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

March 24, 2023
2023-5356

Report on recent US international tax developments – 24 March 2023

The US Internal Revenue Service (IRS) issued Notice 2023-27 on 21 March, announcing that Treasury and the IRS intend to issue guidance related to the treatment of certain nonfungible tokens (NFTs) as collectibles for tax purposes. Pending the issuance of that guidance, the IRS intends to determine whether an NFT constitutes an Internal Revenue Code1 Section 408(m) collectible by analyzing whether the NFT’s associated right or asset is a collectible, under a look-through analysis.

While some NFTs may represent a right or asset explicitly listed under Section 408(m), such as gemstones, other assets may require further clarification in the ensuing guidance. In particular, the IRS will make a determination on the extent to which a digital file may constitute a “work of art” under Section 408(m)(2)(A). Notice 2023-27 requests comments on specific questions, offering taxpayers the opportunity to provide technical input on future guidance.

Addressing BEPS 2.0, a senior US Treasury official this week said negotiations have been so challenging that he does not expect the Inclusive Framework (IF) will be able to craft a permanent safe harbor under the Pillar Two global anti-base erosion (GloBE) rules. Recent guidance provided for several temporary safe harbors that apply to the first three years that GloBE is in effect. On the other hand, the official was also quoted as saying that the IF is working on a qualified domestic minimum top-up tax (QDMTT) safe harbor that would eliminate an in-scope multinationals’ liabilities under the Income Inclusion Rule (IIR) and Undertaxed Profit Rule (UTPR).

_________________________________________

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

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

_________________________________________

Endnotes

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

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