46 State Tax & Business Developments You May Want to Know - July 21, 2017

This week I started curating state tax and business developments from a variety of sources into one spot, the LEVERAGE SALT LinkedIn group. Many people have contacted me and said they find it very useful. So I will continue to do so by posting a state tax update blog post every week. To clarify, I will post state tax and business developments daily to the LEVERAGE SALT LinkedIn group. Every week (maybe more than once a week) I will write a blog post summarizing those developments that I posted to the LEVERAGE SALT LinkedIn group with links to the posts. 

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

1. Internet Access Exempt from Washington Sales Tax

2. Washington B&O Tax Extends to Speculative Builders

3. Do you owe TN sales tax on cloud-based software?

4. Will federal tax reform make state tax nexus even more important?

5. The ImpACT of the Tennessee IMPROVE Act

6. Summary of Illinois Income Tax and Sales Tax Changes from P.A. 100-0022

7. Illinois Withholding Tax Rate and Personal Exemption Amount Changes

8. Illinois Income Tax Increase Guidance - Detailed Instructions For Filing Your 2016 Illinois Income Tax Return and 2017 Estimated Payments

9. Incentives Watch: ‘Back to School, Back to School’ in Georgia—Scholarship Tax Credits Have Been Ruled Legal, Too

10. Indiana – Gain from subsidiary sale is nonbusiness income; interest expense allowed for payments accrued but not paid

11. FREE WEBINAR TODAY: Legislative and Taxation Updates in Communications and Cloud Industries

12. Advancing Your Investment Opportunity through NMTC, HTC, and Traditional Incentives

13. What Did the Washington State Legislature Do to Us This Time?

14. Personal Property Tax Audits and Appeals – Coast to Coast

15. 2017 Louisiana Legislative Session Recap

16. Conferences: Not Lobbying Free-for-alls

17. Hawaii Revises Government Ethics Laws

18. State Rundown 7/19: Handful of States Still Have Their Hands Full with Tax and Budget Debates

19. States in crisis: Embroiled in the worst budget battles since the Great Recession

20. America's Top States for Business 2017: The full list

21. On the move: Biggest winners and losers in states' battle to lure corporations, jobs

22. Middle-Market Public Policy Roundup

23. The National Center for the Middle Market’s Q2 ‘17 Middle Market Indicator

24. Starbucks, Anthem Awarded Slice of $7M in Nevada Tax Relief

25. Investment Entities Owning Property Purchased Outside the United States Face Double Taxation Under Amended New York Law

26. DuPont Mostly Prevails in $800K Indiana Income Tax Case

27. The Impact of Federal Tax Changes on States

28. Unfair Apportionment: Consider the Alternatives | Tax Executive

29. Kentucky:Amazon Delivers $1.5-Billion Package to Kentucky | Site Selection Magazine

30. California: Innovation Works | Site Selection Magazine

31. Indiana: Indiana Claims Factory Belt Title | Site Selection Magazine

32. Iowa: How to Make $3 Billion | Site Selection Magazine

33. Iowa: A Complete Business Cycle | Site Selection Magazine

34. Manufacturing Innovation Center To Open in ’17 | Site Selection Magazine

35. Minnesota: North Star Manufacturers ‘Optimistic’ | Site Selection Magazine

36. New England: Punching Above Their Weight | Site Selection Magazine

37. Tennessee Grants and Tax Credits

38. Seattle City Council Passed Legislation Imposing a 2.25% Income Tax on Select Residents

39. How High Are Individual Income Tax Collections in Your State?

40. Potential state tax consequences of federal corporate tax reform | Deloitte US

41. The DC qualified high-technology company program: Recent developments

42. California Chief Counsel Ruling on the Application of Market-Based Sourcing Rules to Non-Marketing Services

43. Michigan Department of Treasury Discusses Implications of Concluded Multistate Tax Compact Election Litigation

44. Texas Comptroller Discusses Policy Changes Regarding Temporary Credit for Business Loss Carryforwards

45. Connecticut Department of Revenue Services Apparently Enforcing Economic Nexus Standard on Some Remote Sellers

46. Georgia Department of Revenue Amends Administrative Rule on Manufacturing Exemption

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 LS 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. Clients hire LS to curate information for multiple specific items on a daily basis. This service is provided on a subscription basis.

