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Puerto Rico enacts tax amnesty program to begin May 13, 2013 - May 10, 2013 Puerto Rico has enacted legislation that creates a tax amnesty program that will be in effect from May 13, 2013, through June 30, 2013.The legislation provides for a full waiver of interest,surcharges and penalties on certain tax debts assessed, or to be assessed, as of Dec.31, 2012.
New Jersey Division of Taxation issues proposed market-based sourcing regulation - May 7, 2013 On April 15, 2013, the New Jersey Division of Taxation published a proposed regulation in the New Jersey Register that, if adopted, would change the way in which New Jersey determines whether receipts from services are included in the numerator of the Corporation Business Tax allocation factor sales fraction.
Tennessee trial court approves variance requiring telecommunications company to use market-based sourcing - May 3, 2013 A Tennessee chancery court has held that the state’s Revenue Commissioner properly issued a variance requiring a telecommunications company to apportion sales using market-based sourcing based on a customer’s billing address rather than the statutory cost of performance method.
Illinois Department of Revenue holds gain from sale of business segment excluded from sales factor as occasional sale - May 2, 2013 In a private letter ruling, the Illinois Department of Revenue determined that a taxpayer’s gain from selling the assets of a business segment is excluded from the sales factor as an occasional sale.
Texas court of appeals holds consumable hotel items are exempt from sales tax under sale-for-resale exemption - April 30, 2013 The Texas Court of Appeals has held that a hospitality company’s purchases of consumable items, including soap and shampoo that it provided to its hotel guests, was exempt from Texas sales tax under the sale-for-resale exemption.
Kansas enacts sales and use tax click-through nexus and affiliate nexus provisions - April 30, 2013 On April 16, Kansas Governor Sam Brownback approved legislation that implements click-through nexus and affiliate nexus provisions for purposes of the state’s sales and use tax.
Kentucky enacts legislation amending intercompany management fee addback, imposing remote seller notification requirement - April 23, 2013 On April 4, Kentucky Governor Steve Beshear signed legislation that makes several changes to income tax law as well as sales and use tax law.
New York enacts budget legislation amending royalty expense addback provisions, lowering tax rates for qualified manufacturers - April 16, 2013 New York Governor Andrew Cuomo recently signed budget legislation which amends the related member royalty expense addback rules, reduces the tax rates for certain New York State manufacturers, extends the higher personal income tax rate for high-income individuals and extends the charitable contribution deduction limitation for high-income individuals.
Tennessee releases franchise and excise tax administrative rulings covering variety of topics, including not-for-profit entities, nexus and intangible expense - April 12, 2013 Earlier this year, the Tennessee Department of Revenue released several 2012 revenue and letter rulings1 addressing a variety of franchise and excise (income) tax questions. In particular, the Department discussed the rules with respect to a not-for-profit’s franchise and excise tax liability.
Utah to withdraw from and partially reenact Multistate Tax Compact - April 11, 2013 On April 1, Utah Gov. Gary Herbert signed legislation withdrawing the state of Utah from the Multistate Tax Compact on June 30, 2013, and simultaneously readopting some of the Compact’s provisions until June 30, 2014.
Alabama Department of Revenue promulgates market-based sourcing regulation - April 11, 2013 The Alabama Department of Revenue recently has promulgated a corporate income tax regulation to clarify the statutory market-based sourcing methodology that is used to source sales other than sales of tangible personal property.
New Mexico enacts omnibus tax and administrative procedures legislation - April 11, 2013 On April 4, New Mexico Gov. Susana Martinez signed significant tax reform legislation that reduces the corporate income tax rate, requires certain “big box” retailers to file combined reports and allows manufacturers to elect a gradually phased-in single sales factor apportionment formula.
Oregon Supreme Court holds gain from sale of public utilities'assets constitutes apportionable business income - April 3, 2013 On March 7, the Oregon Supreme Court, in two separate decisions, held that the gain realized from the sale of two multistate telecommunications service providers’ assets constituted apportionable business income rather than nonbusiness income.
New York State Court of Appeals holds click-through nexus statute is facially constitutional - April 3, 2013 The New York State Court of Appeals, the state’s highest court, recently held that New York’s click-through nexus statute that presumes sales tax nexus for certain online retailers does not facially violate the U.S. Constitution under either the Commerce or the Due Process Clauses.
Washington Department of Revenue adopts final rules regarding taxation of digital products, computer hardware and software - March 26, 2013 The Washington Department of Revenue recently adopted permanent administrative rules that address the taxability of digital products, computer hardware and software for purposes of sales and use tax and the business and occupation tax.
Alabama ALJ clarifies affiliated group can exist prior to filing consolidated return for purposes of NOL limitations - March 22, 2013 An Alabama administrative law judge (ALJ) has issued a final order on rehearing holding that separate return limitation year rules do not apply to net operating losses (NOLs) incurred by corporations that filed separate returns but were members of the same affiliated group during the loss year.
