State Tax Knowledge Update (41 items) - January 6, 2018

Happy New Year! 

I hope you are off to a great start (despite the extreme cold and snow many of you have been experiencing).  Be safe out there.

As we start the new year with federal tax reform finally enacted, we will begin to have to deal with the details, and how states will respond. This year's state legislative season should be very interesting. The District of Columbia and Pennsylvania have already provided some responses (see #30 and #32 below).

The following are state tax and business developments I have curated since December 12, and posted in the LEVERAGE SALT LinkedIn group:

Some of the items may be on the same state/issue/topic, but they are from different sources which may give you a broader perspective to help your company or client.

1. Income-producing activity of cable company is as licensee

2. Seattle Income Tax Ruled Invalid

3. Connecticut Fresh Start Program Has Begun

4. Florida DOR Issues Guidance on Voluntary Disclosure Program

5. Amended Alabama Rule Reflects New Law that Includes Loans and Credit Card Receivables in Property Factor for FIET Purposes

6. New California FTB Policy Prohibits Certain Ex Parte Communications Involving Alternative Apportionment Petition Hearings

7. Arkansas Taxpayers Reminded that New Law Taxes Specified Digital Products and Digital Codes Beginning January 1

8. Ohio Supreme Court Holds that Preparation of Company Gift Sets for Retailers Qualifies as Exempt Assembly Under Manufacturing Exemption

9. Washington DOR Issues Amended Business and Occupation Tax Rules on Financial Institution Apportionment to Conform with MTC Changes

10. Corporate Close-Up: New Jersey Court Rules That State Cannot Impose Corporate Business Tax on Foreign-Source Income Not Subject to United States Federal Income Tax

11. Tennessee DOR Subjects Cloud-Based Employee Scheduling Services to Sales and Use Tax

12. City of Chicago Department of Finance has changed the terms of its voluntary disclosure program

13. Trends in State Tax Policy, 2018

14. How States May React to Federal Tax Reform

15. Illinois updates the Revised Uniform Unclaimed Property Act

16. California Tax Update 2017

17. California Office of Tax Appeals Releases Final Draft Emergency Regulations on Rules for Tax Appeals

18. The 2018 National Multistate Tax Symposium

19. California OTA Issues Amended Proposed Emergency Regulations on Administration and Procedures of Appeals and Petitions for Rehearing

20. Indiana DOR Explains Success of its New Protest Review System

21. New Michigan Law Permits Alternate Method of Dispute Settlement/Resolution for Certain Tax Liabilities

22. Texas Comptroller Announces that Recently Enacted Tax Amnesty Program will Run from May 1 to June 29 Providing for Potential Waiver of Penalties and Interest

23. California FTB Updated New Policy Prohibits Certain Ex Parte Communications Involving Alternative Apportionment Petition Hearings

24. Massachusetts DOR Issues Proposed Regulations on Corporate Excise Tax Nexus

25. New Ohio Law Imposes Preferential Tax Rate on Certain Wages and Guaranteed Payments Paid by PEOs to Certain Owners of Pass-Through Entities

26. Texas Supreme Court Affirms Rejection of Taxpayer Use of Multistate Tax Compact Evenly-Weighted

27. CDTFA Discusses Expanded Partial Sales and Use Tax Exemption

28. Minnesota DOR Discusses New Law Imposing Collection and Remittance Responsibilities on Marketplace Providers

29. Ohio Trade Association Files Suit Challenging Validity and Enforcement of New Remote Seller Economic Nexus Law as Interpreted by Department of Taxation

30. PA Department of Revenue Bulletin: Federal 100 Percent Expensing Deduction Disallowed

31. Texas Supreme Court - Multistate Tax Compact three-factor election denied

32. District of Columbia Takes First Step to Decouple from Federal Tax Reform

33. State Strategies to Preserve SALT Deductions for High-Income Taxpayers: Will They Work?

34. State Tax Changes That Took Effect on January 1, 2018

35. Texas Tax Amnesty Begins May 1, 2018

36. Texas Supreme Court Denies Three-Factor Apportionment in Graphic Packaging

37. Federal tax reform and the states: Conformity is key

38. New York City small businesses to receive Commercial Rent Tax benefits

39. Indiana-based online participant revenue properly sourced out of state

40. Ohio Supreme Court affirms decision on employment service exemption

41. Pennsylvania provides guidance on the corporate NOL limitation

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LEVERAGE SALT to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a fixed-fee or subscription basis. Contact me at strahle@leveragesalt.com.

How States May React to Federal Tax Reform

I hope you had a great Christmas, and are looking forward to 2018.

