Forecasting this year’s SALT issues
The year 2018 was quite an important one in state and local tax law, dominated by the Tax Cuts and Jobs Act reforms and the U.S. Supreme Court’s South Dakota v. Wayfair, Inc. To help your business plan for another year of tax law changes, Grant Thornton offers 10 issues we believe will dominate SALT legislative actions in 2019 in Forecasting what lies ahead for 2019 in state and local tax news.
Look ahead to 2019’s trends here
Keep up with the latest state and local tax developments by reading our SALT Alerts. They are labeled by state so that you can easily find the ones that apply to you. The following are the most recent alerts:
MTC OK’s statute on reporting audit adjustments
During a special meeting on Jan. 24, 2019, the Multistate Tax Commission (MTC) approved a model statute for reporting adjustments to federal taxable income and federal partnership audit adjustments.
Kentucky amends corporate income tax regulations
The Kentucky Department of Revenue recently amended a variety of corporate income tax regulations. Some apportionment regulations are revised to reflect the major state tax reform legislation enacted last year, including the adoption of single sales factor apportionment.
Mississippi issues guidance on federal tax reform provisions
The Mississippi Department of Revenue has released a notice detailing the impact of various provisions of H.R. 1, commonly referred to as the Tax Cuts and Jobs Act (TCJA), on Mississippi taxpayers, which addresses both business and individual terms.
New York declares remote seller economic nexus standard
On Jan. 15, 2019, the New York Department of Taxation and Finance issued Important Notice N-19-1, declaring that remote sellers without a physical presence in New York State but having more than $300,000 in sales of tangible personal property into the state and more than 100 transactions in the state are now required to register as a vendor and collect and remit sales tax.
Philadelphia enacts tax laws addressing economic nexus standard
The City of Philadelphia recently announced several tax changes impacting the City’s Business Income and Receipts Tax (BIRT) and Net Profits Tax (NPT). These changes were accomplished through the issuance of a series of regulations and advisory notices adopting an economic nexus standard in response to South Dakota v. Wayfair
, establishing the City’s treatment of key federal tax reform provisions, and proposing the extension of the BIRT net operating loss (NOL) carryforward period.
Tennessee: Apportionment allowed due to taxpayer’s out-of-state incorporation
On Dec. 20, 2018, the Tennessee Court of Appeals held that a taxpayer was entitled to apportion its income because it was incorporated in another state. The fact that the taxpayer was incorporated in Florida established substantial nexus in another state for purposes of the Commerce Clause of the U.S. Constitution.
Texas rules ‘free’ hotel consumables not for resale
The Texas Court of Appeals recently upheld a District Court decision finding that a hotel operator’s purchases of certain consumables such as shampoo, toothpaste, and Styrofoam dishes do not qualify for the Texas resale exemption if they are held out to the public as free and not separately invoiced.
Virginia adopts remote seller economic nexus standards
Virginia recently enacted legislation advancing the Commonwealth’s conformity with the Internal Revenue Code (IRC) to the version in effect as of Dec. 31, 2018. In a separate measure, it adopted economic nexus standards for certain remote sellers and marketplace facilitators.
Virginia upholds constitutionality of apportionment statute
On Feb. 7, 2019, the Virginia Supreme Court held that the Virginia Department of Taxation’s use of the state’s statutory apportionment formula, and denial of a taxpayer’s request to use alternative apportionment, did not violate the Due Process or Commerce Clauses of the U.S. Constitution.