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Tax Update

Tax Update

In this section, we provide a summary of brief updates from the previous quarter on legislative, judicial, and administrative developments in tax that may impact Japanese companies operating in the United States.

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Biden's tax proposals (updated FAQs)

August 24, 2020

In November, voters in the United States will elect their next president. In addition, all seats in the U.S. House of Representatives, as well as about a third of the seats in the U.S. Senate, will be in play. Thus, the elections will determine whether one party will control the White House as well as both chambers of Congress beginning in early 2021 or whether there will continue to be "divided government" at the federal level.

Joe Biden's Tax Proposals: Frequently Asked Questions (PDF)

Proposed regulations on qualified parking deductions

August 17, 2020

Deductions for parking expenses may be disallowed under changes enacted as part of the 2017 U.S. tax law. New proposed regulations might help employers determine how to apply the new law to real world situations.

IRS Releases Proposed Regulations on Qualified Parking Deductions with Some Lane Changes (PDF)

Analysis of final and proposed regulations, high-tax exception under GILTI and subpart F

August 13, 2020

The U.S. Treasury Department and IRS in July 2020 released for publication in the Federal Register final regulations relating to the “global intangible low-taxed income” (GILTI) high-tax exclusion and proposed regulations relating to both the GILTI high-tax exception and the subpart F high-tax exception.

Analysis of final and proposed regulations, high-tax exception under GILTI and subpart F (PDF)

Initial impressions about presidential memorandum on deferring payroll tax obligations (COVID-19)

August 10, 2020

President Trump on August 8, 2020, signed an executive action in the form of a memorandum directing "the Secretary of the Treasury to use his authority to defer certain payroll tax obligations with respect to the American workers most in need."

TaxNewsFlash No. 2020-504 (PDF)

Initial analysis of regulations, guidance under section 163(j) (printable version)

August 5, 2020

The U.S. Treasury Department and IRS on July 28, 2020, released two sets of regulations, as well as other administrative guidance, relating to section 163(j) as amended by the 2017 tax law and the CARES Act (March 2020).

Initial analysis of regulations, guidance under section 163(j) (PDF)

Final regulations pending OIRA review: “BEAT” provisions under section 59A

August 5, 2020

OMB’s Office of Information and Regulatory Affairs (OIRA) reported that it has received for review from the U.S. Treasury Department final regulations under section 59A—the "base erosion and anti-abuse tax" or "BEAT" provisions that were enacted as part of the 2017 tax law (Pub. L. No. 115-97), the law that is often referred to as the "Tax Cuts and Jobs Act" (TCJA).

TaxNewsFlash No. 2020-492 (PDF)

Tax issues that banks are facing due to COVID-19

August 5, 2020

Banks are facing unprecedented challenges from COVID-19. Customers are struggling to satisfy their financial obligations, and there is significant turmoil in the markets.

TaxNewsFlash No. 2020-488 (PDF)

IRS updates FAQs on deferral of employment tax deposits, payments (COVID-19)

July 31, 2020

The IRS has updated a list of "frequently asked questions" (FAQs) concerning the deferral of employment tax deposits and payments through December 31, 2020—relief allowed in response to the coronavirus (COVID-19) pandemic.

TaxNewsFlash No. 2020-481 (PDF)

Analysis of final FDII regulations

July 31, 2020

The U.S. Treasury Department and IRS earlier in July 2020 released final regulations (T.D. 9901) that finalize regulations that were proposed in March 2019 related to the deduction for foreign-derived intangible income ("FDII") and global intangible low-taxed income ("GILTI") under section 250.

Analysis of final FDII regulations – Tax reform (PDF)

IRS concept unit on accuracy-related penalties, tax professionals urge caution

July 30, 2020

The IRS Large Business and International (LB&I) Division yesterday publicly released a "concept unit" on accuracy-related penalties under Internal Revenue Code section 6662.

TaxNewsFlash No. 2020-477 (PDF)

IRS’s temporary procedure for filing Form 3115, accounting method changes (COVID-19)

July 29, 2020

The IRS today posted a set of "frequently asked questions" (FAQs) providing a temporary procedure for taxpayers to fax the duplicate copy of Form 3115, "Application for Change in Accounting Method"—a procedure provided in response to the coronavirus (COVID-19) pandemic.

