Global Daily Tax Update

 Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

May 8, 2020
2020-5702

Report on recent US international tax developments 8 May 2020

House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer reportedly are poised to release a fourth coronavirus relief package that the Minority Leader described as “Rooseveltian” in its breadth and scope. The release of that package could come within days.

Earlier in the week, Senate Majority Leader Mitch McConnell and Senate Republicans indicated that they wanted to slow-down any action on a fourth COVID-19 bill. The Majority Leader was quoted as saying he favored a pause to evaluate the effects of prior coronavirus legislation. Senator McConnell did not offer a timeline, but one Republican senator said any action on another COVID-19 bill was weeks away and could even come after the Memorial Day recess.

The United States (US) Internal Revenue Service (IRS) on 7 May released Rev. Proc. 2020-30, providing limited relief under Internal Revenue Code1 Section 1503(d) for the filing of Form 8858 or Form 8865 (controlled foreign partnership) by not taking into account “temporary activities” undertaken by individuals in a foreign country during a single consecutive period of up to 60 days during 2020, to the extent the individuals were temporarily present in the foreign country during that period and the activities would not have been undertaken but for “COVID-19 Emergency Travel Disruptions.” The revenue procedure establishes documentation requirements for this purpose, which must be provided to the IRS upon request.

This relief is consistent with the other recent IRS revenue procedures that provided relief for determining whether a US trade or business exists and the extent to which an individual qualifies for the benefits of the Section 911 foreign earned income exclusion.

The OECD2 is postponing the Inclusive Framework (IF) on BEPS3 meeting regarding BEPS 2.0 that was scheduled for 1-2 July until early October, according to Pascal Saint-Amans, Director of the OECD’s Centre for Tax Policy and Administration. Saint-Amans confirmed the change during a 4 May OECD Tax Talks webcast. The July meeting reportedly will be replaced with a virtual meeting during which the nearly 140-member participating jurisdictions of the IF will discuss ongoing progress and adopt a report on implementation of the BEPS project measures. The July meeting was meant to reach agreement on the key policy features of a BEPS 2.0 solution that would form the basis for a political agreement.

The planned October IF meeting — for which no date has been set nor a decision made on whether it will be virtual or not — reportedly will aim to adopt a BEPS solution although it is not clear if it will contain a full set of measures, according to Saint-Amans. The OECD official was quoted as saying, “The reasonable expectation here is we may have a staged process,” adding that some parts of the solution, particularly with regard to Pillar 1, could spill over to 2021.

Saint-Amans also disclosed during the webcast that the OECD is considering addressing unique transfer pricing issues cropping up as a result of the COVID-19 pandemic. He was quoted as saying that Working Party 6, which will establish a work process in this area, is not expected to release any guidance before the end of 2020.

Endnotes

1. All “Section” references are to the Internal Revenue Code of 1986, and the regulations promulgated thereunder.

2. Organisation for Economic Co-operation and Development.

3. Base Erosion and Profit Shifting.

_____________________________________________________________________________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP, International Tax and Transaction Services, Washington, DC

ATTACHMENT

 
 

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.

 

Copyright © 2022, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct