State and native taxes impression virtually each taxpayer, and developments in anyone jurisdiction may be frequent and generally complicated. In this article version, we are going to briefly summarize sure SALT developments in a number of states which can be essential to you.
Alabama – Updates Reported
August Rule Hearing Public Notice: The Alabama Department of Revenue (Department) just lately revealed a Public Notice asserting that the Department will maintain rule hearings on August 9, 2022, through internet convention. The hearings will start at 1:30 p.m. CST and can cowl all kinds of Alabama taxes and associated points, together with an modification to: Rule 810-3-39-.02, coping with the extension of time for submitting a company return; Rule 810-3-43-.01, coping with the supply, claiming, and transferability of the rail credit; Rule 810-6-2-.27, coping with gold, coin, and bullion; Rule 810-6-3-.42.02, coping with gross sales to nonresidents; amongst numerous different Rules to be addressed on the listening to. The Notice states that to take part within the upcoming internet convention public listening to, events ought to contact the Department’s Tax Policy and Governmental Affairs Division at taxpolicy@income.alabama.gov or 334-242-1380 to acquire the suitable sign-in data. The Notice additional acknowledged that rule actions are wanted to adjust to current regulation adjustments, new pointers, or procedures. Further, the Notice gives that copies of a proposed rule could also be downloaded from the web site, the place all rulemaking hearings performed by the Department are posted. More data may be discovered here.
Alabama Tax Tribunal Ruling on Add-Back Statute: In Pfizer, Inc. v. Department of Revenue (Ala. Tax Trib. Docket No 18-236-JP, July 28, 2022), the Alabama Tax Tribunal dominated in favor of the taxpayer relating to the deductibility of curiosity paid to a international affiliate. Under Alabama’s “add-back” statute, Alabama Code Section 40-18-35(b), sure intangible bills and curiosity funds paid to a associated particular person usually are not deductible for Alabama company earnings tax functions. However, an exception permits the deduction “to the extent the corporation shows … that the corresponding item of income was in the same taxable year … subject to a tax based on or measured by the related member’s net income by a foreign nation which has in force an income tax treaty with the United States, if the recipient was a ‘resident’ of the foreign nation.” In Pfizer, the Alabama Department of Revenue disallowed the deduction for curiosity paid to an affiliate based mostly in Ireland, arguing that the quantity was not “subject to a tax” in Ireland because of an identical fee and deduction of curiosity by the Irish affiliate to a Luxembourg affiliate. The Tribunal discovered that the following fee and deduction of the curiosity to the Luxembourg affiliate didn’t trigger the add-back of the curiosity paid to the Irish affiliate. In doing so, the Tribunal distinguished the choice of the Alabama Court of Civil Appeals in Surtees v. VFJ Ventures, Inc., 8 So.3d 950 (Ala. Civ. App. 2008). A hyperlink to the Pfizer choice is here.
District of Columbia – Updates Reported
Tax Deed Recordation Revised Process Following Tax Sale: On June 9, 2022, the Office of Tax and Revenue (OTR) revealed an announcement that the 2022 actual property tax sale would happen on July 19 and 20, 2022. That announcement contained numerous data relating to the sale akin to the situation of the sale in addition to when and the place the record of topic property could be obtainable for overview. For these purchasers at that tax sale, the OTR beforehand issued Notice 2022-04, which set forth the District’s revised tax deed issuance and recordation course of that may be efficient May 1, 2022. Under that Notice and upon receipt of a last order, the tax sale purchaser shall present an authorized copy of the order to the OTR and, after receiving the licensed copy of the ultimate order, the OTR shall generate a invoice for deed directing the tax sale purchaser to pay the quantities required by relevant regulation. The purchaser “should pay the required amount to the District within 30 days of the final order.” Subject to different circumstances within the Notice, and after overview of tax account financials and relevant case paperwork, the OTR will put together the Tax Deed and document the Tax Deed with the Recorder of Deeds. Questions relating to this revised course of must be directed, in response to the Notice, to mytax.dc.gov through the tax sale purchaser’s account. More data may be discovered here.
Florida – Updates Reported
Emergency Sales/Use Tax Rule for Purchase of Farm Trailer: The Florida Department of Revenue (Department) just lately revealed Emergency Rule No. 12AER22-11, efficient July 1, 2022, implementing adjustments to the exemption from the gross sales/use tax with respect to sure agricultural manufacturing objects. The Department’s preamble to this Emergency Rule gives that the Rule implements adjustments to the exemption from the gross sales/use tax for the acquisition of a trailer by a farmer for agricultural manufacturing or to move farm merchandise from the farm to the place the place the farmer transfers possession of the farm merchandise to a different, in addition to the brand new exemption from tax for purchases of supplies used to assemble or restore fencing utilized in agricultural manufacturing. The textual content of this Emergency Rule may be discovered here.
Georgia – Updates Reported
Proposed Rule Amendments for Qualified Timberland Property Appraisal Manual: The Georgia Department of Revenue (Department) revealed Notice LGSD-2022-004 on July 22, 2022, proposing to amend Rule 560-11-16.05 and Appendix 560-11-16-A involving the Qualified Timberland Property Appraisal Manual. The Department’s synopsis on this Notice acknowledged that the aim of this modification is to replace the Manual and the desk of business timberland per acre values by ecological area and soil productiveness classification. The Department will think about the proposed modification to this Rule and Appendix at a distant regulation listening to held at 10:00 a.m. EST on August 30, 2022, which may be accessed by means of the next hyperlink: https://meet.goto.com/478259845 or through phone at 1-877-309-2073 (toll-free) and 646-749-3129 (native) with the entry code 478-259-845. The Department additionally acknowledged that every one feedback relating to this Rule from individuals should be acquired no later than 10:00 a.m. on August 30, 2022. The textual content of a proposed modification, in addition to different contact data, may be discovered here.