Last week, the President signed tax reform (H.R. 1) into law making the most dramatic overhaul to our federal tax code since 1986. I normally focus on state taxes, but I have been analyzing the federal tax reform changes for specific clients and doing some ghost-writing. 

Here I want to provide you with some predictions as to how the states may respond to some of the main business federal tax changes.

1. New federal tax law allows 100% expensing of short-lived capital investments, such as machinery and equipment (for 5 years) - applies to qualified property placed in service after 9/27/17 and before 2023. States will most likely NOT conform to this provision and require businesses to add-back the federal deduction.
2. New federal tax law raises Section 179 small business expensing cap to $1 million with a phaseout starting at $2.5 million. States will most likely NOT conform to this provision and require businesses to add-back the federal deduction.
3. New federal tax law eliminates net operating loss (NOL) carrybacks while providing indefinite net operating loss carryforwards, limited to 80 percent of taxable income. Most states don't use the federal NOL and compute their own state NOL, and thus, will most likely not conform to this change. However, there are a handful of states that use the federal NOL and do not compute a separate state NOL. These states will have to make a decision as to whether to conform to the federal changes. I think these states will most likely conform. (For more info on state NOLs, see my previous post)
4. Under the new federal tax law, research expenses are required to be amortized and the domestic production deduction (Sec. 199) was repealed. States will most likely conform to these changes.
5. The new federal tax law creates a new 20% deduction for pass-through entities. The calculation for this new deduction is extremely complex and has several limitations. States that are impacted negatively (i.e., obtain less tax revenue) by this deduction will most likely NOT conform. (Here is a link to an article by the Tax Foundation - Pass-Through Deduction Won’t Flow Through to Most States)

Those are the top 5 business tax changes (other than the tax rate changes and tax changes for foreign income) that I believe the states will address specifically. 

Have a Happy New Year and remember - you can't keep doing the same things and expect a different result! Change can be good. Start now.

State Tax Knowledge Update (34 items ) - December 12, 2017

I hope you are having a great holiday season and are remaining calm and enjoying it. I know it isn't easy. So many things going on this month and then trying to get work done, and the constant tax reform talk providing uncertainty. BUT it will calm down at some point. Just remember, life is too short to stress about things that don't really matter. The key is knowing what matters and what doesn't - that is true for both work and in life. As they say, "don't major in minors." 

The following are state tax and business developments I have curated since November 18, and posted in the LEVERAGE SALT LinkedIn group:

Some of the items may be on the same state/issue/topic, but they are from different sources which may give you a broader perspective to help your company or client.

1. Weekly Round-Up: News from MTC’s National Conference

2. A presentation on Residence and Domicile -Principles and Practice

3. Pennsylvania Issues Guidance on NOL Deduction

4. Connecticut to Implement App and “Cookie” Nexus

5. New York Denied Deduction for Rental Losses

6. Small-Business Owners Allege Tax Plan Bias

7. Taxes Intercept Millions From NFL Players’ Salaries

8. Corporate Close-Up: Utah Clarifies Definition of Foreign Operating Companies and Rules on Inclusion of Proceeds from Buy-Sell Agreements in Receipts Factor

9. California Competes tax credit program - $100 million in tax credits available

10. Pennsylvania - Refund limitation period starts when liability fully paid-in

11. Practice and Procedure: California Tax Appeals Office Races to the Finish Line on Finalizing Procedure Rules

12. New Jersey – No addback for worldwide income; treaty protections respected

13. Illinois Franchise Tax Relief on the Horizon

14. Massachusetts Denies Sales Factor COP Determination

15. Sale of Business Excluded From Sales Factor on California Return

16. Global Talks on Taxing Digital Economy a Worry for U.S.

17. Pennsylvania Supreme Court holds statute of limitations for corporate tax refunds is three years from the original due date of a return

18. Rhode Island's tax amnesty program begins December 1, 2017

19. State Income Tax Implications of Base Broadening Components of House and Senate Tax Reform Bills

20. 2017 Interim Report on State Taxation

21. California FTB Chief Counsel Ruling Addresses Whether Sales from Certain Business Divestures Can be Excluded from Sales Factor

22. California FTB Issues Proposed Regulations on How Credits are Allocated Among Members of Combined Reporting Group when Defective Election Occurs

23. New Connecticut Law Postpones Start of Claimant Period for Combined Reporting-Related ASC 740 Deduction

24. Virginia Department of Taxation Ruling Holds that Online Marketplace Operator is Not a Dealer for Sales Tax Collection and Remittance Purposes

25. New York Appellate Court Holds that Purchased Competitor Pricing Reports are Information Services that Qualify for Exclusion