Washington Supreme Court holds requirement that supermajority of legislature approve tax increases is unconstitutional - March 20, 2013 The Washington Supreme Court recently held that a voter-enacted supermajority requirement for the Washington legislature to enact tax increases violated the state constitution, but a constitutional challenge to a voter-enacted referendum requirement to approve tax bills increasing spending beyond the state spending limit could not be considered by the Court because there was no legal interest or injury at issue.
U.S. Bankruptcy Court rules imposition of Oregon corporate excise tax on out-of-state holding company was unconstitutional - March 8, 2013 The U.S. Bankruptcy Court has held that imposition of the Oregon corporate excise tax upon a parent holding company violated the Due Process and Commerce Clauses of the U.S. Constitution as the parent had no property or employees in Oregon and had no sales or other revenue directly attributable to Oregon sources.
Federal legislation reintroduced to authorize states to impose sales tax collection requirements on remote sellers - March 8, 2013 On Feb. 14, members of Congress reintroduced the Marketplace Fairness Act, which would authorize certain states to impose a sales and use tax collection requirement on remote sellers. Under the new proposed legislation, for member states of the Streamlined Sales and Use Tax Agreement (SSUTA), collection authorization would commence assuming it is determined that the Agreement contains the minimum simplification requirements.
Illinois Appellate Court holds refund request for portion of estimated payment made under amnesty program rules was timely - March 6, 2013 The Illinois Appellate Court has held that a taxpayer’s refund request of a good faith estimated payment made to the Department of Revenue through its participation in the 2003 amnesty program was within the applicable statute of limitations.
Kentucky requires filing of disclosure schedule for related-party costs - March 1, 2013 The Kentucky Department of Revenue has announced that for tax years beginning on or after Jan. 1, 2012, corporations and pass-through entities are required to file and attach a Related Party Costs Disclosure Statement (RPC) to their Forms 720, 720S, 765 or 765-GP.
Maryland Court of Appeals rules denial of county-level tax credit for taxes paid to other states violates commerce clause - Feb. 28, 2013 The Maryland Court of Appeals has ruled that the failure of Maryland law to allow a credit against county income tax for Maryland residents for their pass-through income from an S corporation’s out-of-state activities that was taxed by another state was unconstitutional.
Special considerations for Los Angeles business taxes filing due on Feb. 28, 2013 - Feb. 26, 2013 The California city business taxes require an analysis of numerous variables, including industry classification, payroll size, gross receipts and apportionment rules for in-city and out-of-city activities. This alert focuses on the municipal-level tax imposed by the most populous city in California, the Los Angeles Business Tax.
Puerto Rico Treasury Department issues regulations for controlled groups of corporations and related entities - Feb. 20, 2013 The Puerto Rico Treasury Department has released regulations to provide guidance on the application of the new rules for controlled groups of corporations and related entities included in the Internal Revenue Code for a New Puerto Rico.
Maryland Court of Special Appeals holds intangible holding companies have corporate income tax nexus - Feb. 20, 2013 On Jan. 24, the Maryland Court of Special Appeals held that two out-of-state intangible holding companies had corporate income tax nexus with Maryland because they were in a “unitary business” relationship with their Maryland parent company.
Illinois Appellate Court holds department improperly 'corrected' taxpayer’s apportionment formula as 'mathematical error' - Feb. 19, 2013 The Illinois Appellate Court recently addressed the Department of Revenue’s ability to assess additional tax through a correction of a “mathematical error” when the department has a substantive dispute with the taxpayer’s position on its return. The Court held that the Department’s treatment of the taxpayer’s use of a certain apportionment factor formula as a “mathematical error” was improper, and that the use of a proper formula was substantive in nature, necessitating the issuance of a “notice of deficiency.”
Delaware expands unclaimed property voluntary disclosure program - Feb. 15, 2013 Under a new law signed by Gov.Jack Markell on Jan. 30, 2013, Delaware has again amended its voluntary disclosure agreement program to provide additional incentives to holders to comply with its unclaimed property laws.
Tennessee releases sales and use tax administrative rulings covering variety of topics, including industrial exemptions and Web-based services - Feb. 15, 2013 On Jan.8, the Tennessee Department of Revenue released a number of 2012 revenue and letter rulings addressing a variety of sales and use tax issues, including the applicability of the industrial materials and machinery exemptions to various fact patterns, and the scope of the exemption for Web-based services.The department’s rulings also address the taxability of wireless replacement phones provided to subscribers of wireless plans under an insurance policy, and a wireless customer’s redemption of loyalty points for a reduction in the purchase price of taxable goods or services.
Oklahoma Court of Appeals holds capital gains deduction statute violates commerce clause - Feb. 13, 2013 On Jan. 17, the Oklahoma Court of Appeals determined that the state’s capital gains deduction statute impermissibly violated the commerce clause of the U.S. Constitution by facially discriminating against non-Oklahoma companies or companies without headquarters located in the state.
