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December 3, 2023

Americas Tax Policy: This Week in Tax Policy for December 1

This week (December 4-8)

Congress: The House and Senate are in session. The Senate reconvenes Monday, December 4 at 3 p.m., with a procedural vote on a judicial nomination at 5:30 p.m. Majority Leader Chuck Schumer (D-NY) has said he may put the national security supplemental with funding for Israel, Ukraine, etc. on the floor as soon as this week, but a bipartisan deal on border security provisions that Republicans want included hasn't been reached. A National Defense Authorization Act (NDAA) conference agreement could be brought to the floor instead. The Senate Finance Committee is holding a hearing on drug shortages on Tuesday, December 5.

The House is back in on Monday, but votes don't start until Tuesday, December 5. House Ways & Means Committee hearings this week include:

  • On Wednesday, December 6 at 10 a.m., Oversight Subcommittee hearing on "Hidden Cost: The True Price of Federal Debt to American Taxpayers"
  • On Wednesday, December 6 at 2 p.m., Tax Subcommittee hearing on "Tax Policies to Expand Economic Growth and Increase Prosperity for American Families

Last week (November 27-December 1)

Tax bill prospects: Congress is in the home stretch before leaving Washington for the holidays and, unusually, doesn't face a year-end deadline on government funding, which was extended through a two-step continuing resolution (CR) through January 19 for some spending and February 2 for the remainder. Tax packages are typically appended to year-end appropriations bills, and it remains to be seen whether tax provisions — addressing 174 R&D, 163(j) interest deductibility, expensing, extenders, etc. — can be added to spending bills early in 2024, or other legislation between now and then. A Federal Aviation Administration (FAA) reauthorization and taxes measure (they currently expire December 31) already includes tax provisions, leading some members to speculate that it could carry a long-sought but still elusive tax package on TCJA pre-cliffs and extenders. However, a stop-gap FAA extension through March 8 now appears likely even with a Senate Commerce logjam over pilot training appearing to break, which may eventually lead to a five-year bill but not before the end of the year. A November 27 Roll Call story cited off-Hill sources as saying the National Defense Authorization Act (NDAA) is a bill to watch, with some speculating that it likely will be a "proverbial Christmas tree" that may include "tax policy provisions and health care extenders." The report cited the longtime push to address IRC Section 174 R&D amortization (as opposed to expensing) and other business tax provisions that likely hinges on some expansion of the Child Tax Credit.

There haven't been many concrete signals on a year-end tax bill brewing, but there has been some limited renewed optimism. A November 29 Tax Notes story cited Finance Committee members including Ranking Member Mike Crapo (R-ID) and Senators Sherrod Brown (D-OH) and John Thune (R-SD) as saying tax bill prospects have improved and talks have become more productive. Senator Brown was cited as saying there is optimism that wasn't present a month-and-a-half ago, but that time is a factor because of the 2024 filing season. "You can't wait much past December, maybe early January because of the tax season," Brown said. "We can't dramatically change tax law February 1 or something." The Taiwan tax issue that was the subject of a Ways & Means markup this week demonstrated the potential for bipartisan and bicameral tax cooperation and showed a level of comity among Committee members. "Hopefully it's a sign of more to come on bipartisan tax legislation in the future," Chairman Jason Smith (R-MO) said.

About 150 House Republicans not on the Ways & Means Committee and led by Rep. Rudy Yakym (R-IN) in a November 29 letter called on Speaker Mike Johnson (R-LA) to extend "immediate Research and Development expensing, full capital expensing, and a pro-growth interest deductibility rule," demonstrating that a tax bill is a priority for many in the broader Republican conference.

Taiwan tax bill: The House Ways & Means Committee November 30 unanimously approved 40-0 the United States-Taiwan Expedited Double-Tax Relief Act (H.R. 5988), after the Senate Foreign Relations bill to authorize the Administration to negotiate and enter into tax agreements to provide for bilateral tax relief with Taiwan was appended to the tax bill that has already been approved by the Senate Finance Committee. Subject to reciprocity requirements, the Ways & Means/Finance bill would reduce the general statutory 30% withholding tax on US source income received by Taiwanese residents, including the reduction of interest and royalties to a 10% withholding tax rate. Generally, dividends would be subject to a 15% withholding tax rate, or a 10% rate if paid to a recipient that owns at least 10% of the shares of stock in the corporation, subject to limitations. Both Chairman Smith and Ranking Member Richard Neal (D-MA) highlighted reciprocity requirements under the bill. The bill's provisions are applicable only if reciprocal provisions apply to US persons with respect to income sourced in Taiwan. In a colloquy, Rep. Neal said, in making the determination that Taiwan has reciprocal tax benefits, his understanding is Treasury is expected to ensure that Taiwan does not impose tax on business income, such as a withholding tax on services income, on US taxpayers except for business income that is effectively connected to a permanent establishment of the US person in Taiwan. He asked for the Committee report to clarify this point. Chairman Smith said he agreed with Rep. Neal's assertion and would work to address the point in the report. Next steps are unclear but both Reps. Smith and Neal have made comments suggesting the bill is ready for the House floor and could receive a vote soon. Senate Foreign Relations Committee Chairman Ben Cardin (D-MD), who is also on the Finance Committee, has suggested Senators are looking for any suitable legislative vehicle to move the Taiwan proposal, which he views as noncontroversial.

