Texas Joins the Amnesty Wave

Posted in Texas

Texas has joined the growing list of states providing amnesty programs for taxpayers with unreported tax liabilities.  Texas announced a temporary amnesty program that will commence on May 1, 2018 and run through June 30, 2018.  The Comptroller is expected to offer further details regarding the program in the coming weeks.

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Tax Reform: With Massive Overhaul Now Law, Prepayment of Property Tax May Benefit New York Property Owners

Posted in New York, Real Property

On December 22, 2017, President Donald J. Trump signed the Tax Cuts and Jobs Act (Act), which beginning in 2018 caps at $10,000 the allowable deduction for payment of state and local income, sales, and property taxes. While the Act prohibits 2017 deductions for prepayment of 2018 state and local income taxes, such prohibition does not expressly limit 2017 deductions for prepayment of 2018 property taxes. On December 27, 2017, the Internal Revenue Service issued an Advisory (IR-2017-210) stating: “A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.  State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed.”

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“It’s Not You, It’s Me” – Agilent Technologies and the Inclusion of Foreign Holding Companies in Combined Corporate Income Tax Returns

Posted in Colorado

In the famous Seinfeld episode titled “The Lip Reader,” George Costanza’s girlfriend breaks up with him by telling him “It’s not you, it’s me.”  George famously replied, “You’re giving me the ‘It’s not you, it’s me’ routine? I invented ‘It’s not you, it’s me.'”  In the recent case of Agilent Technologies, Inc. v. Colorado Department of Revenue, the taxpayer leaned on the ramblings of George Costanza to “break up” with one of its own corporate affiliates to refute a $13 million dollar assessment of corporate income taxes.

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Is it Too Late to Jump on the Bandwagon? – Mississippi’s Economic Presence Nexus Standard

Posted in Mississippi, Nexus

The Mississippi Department of Revenue adopted a new sales and use tax regulation articulating the Department’s position regarding out-of-state sales into the state.  The regulation provides that sellers lacking physical presence in the state “but who are purposefully or systematically exploiting the Mississippi market have a substantial economic presence for use tax purposes if their sales into the state exceed $250,000 for the prior 12 months.”  The regulation defines the phrase “purposefully or systematically exploiting the market” by listing examples such as television or radio advertising on a Mississippi station, advertising in Mississippi newspapers, or direct mail marketing to Mississippi customers.  Any seller meeting this standard must register to collect and remit tax in Mississippi.  The new regulation is effective December 1, 2017.

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Ambitious Tax Reform Takes Center Stage

Posted in Federal Tax

The Trump Administration and certain members of Congress recently released an ambitious, conceptual plan for tax reform that would drastically alter current U.S. tax law, affecting a wide array of taxpayers. The plan (called the Unified Framework for Fixing our Broken Tax Code), much like President Trump’s plan released earlier this year, does not contain abundant details. In its broad outlines, however, it is clear that this effort will attempt to impact long-standing elements of the federal tax code as well as substantially lower and/or eliminate rates across a broad swath of taxpayers.

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Risky Business? – South Dakota v. Wayfair, Inc. Sets Stage for SCOTUS Review of Physical Presence Requirement for Sales and Use Taxes

Posted in Nexus, Sales Tax, South Dakota, Use Tax

It has long been the law of the land that a taxpayer must have a discernable physical presence in a state before it can be required to collect and remit sales and use taxes. The U.S. Supreme Court reaffirmed this bright-line test in the 1992 case of Quill Corp. v. North Dakota. In Quill, the Court held that interstate commerce would be unduly burdened if an out-of-state business were required to comply with the sales and use tax laws of thousands of state and local tax jurisdictions. Requiring a physical presence, the Court reasoned, is a constitutionally sufficient contact – or nexus – with a state or locality to impose sales and use tax collection duties. Continue Reading

The Impact of Hurricanes Irma and Harvey on Snowbirds and Residency Requirements

Posted in New York, Residency
Snowbirds need to be concerned about their residency status for income tax purposes in light of Hurricanes Harvey and Irma. Clients who retreated to New York or clients who had planned to travel from New York to Florida but could not find transportation, need to know the effect of spending more time in New York. While domicile may not be an issue with their residency status, the statutory residence test – i.e., the “183 day rule” – could be.

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Where’s My Sales? – Sourcing Sales Receipts for Ohio CAT Purposes

Posted in Ohio, Sales Tax, Sourcing

The cornerstone of any taxing regime is the situsing of receipts.  The taxpaying public must have certainty regarding when its income is subject to tax in a jurisdiction.  Recent rulings from the Ohio Department of Taxation (the “Department”) regarding the situsing of receipts for the Ohio Commercial Activity Tax (“CAT”), however, inject ambiguity into what should be a straightforward analysis. The simple quest to source sales is akin to a 2000 teen movie, “Dude, Where’s My Car,” where two young men are unable to locate their car after a long night of partying.  The teens spend the next several days following clues to locate the vehicle only to find it innocently parked behind a mail truck.

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Residency Audits: “What Does Love Have to Do With It?”

Posted in New York, Residency

A taxpayer changing domicile to outside New York faces a daunting task, especially when the New York residence is not abandoned.  The taxpayer must have the intent to make the new location his or her new permanent home and act on this intent.  To determine what is in a taxpayer’s mind is not always an easy task for an auditor, but the auditor generally considers five factors indicating domicile:  homes maintained and used; active business involvement; time in the state; location of near and dear items; and family connections.

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California Supreme Court Affirms Transfer Tax on Entity Control Change

Posted in California, Real Estate Transfer Tax

California allows cities and counties to impose a tax on certain real estate transfers at a rate of 0.11 percent of the sales price. Los Angeles County enacted an ordinance to impose the tax on transfers within the county. Recently, the county took the position that a change of control of an entity holding real property in the county constituted a taxable transfer of the underlying real property. On June 29, 2017, the California Supreme Court agreed, setting the stage for cities and counties throughout the United States to adopt a similar approach.

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