Report on recent US international tax developments – 12 November 2021

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EY Global

12 Nov 2021
Subject Tax Alert
Categories Corporate Tax
Jurisdictions United States

United States (US) President Joe Biden will sign the Infrastructure Investment and Jobs Act (HR 3684) next week when Congress returns to Washington from the Veterans Day work period recess. The House passed the Senate-passed bill late on 5 November, clearing the way for about US$550 billion in new spending on highway and other projects. Worth noting, the infrastructure bill will impose information-reporting requirements on sales of cryptocurrency and other “digital assets.” Cryptocurrency and other "digital assets" sold by customers of "brokers" will be subject to Form 1099-B reporting and cost-basis reporting. The legislation specifically amends the Internal Revenue Code (IRC) to make certain changes including expanding the definition of a broker, defining "digital assets," and applying the cost-basis-reporting regime for securities to digital assets. The amendments will be effective for information returns filed in 2024 for the 2023 calendar year.

House Speaker Nancy Pelosi, who attended the climate summit in Glasgow this week, reiterated the plan for the House to vote on the Build Back Better Act (HR 5376) next week. Last week’s agreement among House progressives and moderates that resulted in passage of the bipartisan infrastructure bill also called for the House to vote on the budget reconciliation bill no later than the week of 15 November.

Recall Democratic moderates withheld their support for the bill last week pending estimates from the Congressional Budget Office (CBO). CBO announced this week that they would be releasing estimates for individual titles of the reconciliation bill as they are completed, but warned that some estimates would take longer – particularly for provisions that interact with various titles of the bill.

There is some speculation that this week’s reported high US inflation numbers for October may affect the timing of Senate action on the Build Back Better bill. Senator Joe Manchin reacted to the inflation report saying the “threat” from inflation is not temporary and “getting worse.” The Senator’s comments are being viewed through the prism of the possible inflationary impact of the proposed US$1.7 trillion budget reconciliation package.

A senior Treasury official this week said that the first set of eagerly-anticipated final foreign tax credit regulations are still planned to be released before the end of the year. The official said the final rules, which are expected to come in at around 400 pages, are in the “clearance process.” Treasury and the Internal Revenue Service issued proposed foreign tax credit regulations in September 2020. Repeating prior comments, the official said the foreign tax credit package would focus on core rules, including jurisdictional nexus and refundable credits. A second set of final foreign tax credit regulations will likely be released in 2022, he said. The proposed regulations would apply to foreign taxes paid or accrued in tax years beginning on or after the date of publication of the final rules.

Proposed regulations on previously taxed earnings and profits (PTEP) are approximately a month or two from completion as to core aspects of the package, the official said, but will then require considerable review. The first set of proposed PTEP regulations are expected to be released in 2022. The official conceded that provisions in the House’s proposed Build Back Better Act could affect the first set of PTEP regulations currently in process, pointing to proposed changes to IRC Section 961(c) basis adjustments.


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

  • Joshua Ruland

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.