Foreign entity of concern: On December 1, IRS released IRC Section 30D foreign entity of concern (FEOC) regulations, regarding the excluded entity provisions with respect to the clean vehicle credit as amended by the Inflation Reduction Act of 2022. Beginning in 2024, an eligible clean vehicle may not contain any battery components that are manufactured or assembled by a FEOC, and, beginning in 2025, an eligible clean vehicle may not contain any critical minerals that were extracted, processed, or recycled by a FEOC. Concurrently with the release of the proposed regulations, the Department of Energy (DOE) released proposed guidance on interpretations of terms used in the definition of "foreign entity of concern." Treasury said in announcing the regulations, "Under the proposal, FEOC-compliance for battery components would be determined at the time of manufacture or assembly, and FEOC-compliance for critical minerals would be determined by reviewing all phases of applicable critical mineral extraction, processing, and recycling." Critical minerals generally also must be traced, but the proposed regulations ask for comments on a temporary transition rule. Another proposed transition rule, through 2026, would give the auto industry time to develop tracing standards for low-value materials. A story in the November 30 Wall Street Journal previewed the release of the regulations, saying of foreign entity of concern, "Defining the vague phrase has emerged as a challenge for the Biden administration. How it addresses the term in the proposed rules, expected Friday, could help determine how much Americans will pay for many EVs in the coming years," and that "disqualifying vehicle batteries with even minor contributions from [such countries] could mean that few, if any, EVs would be eligible for the $7,500 credit, potentially slowing the transition away from gasoline-powered cars."

Billionaire's tax: Senate Finance Committee Chairman Ron Wyden (D-OR) November 29 reintroduced the Billionaire's Income Tax proposal under which: tradable assets like stocks owned by billionaires would be marked to market each year; and a "deferral recapture amount" akin to interest on tax-deferred assets while the individual held that asset would be imposed "when a billionaire sells a non-tradable asset (like real estate or a business interest)," in addition to their usual tax. The previous incarnation of the bill was floated briefly in the October 2021 Build Back Better negotiations that were a precursor to the narrower IRA, taking the mark to market approach Wyden has long espoused in various proposals. Chairman Wyden had announced November 9 that a billionaire tax avoidance bill was in the works, around the time Democrats were defending preserving the IRA's IRS funding boost to increase enforcement on the wealthy after House Republicans proposed clawing back some of the funding to pay for an Israel-only national security supplemental bill. Since then, President Biden has called for a billionaire's tax to be enacted. The effort to highlight what Democrats view as insufficient taxation of wealthy individuals effectively opens a Democratic tax argument ahead of the 2024 elections, which will decide who is in power for the 2025 fiscal cliff when TCJA individual provisions expire. In a clean energy-focused speech in Colorado November 29, President Biden said, "the next big battle's going to be whether the very wealthiest among us begin, and the biggest corporations begin, to start paying their fair share … The Speaker, Donald Trump, and the MAGA Republicans here in Congress committed to protecting their outrageous tax cuts for those at the very top. And they're going to continue to oppose investing in all of those programs that help people, whether it's in education, healthcare, whatever." The President said billionaires pay an average tax rate of 8% and, "That's why I'm proposing a billionaire minimum tax … and it would raise $440 billion over the next 10 years, just paying 25% instead of eight." President Biden first proposed such a tax in the FY2024 Budget, a billionaire's tax to impose a 25% minimum tax on total income, inclusive of unrealized capital gains, for taxpayers with wealth of greater than $100 million. A bill reflecting the President's proposal, H.R. 6498, was introduced in the House November 29 by Rep. Don Beyer (D-VA) and others.

Global tax: The United Nations November 22 voted to open an international tax cooperation project that supporters hope could rival the OECD-led two-pillared global tax agreement. The "Promotion of inclusive and effective international tax cooperation at the United Nations" would stress that efforts in international tax cooperation should be universal in approach and scope and fully consider the different needs and capacities of all States, in particular developing countries. "Unfortunately, the resolution is likely to duplicate and undermine existing intergovernmental negotiations on international tax cooperation, including Pillar 1 of the Inclusive Framework's Two-Pillar Solution," an unnamed Treasury official said in a Politico report. "The UN resolution also fails to achieve the global consensus that is necessary to strengthen international tax cooperation for the benefit of developing countries and anyone else."

Reporting threshold relief: In Notice 2023-74 November 21, IRS again delayed the reduction to a $600 de minimis threshold for reporting transactions by third-party settlement organizations on Form 1099-K and announced plans for a $5,000 threshold for 2024 to phase in the requirement. An EY Tax Alert has details.