TaxNewsFlash No. 2020-471 (PDF)

Initial impressions about final and proposed regulations, high-tax exception under GILTI and subpart F

July 21, 2020

The U.S. Treasury Department and IRS yesterday, July 20, 2020, released for publication in the Federal Register final regulations (T.D. 9902) related to the "global intangible low-taxed income" (GILTI) high-tax exception and proposed regulations (REG-127732-19) which would establish uniformity between the historic subpart F high-tax exception in section 954(b)(4) and the final GILTI high-tax exception by providing for a single high-tax exception.

Initial impressions about final and proposed regulations, high-tax exception under GILTI and subpart F (PDF)

Proposed changes to Form 1065 for partnerships with international tax items

July 14, 2020

The IRS is proposing changes to Form 1065, U.S. Return of Partnership Income, for tax year 2021 (filing season 2022). Similar form updates are intended for Form 1120-S, U.S. Income Tax Return for an S Corporation, and Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships.

TaxNewsFlash No. 2020-450 (PDF)

Rev. Proc. 2020-37: Automobile depreciation deduction limits for 2020

July 8, 2020

The IRS today released an advance version of Rev. Proc. 2020-37 that provides the annual depreciation deduction limitations under section 280F for automobiles placed in service in 2020. These limitations are required to be adjusted for inflation for automobiles placed in service after 2018.

TaxNewsFlash No. 2020-438 (PDF)

States enacting federal tax conformity measures, new fiscal year starting July 1

July 6, 2020

With a new fiscal year for many states beginning July 1, 2020, there was legislative activity with a number of bills being signed into law to update state conformity to the Internal Revenue Code.

TaxNewsFlash No. 2020-432 (PDF)

Regulations: Consolidated net operating losses (text of regulations)

July 2, 2020

The U.S. Treasury Department and IRS this afternoon released for publication in the Federal Register temporary regulations (T.D. 9900) and proposed regulations (REG-125716-18) as guidance under sections 1502 and 172 regarding consolidated net operating losses (NOLs).

TaxNewsFlash No. 2020-428 (PDF)

New FAQs on faxing refund claims, NOL carrybacks under CARES Act (COVID-19)

June 29, 2020

The IRS today updated a set of "frequently asked questions" (FAQs) addressing how taxpayers can file applications for eligible refund claims related to the net operating loss (NOL) carryback provisions of the "Coronavirus Aid, Relief, and Economic Security Act" (CARES Act) (Pub. L. No. 116-136).

TaxNewsFlash No. 2020-422 (PDF)

IRS updated FAQs on deferral of employment tax deposits, payments (COVID-19)

June 26, 2020

The IRS today updated a list of "frequently asked questions" (FAQs) concerning the deferral of employment tax deposits and payments through December 31, 2020—relief allowed in response to the coronavirus (COVID-19) pandemic.

TaxNewsFlash No. 2020-418 (PDF)

IRS updated FAQs on employee retention credit (COVID-19)

June 23, 2020

The IRS on June 19, 2020, released another set of updated "frequently asked questions" (FAQs) for the employee retention credit (ERC) provided by the "Coronavirus Aid, Relief, and Economic Security Act" (CARES Act), Pub. L. No. 116-136.

TaxNewsFlash No. 2020-410 (PDF)

Proposed regulations and guidance on qualified transportation fringe benefits

June 23, 2020

Proposed regulations from the U.S. Treasury Department and IRS appear in today's edition of the Federal Register and provide additional guidance for implementing section 274 amendments enacted under the 2017 tax law (Pub. L. No. 115-97), the law that is often referred to as the "Tax Cut and Jobs Act" (TCJA), and that disallows a deduction for the expense of any section 132(f) qualified transportation fringe (QTF) benefits, including qualified parking, provided to an employee, effective for amounts paid or incurred after December 31, 2017.

TaxNewsFlash No. 2020-411 (PDF)

Qualified opportunity zone rules, as of June 2020

June 22, 2020

As with almost all current developments, the ongoing pandemic has significantly disrupted aspects of qualified opportunity zone (QOZ) planning and development.

Qualified Opportunity Zone Rules as of June 2020— Checking In and Checking Up (PDF)

California: Tax increases expected for taxpayers; NOLs suspended and other tax-related measures

June 16, 2020

The California legislature on June 15, 2020, approved a $143 billion budget, including a "trailer bill" that suspends the use of California net operating loss (NOL) deductions and certain tax credits for the 2020, 2021, and 2022 tax years.

TaxNewsFlash No. 2020-388 (PDF)

Tax relief, updated state and local tax guidance (COVID-19)

June 15, 2020

State and local governments continue to address tax matters stemming from the coronavirus (COVID-19) pandemic.

TaxNewsFlash No. 2020-386 (PDF)

Proposed regulations: Limitations on like-kind exchanges

June 11, 2020

The U.S. Treasury Department and IRS today released for publication in the Federal Register a notice of proposed rulemaking (REG-117589-18) as guidance to implement the 2017 tax law changes made to the like-kind exchange rules of section 1031.

TaxNewsFlash No. 2020-378 (PDF)

Notice 2020-46: Employer leave-based donation programs (COVID-19)

June 11, 2020

The IRS today released an advance version of Notice 2020-46 as guidance for employers whose employees forgo sick, vacation or personal leave because of the coronavirus (COVID-19) pandemic.

TaxNewsFlash No. 2020-380 (PDF)

President signs legislation providing payroll tax deferral for taxpayers with forgiven PPP loans (COVID-19)

June 5, 2020

President Trump today signed into law the "Paycheck Protection Program Flexibility Act of 2020" (H.R. 7010).

TaxNewsFlash No. 2020-370 (PDF)

Rev. Rul. 2020-13: Interest rates, tax overpayments and underpayments (third quarter 2020)

June 4, 2020

The IRS today released an advance version of Rev. Rul. 2020-13 that provides the rates of interest with regard to tax overpayments and tax underpayments for the calendar quarter beginning July 1, 2020. The rates of interest will decrease for the third quarter 2020.

TaxNewsFlash No. 2020-365 (PDF)

Notice 2020-35: Postponed deadlines for employment taxes, employee benefit plans, IRAs, HSAs, MSAs, other time-sensitive actions (COVID-19)

May 28, 2020

The IRS today released an advance version of Notice 2020-35 announcing that deadlines for certain time-sensitive actions will be postponed because of the coronavirus (COVID-19) pandemic.

TaxNewsFlash No. 2020-349 (PDF)

IRS practice unit: Taxation of the disposition of U.S. real property interests (USRPI) by foreign persons

May 27, 2020

The IRS today released an advance version of Notice 2020-35 announcing that deadlines for certain time-sensitive actions will be postponed because of the coronavirus (COVID-19) pandemic.

TaxNewsFlash No. 2020-341 (PDF)

United States: Competent authority, changes regarding requests and APA consultations

May 20, 2020

IRS officials recently announced changes to the procedures for filing documents under Rev. Proc. 2015-40 (mutual agreement procedure (MAP) requests) and under Rev. Proc. 2015-41 (advance pricing agreement (APA) requests and APA annual reports). These changes were released in a statement posted on the IRS webpage containing relief measures issued in response to the coronavirus (COVID-19) pandemic.

United States: Competent authority, changes regarding requests and APA consultations

Final regulations: Funding rule under section 385 (text of regulations)

May 13, 2020

The U.S. Treasury Department and IRS today released for publication in the Federal Register final regulations (T.D. 9897) that relate to section 385 and specifically concerning application of the funding rule in Reg. section 1.385-3.

TaxNewsFlash No. 2020-316 (PDF)

Proposed regulations: Disallowed deductions and information reporting for fines, penalties

May 12, 2020

The U.S. Treasury Department and IRS today released for publication in the Federal Register a notice of proposed rulemaking (REG-104591-18) concerning section 162(f)’s denial of deductions for certain fines, penalties, and other amounts.

TaxNewsFlash No. 2020-309 (PDF)

State and local tax guidance, tax relief (COVID-19)

updated May 11, 2020

U.S. state and local jurisdictions continue to provide tax relief—such as extensions of time to file returns or to pay state and local taxes, or both—in response to the coronavirus (COVID-19) pandemic.

TaxNewsFlash No. 2020-309 (PDF)

Rev. Proc. 2020-30: Relief from creating foreign branch separate units under the dual consolidated loss rules (COVID-19)

May 7, 2020

The IRS today released an advance version of Rev. Proc. 2020-30 to address situations when a foreign branch separate unit will not be created as a result of travel restrictions and disruptions resulting from the coronavirus (COVID-19) pandemic.

TaxNewsFlash No. 2020-299 (PDF)

New FAQs provided by IRS for QIs/WPs/WTs

May 1, 2020

The IRS announced it has updated a set of "frequently asked questions" (FAQs) on a FATCA webpage concerning qualified intermediaries (QIs), withholding foreign partnerships (WPs), and withholding foreign trusts (WTs).

TaxNewsFlash No. 2020-281 (PDF)

 

For more information, please contact:

Tai Kimura | +1 408 367 2204 | tkimura@kpmg.com

 

 

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser. This article represents the views of the authors only, and do not necessarily represent the views or professional advice of KPMG.

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