26. Illinois - right to tax refund cannot be assigned to third-party lenders

27. Indiana Tax Court rules on sourcing of online educational service

28. KEEP WATCH ON MTC Use Tax Information Reporting Work Group

29. Rhode Island Division of Taxation Issues Guidance on Amnesty Program that Began December 1

30. California FTB Explains Application of Throwback Rule to Taxpayer Filing Certain Gross Receipts-Type and Franchise Tax Returns

31. Colorado Appellate Court Affirms that Domestic Subsidiary Holding Company Owning Stock in Foreign Entity is Not Required to be Included on Combined Return

32. Indiana Tax Court Rejects DOR Attempt to Source Receipts from Online Revenue Based on Location of Market

33. Washington Adopts Business and Occupation Tax Rule for Apportioning Financial Institution Income

34. Federal Courts Determine OTCs’ Service Fees not Subject to Hotel Occupancy Taxes - Horwood Marcus & Berk

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LEVERAGE SALT to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a fixed-fee or subscription basis. Contact me at strahle@leveragesalt.com.

Why do you keep going after things you don't care about?

Why do we keep going after things we don’t care about? Why do we naturally lean toward conformity and towards checking the boxes or doing what everyone else is doing? Why is it so hard to be truly innovative? To truly follow what you desire deep down to do?

I want to save the world. I want to make life better and business better. I want to make it easier for small and large businesses operating in multiple states within the U.S. I want to make federal tax and state tax law more effective in accomplishing its objectives while being less burdensome on businesses. I want to make the state tax profession something that is fun and valuable. Something that makes a state tax professional jump out of bed with enthusiasm. Something that will make the state tax professional work all night long if necessary. Not because they have to, but because they want to. They must do it; because they are solving problems so important. So valuable. So appreciated; that they must and want to do it.

I want to work with others that are fun to work with – meaning; they are hard workers. They value initiative. Value treating people with respect. Value giving people responsibility and authority to get things done. I don’t want to waste time. I don’t want to spend my time doing tasks and going to events that are simply busy work or a waste of resources. I don’t need golf events. I don’t need happy hours. I don’t need fancy offices (although I like them). I don’t need game rooms or sleep rooms. I need to work and solve problems and then spend time with my family. I don’t need egos. I don’t need competition. I need productive collaboration and knowledge sharing. I don’t need dress codes or rules that don’t matter. I need technology tools and colleagues focused on getting things done, not checking boxes or meeting number goals. I want to get paid for getting work done, not putting in hours. I don’t need an award. I don’t need networking events. I need one-on-one relationship building opportunities.

Do you agree? What do you want to do? What must you do? What will you do?

State Tax Knowledge Update (36 items) - November 18, 2017

The following are state tax and business developments I have curated since November 8, and posted in the LEVERAGE SALT LinkedIn group:

Some of the items may be on the same state/issue/topic, but they are from different sources which may give you a broader perspective to help your company or client.

1. $100 Million Available During Second Application Period in the California Competes Tax Credit Program’s Final Year

2. Tennessee Issues Notice on Intangible Expense Deduction

3. VERMONT BULLETIN: Corporate and Business Income Tax Nexus, Filing Requirements, and Minimum Tax Liability

4. Corporate Close-Up: Impending Federal Tax Reform and its Rippling Effect on State Corporate Taxation

5. Incentives Watch: Federal Tax Reform Pumps the Brakes on Electric Car Incentives; States Zoom Ahead

6. SALT Implications of the House and Senate Tax Reform Bill

7. Colorado Court of Appeals Held that Out-of-State Holding Company is Not Included in Combined Report

8. Watch Your Step: New York City Real Property Transfer Tax Imposed Under Step Transaction Doctrine

9. New California Office of Tax Appeals Discusses Emergency Regulations

10. Nice resource/summary for Tennessee taxes

11. Tennessee sales tax guide by TaxJar for online sellers

12. Rhode Island Division of Taxation Launches Website for Upcoming Amnesty Program that Begins December 1

13. Minnesota DOR Acquiesces to Recent Tax Court Ruling Involving NOL Carryovers and IRC § 382 Limitation

14. California FTB Issues Proposed Rule Changes on the Apportionment and Allocation of Partnership Income for Corporate Tax Purposes

15. Colorado Appellate Court Affirms that Foreign Subsidiary is Not Required to be Included on Combined Return

16. Oregon DOR Proposes Various Administrative Rule Changes, Including Reflection of New Law that Implements Market-Based Sourcing on Sales of Non-TPP

17. Colorado DOR Issues Compliance Guidance on Some Remote Seller Notice and Reporting Requirements

18. Mississippi DOR Adopts New Rule Requiring Some Out-of-State Sellers with Substantial Economic Presence to Collect Use Tax on In-State Sales

19. August 3 Enforcement Date Added to Recent Pennsylvania Ruling Holding that Certain Online Information Retrieval Products Constitute Taxable TPP

20. The Still-Rising Tide - Will Investment Managers Be Swept Up in State Income Tax Trends

21. Ohio Department of Taxation Launches Amnesty Program Website

22. Amended Regulations Reflect Recent Montana Law Changes that Expand Waiver of Composite Return or Withholding for Domestic Second-Tier Pass-Through Entities

23. Tennessee DOR Explains Updated Requirements for Claiming Intercompany Intangible Expense Deduction

24. Vermont Department of Taxes Issues Draft Nexus Bulletin - Comments Must be Received by December 8

25. Tennessee DOR Holds that True Object of Subscriptions for Cloud-Based Scheduling Services is Taxable Remotely Accessed Software

26. AB 398 expands California’s partial sales and use tax exemption

27. Illinois EDGE tax credit program restored

28. Local Policy Digest

29. EY State income and franchise tax Quarterly update

30. Ernst & Young LLP Sales and Use Tax Quarterly Update

31. New York income tax withholding audits on the rise

32. Coping with the tax challenges of relocation and mobility

33. California OTA stakeholder meeting to comment on draft emergency regs

34. State tax implications of federal tax reform: Repatriation toll charge

35. State tax implications of federal tax reform: Interest expense deduction limitations

36. State tax implications of federal tax reform: Full expensing

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LEVERAGE SALT to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a fixed-fee or subscription basis. Contact me at strahle@leveragesalt.com.

State Tax Knowledge Update (24 Items) - November 8, 2017

The following are state tax and business developments I have curated since October 24, and posted in the LEVERAGE SALT LinkedIn group:

Some of the items may be on the same state/issue/topic, but they are from different sources which may give you a broader perspective to help your company or client.

1. State Rundown 10/25: Marijuana Taxes a Bright Spot amid Underperforming State Revenues

2. TN ruling: single-member LLCs owned by a partnership are exempt from Tennessee Franchise & Excise Tax. The partnership is subject to the TN franchise & excise tax

3. Bloomberg BNA’s 2017 Trust State Tax Nexus Survey

4. The State Tax Function and Emerging Technologies

5. California OTA Proposes Draft Emergency Regulations on Administration and Procedures for Appeals and Petitions for Rehearing

6. California FTB Now Permitting Oral Presentations in Petitioning for Use of Alternative Apportionment

7. Maryland Tax Court Holds that Out-of-State Loaning Subsidiary Has Nexus Based on Relationship with In-State Parent

8. Ohio Issues and Updates Bulletins Pursuant to New Law that Includes a 500K USD Gross Receipts Nexus Threshold

9. California A.B. 131 enacted | Deloitte US

10. State Rundown 11/1: Connecticut Balances Budget, Leaves Tax Code Out of Whack

11. New Connecticut Law Provides for Fresh Start Program that Permits Potential Waiver of Most Penalties and 50 Percent Interest

12. New Connecticut Law Revises Claimant Period for Combined Reporting-Related ASC 740 Deduction

13. Florida DOR Proposes Administrative Rule Changes Reflecting New Law on Return Filing and Payment Due Dates

14. Massachusetts DOR Issues Ruling on Net Worth Calculation Where Subsidiaries are Owned Indirectly through a Pass-Through Entity

15. New Pennsylvania Law Revises NOL Carryover Deduction Limitation and Reflects State Supreme Court Ruling on NOL Carryovers

16. Tennessee DOR Explains that Federally Disregarded SMLLCs of Partnerships Are Classified as Partnerships for Purposes of Qualifying for Certain Franchise and Excise Tax Exemption

17. New Pennsylvania Law Imposes Information Reporting Notice Requirements on Some Remote Sellers, Including Marketplace Facilitators

18. California’s New Office of Tax Appeals Issues Preliminary Draft of Procedural Rules that Is Silent on Discovery Matters

19. 2017 State Ballot Measures Preview: Taxes

20. October Tax Retrospective: Two Down, One to Go

21. WEBINAR: State-Specific Property and Other Tax Challenges Affecting Data Centers Coast to Coast

22. Pennsylvania net loss carryover modified, remote seller sales tax notice

23. Finishing SALT: Inside SALT’s Monthly Recap

24. State tax implications of federal tax reform

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LEVERAGE SALT to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a fixed-fee or subscription basis. Contact me at strahle@leveragesalt.com.