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: new requirements apply to facilities that begin construction on or after January 29, 2023

See EY Tax Alert 2022-1832

12/12/22 — Revenue Procedure 2022-42, EVs

agreements between manufacturers and Treasury regarding production of vehicles eligible for credit

See EY Tax Alert 2023-0076

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

See EY Tax Alert 2022-1912

12/22/22 — Fact Sheet (FS-2022-40) on efficient home, residential credits

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

See EY Tax Alert 2022-1935

12/27/22 — Notice 2023-2, stock buyback tax

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

See EY Tax Alert 2023-0054

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 EY Tax Alert 2023-0091

12/29/22 — FS-2022-42 on EV credits; Updated FS-2023-04, FS-2023-08

address how the credit applies to, defines qualified manufacturer; situations in which vehicle's classification changed; whether credit can be split among multiple owners

See EY Tax Alert 2023-0660

12/29/22 — Notice 2023-1, EV credits; modified by

Notice 2023-16

definitions for new clean vehicles, critical mineral and battery component requirements

See EY Tax Alert 2023-0251

12/29/22 — White Paper on

critical mineral requirements

percentage must be extracted or processed in the US or a country with free trade agreement with US

12/31/22 — Notice 2023-9, IRC Section 45W, EVs

Safe harbor regarding the incremental cost of vehicles

See EY Tax Alert 2023-0076

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

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

See EY Tax Alert 2023-0333

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

5/31/23 — Notice 2023-44

$10 billion in tax credits,

information on "energy communities census tracts"

See EY Tax Alert 2023-1012

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

determination of adjusted financial statement income for variable contracts, reinsurance, "fresh start" basis adjustment

See EY Tax Alert 2023-0384

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

computing the credit, amount of unutilized NMCL, unutilized NMCL, transfer of credit to an "eligible project partner"

See EY Tax Alert 2023-0504

3/31/23 — Proposed regulations (REG-120080-22), EV credit

domestic sourcing requirements

See EY Tax Alert 2023-0660

 4/4/23 — Notice 2023-29, "energy communities"

6/15/23 — Notice 2023-45

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

for purposes of PTC under IRC Sections 45 and 45Y, ITC under IRC Sections 48 and 48E for electricity facilities;

Updates eligibility based on updated local unemployment rate data

See EY Tax Alert 2023-1083

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

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

See EY 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 EY Tax Alert 2023-1018

6/7/23 — Notice 2023-42, CAMT

waives addition to tax for a corporation's failure to make estimated tax payments of its CAMT

See EY Tax Alert 2023-1038

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

allows an eligible taxpayer to transfer all or a portion of an eligible credit to an unrelated transferee taxpayer for cash

See EY Tax Alert 2023-1103

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

allows entities like tax-exempt organizations to treat credits as a payment against tax, rather than as a nonrefundable credit

See EY Tax Alert 2023-1102

6/15/23 — FAQs on energy communities

how areas may qualify as an energy community, whether a project is located in an energy community

See EY Tax Alert 2023-1083

6/29/23 — Announcement 2023-18, stock buybacks

taxpayers not required to report or pay excise tax on any tax return filed before regulations are published

See EY Tax Alert 2023-1166

8/10/23 — Final regulations (TD 9979) and Revenue Procedure 2023-27 on Low-income Communities Bonus Credit

implements bonus energy investment credit program for solar or wind facilities in low-income communities: information an applicant must submit, application review, obtaining an allocation

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

satisfying requirements, correction payments to workers, penalties to IRS

See EY Tax Alert 2023-1469

9/12/23 — Notice 2023-64, CAMT

describes rules IRS intends on issues like the determination of a taxpayer's applicable financial statement

See EY Tax Alert 2023-1570

9/27/23 — Notice 2023-65, IRC Section 45L New Energy Efficient Home Credit

addresses eligibility, applicable amount of the credit, energy saving requirements, certification requirements, substantiation

See EY Tax Alert 2023-1741

10/6/23 — Proposed regulations (REG-113064-23) on transfer of EV credits, plus Revenue Procedure 2023-33

clarifies how taxpayers can elect to transfer new and previously owned clean vehicle credits to dealers who are eligible to receive advance payments of either credit. The revenue procedure includes procedures for how a dealer would register with the IRS to be eligible to receive the credit transfers from taxpayers and provides details on the registration process.

See EY Tax Alert 2023-1723

11/17/23 — Proposed regulations (REG-132569-17) on the Investment Tax Credit under Section 48

update the types of energy property eligible for the energy credit, provide additional requirements and rules generally applicable to energy property

See EY Tax Alert 2023-1936

12/1/23 — IRC Section 30D foreign entity of concern proposed regulations (REG-118492-23), plus accompanying DOE rules

FEOC-compliance for battery components determined at the time of manufacture or assembly, and FEOC-compliance for critical minerals determined by reviewing all phases of applicable critical mineral extraction, processing, and recycling


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