23 State Tax & Business Developments You May Want to Know - July 18, 2017

The following are state tax developments and commentary I have curated for today and posted in the LEVERAGE SALT LinkedIn group that you may find helpful:

1. The Ideal Federal Tax Rate? 21%

2. Welcome to the Wild, Wild West Where the States Have All the Guns!

3. Missouri ‘Suddenlink’ Decision Raises Questions Regarding Impact of 2016 and 2017 Legislation

4. Florida Passes Data Center Sales Tax Exemption

5. Delaware DOF Delays Adoption of Estimation Regulations as DOS Adopts Final Regulations

6. New York Significantly Steps up Audit Enforcement while Increasing Incentives for Voluntary Compliance

7. Sales Tax Slice: Following DMA v. Brohl, More States Require Out-of-State Sellers to Report Customers’ Purchases

8. Weekly Round-Up: Online Marketplaces, Remote Retailers and Digital Sales

9. Corporate Close-Up: Oregon Joins Montana in the Trend towards Market-Based Sourcing

10. FY 2018 BUDGET STATUS (for 50 States)

11. Why a Border Adjustment Tax Would Be a Bad Deal for States and Localities

12. THE BEST AND WORST OF STATE TAX ADMINISTRATION COST SCORECARD ON TAX APPEALS & PROCEDURAL REQUIREMENTS

13. 2017 STATE TAX AMNESTY PROGRAMS

14. Testimony before the Arkansas Tax Reform and Relief Task Force

15. COST’s Opposition to S.B. 1548 (“Accurate Reporting of Corporate Profits”/Mandatory Worldwide Combined Reporting)

16. Kansas Learned Its Lesson, But Will Other States?

17. State Inheritance and Estate Taxes: Rates, Economic Implications, and the Return of Interstate Competition

18. Partnership Taxation - A State Tax Administrator's Perspective

19. State Corporate Income Taxes and the Effect on European Taxes

20. UDITPA Sec. 18 Regulatory Project Work Group Meeting

21. Nexus Committee Meeting

22. Use Tax Information Reporting Work Group

23. Partnership Work Group Meeting

If you like the curating of state tax developments into one spot (regardless of firm), but still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LS to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. The client can make it as granular as they prefer. Clients hire LS to curate information for multiple specific items on a daily basis. Unlike getting updates on a publisher's research platform, LS custom curation will provide updates from multiple sources including accounting firms, law firms and state websites. This service is provided on a subscription basis.

21 State Tax & Business Developments You May Want to Know - July 17, 2017

During the past few weeks, state legislatures ended their sessions with many changes and many problems left unanswered. I've also been traveling lately for work and personal reasons, and haven't posted in a while. To make up for it and provide some useful information, I posted several tax developments in the LEVERAGE SALT LinkedIn group that you may find helpful:

1. State Tax Changes Taking Effect July 1, 2017
2. Sales and Use Tax Compliance Legislation was a Big State Tax Trend This Year
3. State and Local Sales Tax Rates, Midyear 2017
4. Ten States Begin FY2018 Without Budget In Place
5. State Rundown 7/11: Some Legislatures Get Long Holiday Weekends, Others Work Overtime
6. Should the Corporate Rate and the Pass-Through Rate Be Identical?
7. With Veto Override, Illinois Legislature Abandons Reform Efforts
8. Important Announcement from the California Department of Tax and Fee Administration, Formerly Part of the California State Board of Equalization
9. $75 Million Available During the First Application Period in the California Competes Tax Credit Program’s Final Year
10. What Is Minimal Substantial Nexus?
11. Illinois Passes a Budget, But it's No Time to Celebrate
12. State Tax Quarterly Insights April to June 2017
13. Illinois – Corporate rate increase, repeal of separate unitary groups for certain industries, R&D credit retroactively reinstated, IRC 199 addback required, and other tax changes
14. Tax Changes Implemented As Part of Revenue Package Supporting Illinois Budget
15. North Carolina Legislature Overrides Governor Veto of Budget Bill
16. Should Corporations Pay Higher State Income Tax? Are Corporations Paying a Small % of State Income Tax Because of Credits & Incentives?
17. Oregon Adopts Market Based Sourcing
18. New Ohio Law Includes Amnesty Program with Potential 100 Percent Penalty Waiver and 50 Percent Interest Waive

19. A Closer Look at NY Draft Proposed Regulations under Article 9-A Business Corporation Franchise Tax Under Subpart 3-9 - Computation of the UNOL

20. Illinois 2017–2018 state budget bill enacted | Deloitte US

21. Ohio fiscal year 2018–2019 budget bill enacted | Deloitte US

Tax Legislation: Are We Asking The Right Questions?

