The US House on 26 April passed the Limit, Save, Grow Act of 2023 (HR 2811), a bill assembled by the Republican leadership that would suspend the statutory debt ceiling until 31 March 2024, or until $1.5 trillion of debt over the current statutory limit is incurred (whichever happens first). The bill would also cut trillions of dollars in spending across a broad swath of programs and repeal a number of tax breaks enacted in last year's Inflation Reduction Act (IRA), among other changes. The Congressional Budget Office concluded this week that the bill would result in $4.8 trillion in deficit reduction from 2023—2033, while also reducing projected tax collections by $191 billion during that period as a result of repealing IRS funding provided in the IRA. Four Republicans voted against the bill, which passed the House 217-215.

The Senate is not expected to take up the bill. President Biden said before the bill was passed that he would veto the legislation if it came to his desk, insisting he will not negotiate with congressional Republicans and will only sign a "clean" bill to raise the debt ceiling. The White House has repeatedly asserted that the President will not negotiate budget and economic policy in the context of a debt-ceiling measure. In a Statement of Administration Policy on 25 April, the White House said, in part: "The President has been clear that he will not accept such attempts at hostage-taking. House Republicans must take default off the table and address the debt limit without demands and conditions, just as the Congress did three times during the prior Administration."

A Treasury official this week said no decision has been made on whether the government will issue interim guidance on the new corporate alternative minimum tax (CAMT). The official was quoted as saying that while the "overriding comment" from taxpayers is that more CAMT guidance is needed, it is still not clear if Treasury will wait for proposed regulations or issue further notices.

The IRS on 24 April released Notice 2023-24, updating earlier guidance (Notice 2014-21) to remove a sentence that described digital currency as "not having legal tender status in any jurisdiction." The amendment was made due to law changes in foreign jurisdictions that characterize Bitcoin as legal tender.

The change to Notice 2014-21 does not affect the answers to the FAQs in the 2014 guidance, including the conclusion that convertible virtual currency is not treated as currency that could generate foreign currency gain or loss for US federal tax purposes. Notice 2014-21 provides that convertible virtual currency is treated as property for US federal tax purposes and general tax principles that apply to property transactions also apply to transactions that use convertible virtual currency.

An OECD official this week was quoted as saying the organization expects to release a BEPS Pillar Two qualified domestic minimum top-up tax (QDMTT) safe harbor by summer and is also working on other safe harbors and simplifications. The official specified the OECD is working on other QDMTT guidance, substance-based income exclusion and deferred tax-liability recapture rules. And finalization of the Pillar Two GLoBE information return reportedly is still on track for release in mid-2023.

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

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

•  Arlene Fitzpatrick | arlene.fitzpatrick@ey.com
•  Joshua Ruland | joshua.ruland@ey.com

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor