Sales and use tax compliance is complicated. Both sellers and purchasers are required to determine where they have nexus, where the purchased products or services should be sourced, and whether the product or service itself is subject to tax. While this sounds simple enough, in practice, it is extremely difficult.
Limited tax amnesty programs gain popularity every few years and this is one of those years. The Alabama legislature has joined the growing list of states providing amnesty programs for taxpayers with unreported tax liabilities. The Tax Delinquency Amnesty Act of 2018 was recently passed and will be in effect from July 1, 2018, to September 30, 2018. Act 2018-153 (H.B. 137), Laws 2018. The program applies to all taxes administered by the Department of Revenue, but excludes motor fuel, motor vehicle, and property taxes. Eligible tax liabilities include liabilities that became due prior to January 1, 2017, or tax liabilities for periods that began before January 1, 2017.
The Colorado Department of Revenue, to the surprise of many, announced that effective as of February 28, 2018, it was rescinding all prior Revenue Bulletins and Policy Positions previously published by the Department.
Businesses were pleasantly surprised to learn that the Illinois Secretary of State reduced Limited Liability Company (“LLC”) filing fees following the passage of Senate Bill 867. This bill was passed in both houses on November 7, 2017 and went into immediate effect upon signature by the governor on December 20, 2017. The fee reduction is intended to allow more businesses to register and maintain business registrations in Illinois. The reduction impacts nearly all LLC filings, reducing fees across the board. For example, the filing fee for Articles of Organization was $500, it is now $150. Similarly, the annual report filing fee was $250, it is now $75.
The Illinois legislature recently mandated electronic filings for certain sales and use and withholding income tax filings as of January 1, 2018. H. B. 0821 was passed in both houses by May 2017 and signed into law on August 24, 2017 by Governor Rauner creating Public Act 100-0303. In September 2017, the Illinois Department of Revenue published an informational bulletin, FY 2018-05-A, explaining the Department’s implementation of P.A. 100-0303. The Bulletin states that as of January 1, 2018 specific sales and use tax and withholding income tax filers are required to file certain forms electronically. Failure to file the appropriate sales and use tax forms electronically results in the disallowance of timely filing discounts/collection allowances claimed on those forms.
The United States Supreme Court has recently agreed to hear oral argument in South Dakota v. Wayfair, Inc. – a case exploring the boundaries of sales and use tax nexus. The crux of the dispute in Wayfair relates to the defining purposes and protections of Commerce Clause of the U.S. Constitution. Much of the discussion to date focuses on the importance of the Court’s decision to grant the appeal. However, there is a fascinating undercurrent yet to be addressed.
New York City faces a continuing decline in state and federal funding and increased property taxes continue to be a reliable revenue stream to fund local services. Every January 15th, the NYC Department of Finance (DOF) sends to each owner of NYC commercial real property a Tentative Assessment setting forth (i) the market value of the lot (including improvements), (ii) the actual assessed value of the lot, and, most importantly, (iii) the value upon which the lot will be taxed for the upcoming tax year. The property owner has until March 1st to challenge the Tentative Assessment determining the amount of tax to be paid on the property. If this tax appeal, often referred to as Tax Certiorari or Tax Cert, is not filed by March 1st, the owner loses any right to challenge the assessment for the upcoming tax year.
An overview of the key dates, approaches for valuation, and process for challenging findings are outlined below.
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.
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.”
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.