State tax developments are everywhere. They happen daily. The question is - are we just reporting them or are we challenging them?

This legislative season has seen crazy proposals to raise revenue, balance budgets - all influenced by political pressures and confusion. We have policy organizations submitting reports and studies asserting that certain proposals are ridiculous or would either be unfair or detrimental to the state and specific taxpayers. This complexity not only applies to state tax legislatures, but also the federal government - as we know. The problem is that states generally have to balance their budgets every year to operate (although apparently that doesn't apply to Illinois).

One thing I noticed is that state legislative sessions are focused on raising revenue. Always asking what can or should be taxed? What new forms of business do we need to tax? What tax revenue are we missing out on?

I think those are the wrong questions. The questions we should be asking are:

• What services should the state or federal government provide?
• To what extent ($$) should the government provide those services?
• How do we prioritize those services?
• What is the cost/benefit of providing those services?
• At what point does the provision of those services cause detriment to citizens and our economy? 
• What oversight will each service have to avoid waste and efficient use of taxpayer dollars?

We don't always need more revenue. We need to rethink and revamp the purpose of government. Our governments should be lean and efficient. They should provide us with what we need most - not more or less. It's not about tax revenue, it's about efficient government. It's about the health and wealth of our country - financially, physically and spiritually. 

If we never ask the right questions, we won't get the right answers.

STATES are living in 'VIRTUAL REALITY,' are YOU?

The states are living in virtual reality. They want out-of-state companies who don't have a physical presence in the state to pay income tax, and collect sales tax.

You may know about all of the talk to enact federal legislation to require remote sellers to collect sales tax when they don't have a physical presence. You may even know about the legislation some states have enacted to require remote sellers to collect sales tax based on having 'economic nexus.'

ECONOMIC NEXUS: Economic nexus is simply having customers in a state and deriving income or sales from those customers. Economic nexus does not require the seller to have a physical presence in the state.

Before states started using economic nexus to require out-of-state companies to collect sales tax, some states enacted economic nexus legislation to require out-of-states companies to pay income tax. In addition to economic nexus, many states have adopted market-based sourcing for apportionment purposes.

APPORTIONMENT: Every company that operates in multiple states has an apportionment factor. The apportionment factor is used to determine the portion of the company's tax base that should be taxed by a state. Historically, the apportionment factor was based on a ratio of the company's in-state property/payroll/sales over the company's everywhere property/payroll/sales. Most states now use an apportionment factor solely based on sales. The property and payroll factor have become less important.

Now, back to market-based sourcing. Market-based sourcing applies to the sales of services and intangibles. It simply says that for apportionment purposes, a service provider's sales are sourced to where the customers are located. 

This leads to why it is important to know where a company's customers are located versus where the company is located for both nexus and apportionment purposes. A service company or any company that sells over the internet could have economic nexus and customers in multiple states creating a large tax liability, possibly over multiple years.

Personally, I think economic nexus and market-based sourcing should not be allowed. I think states need to stop living in virtual reality and live in the physical realm. 

Regardless, if you are a service provider or Internet retailer, please review your situation to reduce the likelihood of having a large tax assessment fall on your doorstep. Virtual reality could simply become reality.

Why Corporations Don't File State Tax Private Letter Rulings

• Taxpayers must disclose their identify before obtaining an answer from the state.
• Facts may not be accurate, or disputed later, making the answer invalid.
• Ruling may be revoked at any time.
• Timing of the proposed and prospective transaction with obtaining an answer from the state.
• Rulings are binding unless the facts are not accurate.
• Unsure as to how deep of an analysis of the law the corporation is required to provide.
• The length of time to obtain a ruling.

Why would you request a private letter ruling?

• To avoid receiving an assessment for additional tax, interest and penalties in the future

How do you file a private letter ruling?

• get your facts straight
• do it timely

Any questions?