Texas comptroller limits telecommunications company’s COGS deduction - Feb. 7, 2013 The Texas comptroller of public accounts recently upheld a decision by the administrative law judge to limit a telecommunications company’s cost of goods sold (COGS) deduction for purposes of the revised Texas franchise tax to those costs incurred in purchasing certain telephone equipment that was sold to its customers in the regular course of business.
Virginia tax commissioner issues guidance on single-sales-factor apportionment election for manufacturers - Feb. 5, 2013 The Virginia tax commissioner recently issued a ruling that provides guidelines to manufacturers electing to use a single-sales-factor method to apportion income for purposes of the corporate income tax. The guidelines clarify the election and highlight the wage and employment requirements including a detailed discussion of the employment requirement as it relates to affiliated groups and corporate restructuring.
Illinois’ Cook County imposing new use tax on nontitled tangible personal property - Feb. 1, 2013 Effective April 1, 2013, Cook County, Ill., will impose a 1.25% use tax on any individual or company based on the value of nontitled tangible personal property acquired from sellers located outside Cook County when the property is first subject to use in Cook County.
New York State Department of Taxation and Finance substantially amends combined reporting regulations - Jan. 30, 2013 The New York State Department of Taxation and Finance has significantly amended its regulations explaining when corporations are required to file combined reports. The regulations are effective Jan. 2, 2013 and apply to taxable years beginning on or after Jan. 1, 2013.
Virginia tax commissioner holds prewritten software license, hosting services and related travel reimbursement expenses for training are not taxable - Jan. 30, 2013 The Virginia tax commissioner recently held that a Virginia taxpayer was not liable for retail sales or use tax on charges relating to software licenses, hosting services and travel reimbursement for on-site software training, where the tangible software was transferred outside the state from the out-of-state licensor directly to the out-of-state company hosting the software.
Ohio enacts legislation overhauling taxation of financial institutions - Jan. 30, 2013 On Dec. 20, 2012, Ohio Gov. John Kasich signed legislation that significantly modifies the taxation of financial entities in Ohio. The law provides for a new financial institutions tax which replaces the Ohio corporation franchise tax currently applicable to financial institutions.
North Carolina Department of Revenue adopts regulations outlining discretionary authority powers - Jan. 29, 2013 On Jan. 3, 2013, the North Carolina Department of Revenue adopted regulations intended to clarify the Secretary’s authority to adjust net income or to force combined returns for income tax purposes as mandated by 2012 legislation.
North Carolina Department of Revenue issues notice regarding computation of net economic loss - Jan. 21, 2013 The North Carolina Department of Revenue has issued a notice discussing a change in its interpretation of the statute allowing a deduction to corporations that sustain a net economic loss (NEL) in any or all of the 15 preceding tax years. This may affect historic NEL calculations.
New York releases guidance on lower corporation franchise tax rates for eligible qualified manufacturers - Jan. 21, 2013 The New York State Department of Taxation and Finance has issued guidance providing the requirements that a taxpayer must meet to be classified as an “eligible qualified New York manufacturer” that is allowed to use lower corporation franchise tax rates.
SALT legislative outlook, trends and predictions for 2013 - Jan. 17, 2013 This year promises to be one in which states consider innovative and potentially dramatic changes to their state tax systems. There will be significant shifts in the political composition of state legislatures as well as uncertainty about the effect of the fiscal cliff and the amount of funding that will be available from federal sources.
California Court of Appeal holds right to replicate and install software is license of intangible property for apportionment purposes - Jan. 15, 2013 On Dec. 18, the California Court of Appeal reversed a trial court’s ruling and determined that a taxpayer’s license of proprietary software, which transferred the right to replicate and install the software, but not the right to use the software, constituted the license of “intangible property” for apportionment purposes.
Ohio adopts changes to bonus depreciation addback for owners of pass-through entities - Jan. 4, 2013 On Dec.11, Ohio Gov. John Kasich signed legislation that makes significant changes to the bonus depreciation addback rules applicable for purposes of calculating the Ohio income tax.The bill allows owners of pass-through entities who claim bonus depreciation and who increase payroll to reduce the amount of bonus depreciation required to be added back to adjusted gross income.
Indiana Department of Revenue applies market-based sourcing to taxpayer selling audience profile information - Jan. 3, 2013 In a letter of findings, the Indiana Department of Revenue applied a market-based sourcing method and required an out-of-state taxpayer to include receipts from audience profile information that it sold to Indiana customers in its sales factor.
Oregon enacts legislation ensuring taxpayers that make qualifying investments may continue to use single sales factor apportionment - Jan 2, 2013 On Dec. 18, as a result of a recent one-day special legislative session, Oregon Gov. John Kitzhaber signed the Economic Impact Investment Act to encourage Nike Corporation, and potentially other large companies, to expand operations and invest in the state.
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