation’s failure to make estimated tax payments of its CAMT under IRC Section 55 for a tax year beginning after December 31, 2022, and before January 1, 2024

See Tax Alert 2023-1038

6/14/23 – Proposed regulations (REG-101610-23) on tax credit transferability

11 credits eligible: alternative fuel vehicle refueling (IRC Section 30C), renewable electricity production (IRC Section 45), carbon oxide sequestration (IRC Section 45Q), nuclear power production (IRC Section 45U), clean hydrogen production (IRC Section 45V), advanced manufacturing production (IRC Section 45X), clean electricity production (IRC Section 45Y), clean fuel production (IRC Section 45Z), energy (IRC Section 48), advanced energy projects (IRC Section 48C), and clean electricity investment (IRC Section 48E)

See Tax Alert 2023-1103

6/14/23 – Proposed regulations (REG-101607-23) on direct pay

allows entities like tax-exempt organizations, state and local governments, and rural electric cooperatives to treat certain credits as a payment against federal income tax liabilities, rather than as a nonrefundable credit. (Payment will first offset tax liability, excess will be refundable.) Applicable credits are the same as for transferability, plus credit for commercial vehicles (IRC Section 45W)

See Tax Alert 2023-1102

6/14/23 – Elective Pay and Transferability FAQs

who is eligible, how to make an elective payment election and receive an elective payment

6/15/23 – FAQs on energy communities

detail on how areas may qualify as an energy community, how to determine whether a project is located in an energy community and brownfield sites for purposes of the Energy Community Bonus Credit

6/29/23 – Announcement 2023-18

confirmed that taxpayers are not required to report or pay the IRC Section 4501 excise tax on stock buybacks on any tax return filed before regulations are published

See Tax Alert 2023-1166

8/10/23 – Final regulations (TD 9979) and Rev. Proc. 2023-27 on Low-income Communities Bonus Credit

guidance necessary to implement the Program, including information an applicant must submit, the application review process, and the manner of obtaining an allocation

8/29/23 – Proposed regulations (REG-100908-23) on prevailing wage and apprenticeship requirements

details on satisfying the requirements and how taxpayers can cure their initial failure to comply with the requirements by making correction payments to workers and paying penalties to IRS

See Tax Alert 2023-1469

9/12/23 – Notice 2023-64, CAMT

describes rules IRS intends to include in proposed regulations on issues like the determination of a taxpayer’s applicable financial statement

See Tax Alert 2023-9007


Contact Information
For additional information concerning this Alert, please contact:
   • Jose Murillo (
   • Jeff Van Hove (
   • Ray Beeman (
   • Kurt Ritterpusch (
   • Bob Carroll (
   • James Mackie (