Ernst & Young Its Washington Dispatch

Republican tax reform framework released; action moves to Congressional tax-writing committees – IRS offers relief for financial institutions required to obtain and report TINs – IRS issues proposed regulations on registration-required obligations and registered form rules – IRS issues updated draft APA template – OECD releases further CbCR guidance – OECD releases US peer review report on BEPS Action 14 minimum standards

Trump Administration, Congressional Republicans to renew focus on tax reform -- US extends transition period for applying certain parts of Section 871(m) regulations -- OECD releases report on branch mismatch arrangements.

House border adjustability will not be part of US tax reform -- Nomination of next Treasury Assistant Secretary for Tax Policy advances in Senate -- IRS delays Section 385 documentation requirements by one year-- US signs more CbC competent authority arrangements -- New IRS CbC reporting site offers latest forms and guidance – Government issues corrections to reporting / withholding regs under FATCA, Chapters 3 and 61-- Deadline for MNCs to request suspension of MAP-related deadline under Mexico-US tax treaty -- Tax Court refuses to follow IRS guidance subjecting foreign investors to US tax on dispositions of partnership investments -- Tax Court holds US parent's CFCs held US Property under Section 956 from intercompany transactions -- Tax Court rules IRS abused discretion in cancelling APAs -- OECD releases update of Guidance on the Implementation of Country-by-Country Reporting -- OECD releases draft 2017 update to the OECD Model Tax Convention -- OECD releases 2017 Transfer Pricing Guidelines for Multinati

Trump Administration to deliver detailed tax reform plan to Congress following August recess -- IRS signing competent authority agreements for CbCR exchanges -- IRS reviewing options for FTINs -- IRS LB&I reviewing how transfer pricing cases selected -- 68 jurisdictions sign Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS -- OECD seeks taxpayer input on BEPS Action 14 peer reviews -- OECD releases revised discussion drafts on profits splits, attribution of profits to permanent establishments.

Trump Administration, Congressional Republicans look for unified tax reform proposal – Trump Administration’s FY2018 Budget offers few specifics on tax reform -- Trump Administration issues NAFTA renegotiation notice letters -- Changes made to IRS reporting under Sections 332, 351, 368 and 6038B by final regulations issued in 2016 affect filings for 2016 -- Treasury negotiating competent authority agreements to exchange CbC reports – US tax treaty negotiation update -- G7 Finance Ministers and Central Bank Governors communiqué references global tax system -- OECD releases implementation guidance on hard-to-value intangibles -- OECD releases peer review document on BEPS Action 6, Preventing the Granting of Treaty Benefits in Inappropriate Circumstances.

President Trump releases tax reform plan; calls for territorial system and repatriation of foreign earnings -- President Trump signs executive order requiring review of tax regulations – Modification of variable prepaid forward contracts does not trigger gain realization, Tax Court holds – IRS issues annual APA report for 2016; uptick in Indian APA cases – IRS extends deadline for submitting QI, WP, and WT agreement renewal requests to 31 May – OECD updates guidance on Country-by-Country Reporting.

Congress turns to tax reform after ACA repeal fails in House – Trump Administration issues FY 2018 ‘skinny budget’ – US Tax Court upholds Amazon subsidiary's transfer pricing buy-in payment – IRS finalizes competent authority agreements for CbC reporting – IRS to resume issuing ‘sub-regulatory’ guidance – OECD official offers insights on upcoming profit split, PE profit attribution drafts – OECD, IMF deliver report addressing tax certainty.

President Trump delivers address to Congress; US tax reform remains priority – LB&I announces first international tax campaigns in new issued-based exams and compliance process – US officials offer insights on Section 901(m), Section 385 guidance – Japan’s NTA confirms tax treatment of US LPs as fiscally transparent – IRS official confirms no major guidance in near term -- OECD begins peer reviews of BEPS Action 14 Dispute Resolution – OECD release peer review documents on BEPS Action 5 (Harmful Competition) and BEPS Action 13 (CbC Reporting) – OECD, UN, IMF, World Bank jointly release draft transfer pricing toolkit for developing countries.

Congress, incoming Trump Administration prepare for tax reform * Temporary and proposed regulations on covered asset acquisitions issued under Section 901(m) * Final and temporary US FX regulations issued * Final regulations retroactively eliminate Section 367(d)'s exception for foreign goodwill and going concern value * IRS releases extensive FATCA-related guidance * IRS issues final PFIC regulations * IRS finalizes regulations requiring reporting by foreign-owned US disregarded entities * IRS Notice 2016-73 announces amendments to Section 367 regulations applying to certain cross-border triangular reorganizations and inbound nonrecognition transactions * IRS issues Section 871(m) transition rules in Notice 2016-72 * IRS Notice 2017-07 modifies effective date for deferral events and outbound loss events * US, India reached agreement in first bilateral APA.

