INTERVIEW #1 - DAVID BRUNORI

As I mentioned in yesterday's post and my site, I have started interviewing state tax professionals across the country and will be posting them on this blog to help each of us build connections and get to know each other better.

My first guest is David Brunori. David is currently a Partner with Quarles & Brady LLP in Washington D.C. He has been a research professor of public policy and public administration at The George Washington University for 18 years, and is currently teaching today as well. You may know him as the prolific teacher and writer on state tax policy from when he worked at Tax Analysts for 14+ years.

His practice focuses on all aspects of state and local taxation, state and local government and regulatory affairs, as well as exempt organizations. He has a particular interest in state tax policy, a subject that he has taught for years and written about extensively.

Without further ado, here are his answers to the 14 questions:

1.  Birthplace: Scranton, Pennsylvania

2.  Education: BA, MA, The George Washington University; JD University of Pittsburgh School of Law

3.  Career: Very varied! I have been a lawyer, writer, teacher, consultant, and business manager. I have worked for the government, a non profit, and in the private sector.

4.  Best Career Move: Joining Quarles & Brady LLP. I also made a good move starting to teach many years ago. But the truth is I have made good choices over my career. It has been quite a ride.

5.  Career Goals: Honestly, I look for interesting things to do and get paid for. Helping people, solving problems, having some positive impact on the planet -- are all good goals. But ultimately, I am looking for meaningful work -- work that allows me to make a difference.

6.  Best advice ever received: I had a boss many, many years ago who advised his folks to "always do right."  Life is one big decision tree.  We should try to do right as we face those decisions whether they are big or small. So I try to do right by my clients, readers, students, family, and friends.  Second best advice -- and related -- was from a partner at a big law firm when I was a very young lawyer. She said try to live a life without regret. She was talking about professional regrets, but that is darn good advice in general.     

7.  Most difficult situation faced on the job: I have dealt with many, as I am old. Most difficult situation was working for someone I did not respect. It was often hard to get out of bed to go to work. But that was a long time ago.

8.  Career tip for students:   Think hard about what you want to do. Then think again. Don't settle. Pursue your passion, particularly when you are starting out -- you may not be able to when you are older.

9.  Role models:  Easy. Personally, it is my dad and my father in law.  They were menschen, which, for the gentiles among us, means men. They were honest, hard working, responsible, loving, and genuinely good guys. They treated people with respect. I am not half the man they were. But when I think of "doing right" I immediately think of them. Professionally, I have had the honor and privilege to work with many leading men and women in the law and public finance fields.  Many have had a positive influence on my career.

10.  Family: excellent wife, three grown children (two girls, one boy), soon to be son-in-law, two dogs, two cats, and a beta fish that apparently will never die.

11.  Pastimes: I like baseball, bourbon, deep sea fishing, watching certain TV shows, college basketball, drinking beer, college football,  and serving on several non profit boards (not necessarily in that order). I should add, in case she is reading, that I like to spend time with my wife.   

12.  Most memorable book: I suspect that for most people, the answer is David Brunori's books on state and local tax policy. But for me, it was Robert Caro's biographies of LBJ. 

13.  Favorite restaurant:  Dolce Vita in Fairfax, Virginia. Try the veal.

14.  Ideal vacation: My ideal vacation? I am now thinking about the Croatian coast. Seriously, look it up.

If anyone finds this interesting, you may contact David at: https://www.linkedin.com/in/david-brunori-b65a5026/

I hope you enjoyed meeting David. I also hope you will consider answering the 14 questions and sending them to strahle@leveragesalt.com to be published on the blog.

Thank you.

Build Relationships | Build Your Career | Answer 14 Questions

I have started interviewing state tax professionals (with any level of experience) to post on the LEVERAGE SALT blog. The objective is to create more visibility and camaraderie among state tax professionals. Hopefully introducing more people to each other outside normal circumstances. I will be publishing my first interview this week. 

All you have to do be interviewed and included on the blog is to submit answers to the following 14 questions to strahle@leveragesalt.com. You can also provide any additional information you deem appropriate. I have provided my answers to give you some ideas.

I hope you take the time to share about yourself to help others and help us all be successful. You never know what relationships will grow out of it.

