August 25, 2023
Report on recent US international tax developments — 25 August 2023
Congress ends its August recess after Labor Day with the Senate scheduled to return to Washington on 5 September and the House returning on 12 September. Much of September is still expected to be taken up by passage and subsequent reconciliation of appropriation bills that must be enacted before the government's fiscal year-end on 30 September.
The House Ways & Means Committee-passed American Families and Jobs Act from June — which addresses the TCJA "pre-cliffs" on Section 174 R&D expensing, Section 163(j) interest deduction limitations, and 100% expensing — is considered to be House Republicans' negotiating position for talks later this year if a year-end tax package materializes.
In the Senate, Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) announced before the August recess that the committee will meet in September to mark up tax legislation to strengthen the US economic relationship with Taiwan. There are at least two proposals circulating that are not mutually exclusive.
Senators Wyden and Crapo, along with House Ways & Means Committee Chairman Jason Smith (R-MO) and Ranking Member Richard Neal (D-MA) on 12 July released a discussion draft of legislation for a US-Taiwan tax agreement. The Senate Foreign Relations Committee on 13 July also approved the Taiwan Tax Agreement Act (S. 1457), which would authorize the President to negotiate and enter into a tax agreement.
The IRS today (25 August) released proposed regulations (REG-122793-19) on information reporting, the determination of amount realized and basis, and backup withholding for certain digital asset sales and exchanges. The 282-page proposed rules would "require brokers, including digital asset trading platforms, digital asset payment processors, and certain digital asset hosted wallets, to file information returns, and furnish payee statements, on dispositions of digital assets effected for customers in certain sale or exchange transactions."
The IRS notes that digital assets have grown in popularity both as a payment method and as an investment or trading asset. According to a GAO report cited in the preamble, limits on third-party information reporting to the IRS generally are an important factor contributing to the tax gap (the difference between taxes legally owed and taxes actually paid.)
On 25 August, the IRS updated the Frequently Asked Questions on the FATCA webpage, extending penalty relief for the 2022, 2023, and 2024 calendar years in limited situations where a withholding agent is reporting dividend equivalent amounts on transactions involving covered partnerships. See updated FAQ 23 (Q23) on the FATCA - FAQs General webpage.
Treasury and the IRS this week released the fourth-quarter update to the 2022–2023 Priority Guidance Plan. The update shows the projects that have been published or released through 30 June 2023. A new international project is identified in the update: regulations under Section 6011 related to Malta personal retirement scheme transactions (published in the Federal Register on 7 June 2023). No additional projects have been added with respect to the international provisions during the fourth-quarter update.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor