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May 14, 2021

Report on recent US international tax developments 14 May 2021

There has been some movement toward compromise on an infrastructure package this week, with President Joe Biden suggesting he would be amenable to a corporate tax increase to 25%, and Senate Minority Leader Mitch McConnell saying he could go up to US$800 billion on the cost of a plan. Following a White House meeting on 12 May that included President Biden, the Vice President, the Senate Majority Leader, the House Speaker and the House Minority Leader, Senator McConnell offered a more optimistic assessment on the chances of reaching an infrastructure deal. The Senate Minority leader said, "I think both sides would like to get an outcome" and reportedly indicated that congressional Republicans would support a smaller bill on which there could be bipartisan support, even if congressional Democrats used reconciliation on other infrastructure proposals not supported by Republicans.

Senate Republicans reportedly will present President Biden with a revised infrastructure proposal early the week of 17 May. The new plan reportedly will include more specifics and address how to pay for the package. The news followed a meeting at the White House on 13 May attended by President Biden and a group of 10 Republicans.

A senior Treasury official this week said during a virtual American Bar Association Tax Section meeting that the Treasury Green Book containing details and revenue estimates on President Biden’s tax proposals will be released the last week in May. Those details are awaited by lawmakers to determine how the proposals would work and how much they would raise as the Administration pushes for transportation and human infrastructure plans financed with tax increases.

The House Financial Services Committee on 12 May reported out six bills, including one that would require the Securities and Exchange Commission to promulgate regulations requiring larger corporations to disclose country-by-country financial information on each of their subsidiaries, including profits, taxes paid, employees and tangible assets.

The Disclosure of Tax Havens and Offshoring Act (HR 3007) would require public companies with annual revenues of US$850 million or more to disclose their total pre-tax profits, tangible assets and total amounts paid in state, federal and foreign taxes. The bill would also require companies to disclose a number of specific tax-related items for each of their subsidiaries, as well as on a consolidated basis, such as total accrued tax expenses, stated capital and total accumulated earnings. Republicans on the committee warned that the new tax disclosures would threaten companies’ right to confidentiality.

The Internal Revenue Service issued Revenue Procedure 2021-26 on 11 May, updating Revenue Procedures 2019-43 (automatic method change procedural guidance) and 2015-13 (general method change procedural guidance). The new procedure establishes how controlled foreign corporations (CFCs) on an impermissible non-alternative depreciation system (non-ADS) or a permissible non-ADS method can make an automatic accounting method change to utilize an alternative depreciation system (ADS) method under Internal Revenue Code1 Section 168(g). This portion of the new procedure applies to Form 3115, “Application for Change in Accounting Method,” filed on or after 11 May 2021, for a tax year of a CFC ending before 1 January 2024.

The revenue procedure also prescribes terms and conditions for accounting method changes made on behalf of CFCs, so that Section 481(a) adjustments resulting from CFCs’ method changes are properly included in computations of tested income and tested loss. Finally, the revenue procedure clarifies the “150 percent rule” that limits audit protection for CFCs. One of the purposes of the revenue procedure is to lessen the burden on CFCs of conforming their income and E&P computations with their qualified business asset investment computations.


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

Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC



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

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