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

March 11, 2022
2022-5261

Report on recent US international tax developments – 11 March 2022

The United States (US) Congress this week passed a long-negotiated US$1.5 trillion, 2,741-page omnibus appropriations bill that does not include a tax title, meaning it does not address any tax extenders or Tax Cuts and Jobs Act cliffs. The spending bill will fund the Federal Government through the remainder of FY2022. The legislation, which now goes to President Joe Biden for his signature, passed the Senate on 10 March and the House earlier in the week. Senate Finance Committee Chairman Ron Wyden had said there likely would not be a tax section in the Omnibus bill because some Democrats did not want to act on corporate tax provisions without items for individuals such as extending the expanded Child Tax Credit with monthly payments.

In regard to a post-Build Back Better Act reconciliation bill and other aspects of the congressional agenda, Senate Majority Leader Chuck Schumer released a letter on 7 March, saying that during March and April “many Senate committees will hold new hearings and mark-ups on Democrats’ cost-cutting proposals.” In regard to reconciliation specifically, the Majority Leader wrote that “Senate Democrats have introduced additional legislative proposals to lower the rising cost of energy, prescription drugs and health care, and the costs of raising a family.” The letter was seen by some as the first signal by Senate Democrats that they plan to bring forward a social spending and climate reconciliation package that is more in line with recent statements by Senator Joe Manchin.

A Treasury official this week confirmed that the Government is committed to releasing long-awaited proposed previously-taxed earnings and profits (PTEP) regulations in 2022 that will address multiple areas, but that taxpayers should not expect their release until the latter half of the year. An Internal Revenue Service (IRS) official was also quoted this week as saying, however, that the coming PTEP regulations would not include rules on capital accounts “especially as [they] relate to GILTI.”

An IRS official provided some insight this week into the December 2021 final foreign tax credit regulations. The government official was quoted as saying that in a situation where a foreign jurisdiction divides a royalty into two parts based on payor location and the location of the use of the intellectual property, withholding tax on the portion based on the payor location may not be eligible for a US foreign tax credit. The IRS official said in this situation, no foreign tax credit would be available because the payor jurisdiction designation is not reasonably similar to US rules and does not meet the final regulations’ attribution requirement.

_________________________________________

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

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

 
 

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 © 2024, 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 Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more