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.
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.
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.
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.
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.”
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
This website supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the subject of this document we encourage you to contact us or an independent tax advisor to discuss the potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this document may be considered to contain written tax advice, any written advice contained in, forwarded with, or attached to this document is not intended by Grant Thornton to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.