Thank you in advance. 

THE 14 QUESTIONS

1. Birthplace: Central Illinois
2. Education: bachelor's degree in accounting, Millikin University; masters degree in taxation, Washington School of Law
3. Career: 20 years including working in multiple public accounting firms (Big 4, national and regional), and Fortune 500 companies
4. Best Career Move: joining RSM McGladrey's National Tax Office, which involved moving from Illinois to Minnesota; second best career move (moving south to Virginia away from the cold in Minnesota) - for more on my career path, check out my LinkedIn profile.
5. Career Goals: to transform multistate tax complexity into practical solutions and positively impact multistate tax policy for all businesses; I want to make a difference with what I do and I want to have fun doing it. 
6. Best advice ever received: this is a hard one. I have received some good advice from a variety of people throughout my career. I am also a quote magnet, so I have lots of mantras or sayings I use on a daily basis. For example, adapt, improvise, overcome. Be you, expect success and live one day at a time. Early in my career, I did more than what was expected on a project. My supervisor was happily surprised and told me that I would be successful in my career if I always kept that mentality of doing more than what is expected. It has stuck with me to this day. 
7. Most difficult situation faced on the job: being given responsibility without authority to act.
8. Career tip for students: I believe you are responsible for your success. You can't rely on other people or wait for others to do something. You must take the initiative. Take daily steps towards your goals. Success or reaching your dream does not happen overnight. There will be many twists and turns along the way. It most likely won't go according to your plan, but if you persist and do the work, you will eventually reach your destination.
9. Role models: I would have to say my dad. My dad worked 45 years at one company straight out of high school. He didn't have a college education but worked his way up from the mail room. The last 10 years of his career, he didn't receive a raise. He really didn't like his job, but he couldn't leave. He had so much time built up at the company and he didn't have a college degree. He felt trapped. My dad died in 2008 from lung cancer. He never smoked a day in his life. The doctor said it was second-hand smoke. They used to let people smoke in the office and they did where my dad worked for probably 20 years of his career. Several of his coworkers who did smoke died of emphysema. My dad worked hard and provided for his family. He saved for retirement and was able to spend six years after retiring with my mom before he died. He is my role model and motivation for not being trapped in a job and working hard to succeed.
10. Family: wife and two daughters, plus a little shih tzu named Fergie
11. Pastimes: spending time with my family, addicted to fitness, music, playing drums and learning guitar
12. Most memorable book: I have several favorites, but I would probably have to say "Tribes" by Seth Godin because it was one of the drivers that compelled me to start my state tax blog back in 2009.
13. Favorite restaurant: don't really have one; but I like unique, restaurants that make you feel like you are somewhere else, and have great food.
14. Ideal vacation: We have been to Hawaii 3 times and have had vacations at several beaches and mountain locations across the U.S. Thus, an ideal vacation includes beauty and relaxation.

SUBMIT YOUR ANSWERS TO THE 14 QUESTIONS AND JOIN THE LEVERAGE SALT COLLECTIVE! E-MAIL RESPONSES TO STRAHLE@LEVERAGESALT.COM.

Federal Tax Reform Causing State Tax 'Stranger Things'

Potential state tax policy / law changes in response to federal tax reform are starting to look ridiculous. Some proposing a new payroll tax instead of income tax. Creating a charitable contribution fund instead of paying property taxes. Changing the definition of taxable income, etc., etc., etc. Simplicity and conformity at its best (NOT).

Whether it is the individual income tax or corporate income tax, most states use federal taxable income as the starting point to calculate state taxable income. Each state either conforms as of a specific date, or they are a 'rolling conformity' state which means they automatically conform to federal changes. The way a 'rolling conformity' state does not conform to federal changes is by passing legislation to 'decouple' from the federal law. Examples of areas where states have 'decoupled' historically include federal bonus depreciation, and the domestic production deduction.

Each state will be making tough decisions during their legislative and budgeting sessions this year - what federal provisions to conform to and which ones to decouple from. Just like corporations should be doing, the states will be doing a lot of 'modeling' or 'what-if' calculations to determine the tax or revenue impact.

Buckle your seat-belt. It's going to be a bumpy ride.

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.