US Treasury and IRS issue final and temporary Section 385 debt/equity regulations – What taxpayers should do now that final Section 385 regulations are released – IRS officials say cross-border intangible guidance, Section 871(m) package coming soon – US taxpayers seeking unilateral APAs with Mexico for maquiladoras will not be subject to double taxation – US to exchange summaries of unilateral APAs in accordance with BEPS Action 5 – OECD holds consultation on BEPS profit attribution to PEs, revised guidance on profit splits – OECD released BEPS Action 14, "More Effective Dispute Resolution Mechanisms," peer review documents.

Congressional Republicans maintain opposition to Proposed Section 385 regulations -- IRS focusing on FATCA IGAs currently ‘in effect’ -- Obama Administration issues White Paper on EU State aid investigations – IRS final regulations issued on 2% tax on payments US government makes to foreign persons under certain contracts -- Treasury/IRS 2016-2017 Priority Guidance Plan contains several new international tax projects -- Lawsuit filed challenging anti-corporate inversion regulations -- OECD releases Discussion Draft on branch mismatch structures.

IRS and Treasury hold hearing on Proposed Section 385 debt/equity regulations – Senate Finance Committee Chairman’s corporate integration draft delayed -- IRS releases proposed Qualified Intermediary Agreement – IRC Section 385 cases in exam or litigation require coordination with IRS Associate Chief Counsel offices – IRS official lists international guidance slated for release before Obama Administration ends.

US releases final country-by-country (CbC) reporting regulations – House W&M Republicans request comment period extension for Proposed Section 385 debt/equity regulations; Treasury remains firm – House tax reform blueprint details to be filled in; House Democrats take aim – OECD releases more guidance on CbC reporting.

Tax reform and corporate integration dominate discussions in lead up to House tax reform blueprint – Comprehensive derivatives taxation draft released -- Congressional Republicans voice concern over Proposed Section 385 debt/equity regulations – US Treasury moving forward with optional CbC reporting in 2016 -- US proposed rules would require reporting by foreign-owned US disregarded entities -- ABA Tax Section meeting highlights proposed Section 385 and Section 305(c) regulations, US Model Treaty -- Six more countries sign tax cooperation agreement enabling automatic exchange of CbC reports.

Uncertainty regarding House international tax reform draft – Comprehensive tax reform blueprint expected by end of June – New Section 385 regulations would treat related-party corporate interests as stock, not debt -- Treasury releases new anti-corporate inversion regulations modifying application of Section 7874, limiting post-inversion tax benefits – US moving toward optional CbC reporting for 2016 – IRS issues proposed regulations under Section 305(c) deemed distributions and related withholding – Future proposed regulations will treat foreign-owned single-member LLCs as corporations for Section 6038A reporting purposes – IRS Associate Chief Counsel (International) lists top guidance priorities.

US international tax reform remains major issue on Capitol Hill – IRS final outbound asset reorganization rules adopt repeal of Section 367(a)(5) exception – Proposed regulations to treat foreign-owned single-member LLCs as corporations for 6038A reporting coming soon – IRS removes Cuba from list of countries for which FTCs, CFC deferral disallowed – Treasury to release US CbC reporting regs by 30 June, official says – IRS issues 2015 APA report.

US international tax reform takes on added urgency in Congress – Obama Administration’s FY 2017 Budget includes international provisions substantially similar to FY 2016 proposals – Treasury releases 2016 US Model Income Tax Treaty – US Treasury official comments on EU State aid investigations -- IRS amends regulations allocating partnership foreign tax expense – FIRPTA regulations amended to reflect Path Act -- IRS files appeal in Altera Corp. v. Commissioner – IRS names new Associate Chief Counsel (international).

House Ways and Means Committee to mark-up international tax reform bill in 2016 – Senate Finance Committee leaders express concern over EU State aid investigations – President Obama delivers State of the Union address – US legislation has implications for certain foreign pension funds –IRS Notice 2016-10 offers guidance for RICs with Section 853 elections alternative methods for handling foreign tax refunds – Treasury is considering foreign goodwill exception in final Section 367 regulations – Sixth Circuit holds FX option is Section 1256 contract, reverses Tax Court.

Congress makes permanent certain international tax extender provisions in major tax legislation – House, Senate committees hold hearings on BEPS, EU state aid and inversions – US issues proposed CbC reporting regulations – US international tax guidance on the horizon – Treasury grants yet another FBAR extension – IRS announces Section 4371(3) excise tax will not apply to foreign-to-foreign reinsurers.

Congressional leaders, Obama Administration negotiating tax extenders package -- Pending Treasury regulations will expand scope of Section 7874, limit benefits of certain post-inversion transactions -- Treasury considering narrowing eliminated exception for outbound transfers of foreign goodwill -- Delayed applicability date announced for aspect of Section 871(m) dividend equivalent payment regulations -- US Senate Foreign Relations Committee approves tax agreements; further Senate action uncertain.