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September 29, 2023

U.S. Tax This Week for September 29

Ernst & Young's U.S. Tax This Week newsletter for the week ending September 29 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

IRS rules converting disregarded entity to domestic corporation does not modify debt

In PLR 202337007 (the Ruling), the IRS ruled that a transaction in which a disregarded entity is converted into a domestic corporation will not cause a modification of debt previously issued by the entity under Treas. Reg. Section 1.1001-3. Accordingly, the transaction does not give rise to a taxable debt-for-debt exchange. The Ruling clarifies the IRS's current position on an issue that has been the subject of various private letter rulings, but which has not been addressed in a revenue ruling or other precedential guidance. EY Tax Alert 2023-1590 has details.

Treasury awards $5 billion in New Markets Tax Credit allocations for CY 2022

On September 22, 2023, the Treasury Department announced that it awarded $5 billion in New Markets Tax Credit (NMTC) allocations to successful Community Development Entities (CDEs) from the 2022 application round. The $5 billion was awarded to 102 CDEs headquartered in 36 states and the District of Columbia. EY Tax Alert 2023-1586 has details.

EY Guides and Publications

QUEST Economic Update highlights key US and global economic trends - September 26, 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.

Upcoming Webcasts

IRC Section 174 interim Treasury and IRS guidance: Technical aspects, business implications and uncertainties of Notice 2023-63 (October 3)
The IRS has issued highly anticipated interim guidance (Notice 2023-63) on the amortization of specified research or experimental (SRE) expenditures under Section 174. These forthcoming proposed regulations would apply to tax years ended after September 8, 2023. Join our team of Ernst & Young LLP subject matter professionals for this EY Webcast, discussing the technical aspects, potential implications and uncertainties of the notice.

Refocusing on the global trade functional organization ... A global trade perspective (October 5)
Global trade professionals have navigated higher customs duty costs, increased complexity from the ever-changing regulatory environment, and a need for increased operational efficiencies to help reduce supply chain delays. This EY Webcast, will share the benchmarking results of peer global trade professionals on how they are organizing their global trade functions to be more efficient, reduce customs duty costs and effectively manage risks, also taking into consideration technology advancements.

Spotlight on BEPS 2.0: developments and practical implications for US MNEs (October 11)
Global minimum tax rules are set to take effect as soon as 2024, and many multinational entities (MNEs) still have a lot to do to prepare. To help with these efforts, EY is launching a one-hour webcast series focused on steps MNEs can take to prepare for, and comply with, these new rules. Join Pillar Two subject-matter professionals for an action oriented panel discussion, moderated by EY’s Jose Murillo, National Tax Department Leader and former US Department of the Treasury Deputy Assistant Secretary (International Tax Affairs).

How to energize a workforce in the great rebalance (October 17)
During this EY Webcast, Ernst & Young professionals will explore the EY 2023 Work Reimagined Survey with insights from 17,050 employees and 1,575 employers in 22 countries, revealing the contours of new workforce realities.

How transferable tax credits are changing the tax landscape (October 17)
The Inflation Reduction Act (IRA) introduced federal transferable tax credits. During this EY Webcast, Ernst & Young professionals will cover many FAQs, including which tax credits are transferable, an update on the contents of the recently released proposed regulations and how the transfer process works.

Business impacts of sustainability and ESG tax policies (October 18)
During this first in a quarterly series of EY Webcasts, Ernst & Young professionals will be discussing the role of tax in sustainability and how it can impact businesses’ ESG strategy and operations. Topics will include: (i) the impact of sustainability on business and tax operations; (ii) the sustainability tax landscape; and (iii) the legislative and tax policy emphasis on climate change.

EY Tax.Tech™ Ecosystem series: Finance and Tax convergence - the next transformation frontier (October 19)
In this dynamic, complex, and competitive landscape, Finance and Tax alignment is critical and can unlock data to help identify synergies and establish viable and enduring business value. During this EY Webcast, we will explore how Thomson Reuters tax and accounting clients have adopted a transformation mindset through better aligning with the finance agenda, integrating into an enterprise resource planning (ERP) strategy, and helping their people, processes and technology improve their tax function and better utilize their ONESOURCE suite of products.

Tax in a time of transition: legislative, economic, regulatory and IRS developments (October 20)
During this EY Webcast, panelists will provide updates on: (i) the US economy and tax policy; (ii) what’s happening at the IRS; and (iii) breaking developments.

US corporate income tax compliance: Insights from Tax Year 2022 and considerations for the future (October 25)
During this EY Webcast, panelists will provide the latest insights on dynamic compliance environment and how your company can continue navigating its complexity and challenges. We will also focus on preparing for tax year 2023 (TY23) and beyond.

Recent Tax Alerts


— Sep 28: Italy's new Enabling Law for Tax Reform foreshadows positive changes to cooperative compliance program (Tax Alert 2023-1616)

— Sep 28: Saudi Arabia releases new draft Zakat Bylaws for public consultation (Tax Alert 2023-1615)

— Sep 28: Vietnam implements new employer obligations and changes to work permit requirements (Tax Alert 2023-1614)

— Sep 27: Canada introduces legislation on enhanced GST rental rebate for new rental units (Tax Alert 2023-1611)

— Sep 27: European Commission proposes Head Office Tax System Directive for SMEs (Tax Alert 2023-1609)

— Sep 27: Egyptian embassy in Ottawa announces new visa requirement for Canadian nationals effective 1 October 2023 (Tax Alert 2023-1607)

— Sep 27: Georgia implements new requirements for employers that hire foreign nationals (Tax Alert 2023-1606)

— Sep 26: Germany approves new citizenship regulations (Tax Alert 2023-1601)

— Sep 26: European Commission proposes extending the Temporary Protection Directive until 3 March 2025 (Tax Alert 2023-1600)

— Sep 25: India suspends issuance of visas to Canadian nationals (Tax Alert 2023-1598)

— Sep 25: Turkiye amends accounting standards to align with BEPS 2.0 Pillar Two legislation (Tax Alert 2023-1596)

— Sep 22: Panama implements stricter entry requirements for certain foreign nationals, including business travelers (Tax Alert 2023-1589)

— Sep 22: Sweden's new salary requirement expected to go into effect on 1 November 2023 (Tax Alert 2023-1588)

— Sep 22: Kenya eliminates visa requirement for nationals of the Democratic Republic of the Congo (Tax Alert 2023-1587)


— Sep 27: What to expect in Washington (September 27) (Tax Alert 2023-1605)

— Sep 25: United States government set to suffer lapse in funding to begin fiscal year 2024 (Tax Alert 2023-1597)


— Sep 27: Illinois law requires pay transparency in job postings (Tax Alert 2023-1608)

— Sep 26: Iowa certifies corporate income tax rate reductions for tax years beginning on or after January 1, 2024 (Tax Alert 2023-1603)

— Sep 26: Missouri rescinds income tax withholding rule for temporary work locations during the COVID-19 emergency (Tax Alert 2023-1602)

IRS Weekly Wrap-Up

Proposed Regulations

 REG–120727–21Requirements Related to the Mental Health Parity and Addiction Equity Act; Extension of Comment Period
 REG–105954–22Superfund Chemical Taxes; Hearing
 REG 115762–23Federal Independent Dispute Resolution (IDR) Process Administrative Fee and Certified IDR Entity Fee Ranges


 2023-682023--2024 Special Per Diem Rates
 2023-67Extension of Replacement Period for Livestock Sold on Account of Drought
 2023-65Section 45L New Energy Efficient Home Credit
 2023-69Treatment of Amounts Paid to Section 170(c) Organizations under Employer Leave Based Donation Programs to Aid Victims of the Hawaii Wildfires that Began on August 8, 2023 (2023 Hawaii Wildfires)

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.