Expansion of Sales Tax Exemption Relative to Certain Sporting Events: In an effort to encourage main sporting occasions to come back to Georgia, admission gross sales to nonrecurring sporting occasions in Georgia have for some years been exempt from the gross sales tax to the extent such occasions are anticipated to generate over $50 million in income. Expressly included in such exemptions are the Super Bowl; any semifinal or championship recreation of a nationwide collegiate event; or an all-star recreation of Major League Baseball, Major League Soccer, or the National Basketball Association. The 2022 General Assembly prolonged that exemption by the passage of Act 757 (H.B. 1034), signed by Governor Kemp on May 2, 2022, in order to use the exemption to tickets to the World Cup, which on the time of passage was contemplating Atlanta as one of many host cities in 2026. Atlanta was subsequently designated as one of many host cities. Further, this exemption was scheduled to be robotically repealed on December 31, 2022, however Act 757 additionally prolonged that repeal date to December 31, 2031. More data may be discovered here.
Living Infants and Fairness Equality (LIFE) Act: On August 1, 2022, the Department issued Guidance relating to Georgia House Bill 481, particularly in gentle of the current rulings by the U.S. Supreme Court on June 24, 2022, in Dobbs vs. Jackson Women’s Health Organization and in gentle of a ruling on July 20, 2022, by the eleventh Circuit Court of Appeals. This Guidance states that the Department will acknowledge any unborn little one with a detectable human heartbeat as eligible for the Georgia particular person earnings tax dependent exemption. Pursuant to this Guidance, on particular person earnings tax returns filed for the tax yr 2022 the place, at any time on or after July 20, 2022, and thru December 31, 2022, a taxpayer has an unborn little one (or kids) with a detectable human heartbeat (which can happen, in response to the Guidance, as early as six weeks’ gestation), the taxpayer might declare a dependent private exemption within the quantity of $3,000 for every unborn little one. The Guidance acknowledged that further data, together with return directions to assert the private exemption for an unborn little one with a detectable heartbeat, shall be issued later this yr, together with different tax adjustments impacting the tax yr 2022 Georgia particular person earnings tax returns. More data may be discovered here.
Louisiana – Updates Reported
Proposed Rule Relieving Employers of Withholding for Certain Nonresident Employees: The Louisiana Department of Revenue (Department) just lately revealed a Notice of Intent to provoke a rulemaking process relative to Revised Statute 47:112.2, which licensed a person earnings tax exemption for sure nonresident staff who carried out their employment duties in Louisiana for 25 days or much less. The Department famous that this statute relieves employers of such nonresident staff of the requirement to withhold Louisiana particular person earnings tax on the nonresident worker’s wages. However, if the nonresident worker performs employment-related duties in Louisiana for a interval greater than 25 days in a calendar yr, the employer is required to withhold and remit tax to Louisiana for the complete yr, together with the primary 25 days. The Notice of Intent states {that a} public listening to shall be held on August 25, 2022, at 1:30 p.m. CST on the Baton Rouge deal with set forth in that Notice. The textual content of the proposed Rule gives a number of circumstances to ensure that an employer to be eligible for the exemption, such because the compensation should be paid for employment duties carried out by the nonresident particular person within the state for 25 or fewer days within the calendar yr; the nonresident particular person carried out employment duties in multiple state through the calendar yr; the wages usually are not paid for employment duties carried out by the nonresident particular person within the particular person’s capability as knowledgeable athlete or in sure different capacities; and the nonresident particular person didn’t produce other earnings derived from sources inside Louisiana through the taxable yr, amongst different circumstances. Further, nonresident staff searching for to assert the exemption should file a Form L-4E, Exemption from Withholding Louisiana Income Tax, with their employer to ensure that their employer to chorus from withholding Louisiana earnings taxes from their wages, and such Form should be filed yearly in an effort to proceed claiming the exemption. Employers receiving the Form L-4E should retain that Form of their data. The Department is not going to require the fee of penalties or curiosity for failing to deduct and withhold earnings tax for a nonresident worker who doesn’t qualify for the exemption if the employer meets sure circumstances; in any other case, the Department would require the fee of penalties and curiosity. The present deadline for feedback below this Notice is 4:00 p.m. CST August 24, 2022, and feedback are to be submitted to the deal with set forth within the Notice. More data may be discovered here (starting at web page 2019).
Multi-Parish Sales and Use Tax Audit Program: On July 1, 2022, new procedures for the multi-parish gross sales tax audit program went into impact. In order to attenuate prices for all events, the State of Louisiana carried out the Multi-parish gross sales tax audit program. A taxpayer might now consolidate a number of audit requests by a number of parishes right into a single audit. A multi-parish audit could also be requested by a taxpayer that (i) has a location within the state and is registered to file and remit native gross sales and use taxes pursuant to an area ordinance in no less than three parishes; (ii) isn’t a recipient of a jeopardy evaluation issued by any collector; (iii) isn’t engaged in a present audit by a collector for which a discover of intent to evaluate was issued previous to July 1, 2022; (iv) agrees to promptly signal all vital agreements to droop prescription; and (v) isn’t concerned in any litigation with any collector. A taxpayer that qualifies might request a multi-parish audit from the board inside 30 days from the issuance of a discover of examination from the entire parishes wherein the taxpayer engaged in taxable transactions through the audit interval. There are plenty of different procedures that observed taxpayers should adjust to in an effort to make the most of this consolidated multi-parish tax audit. More data may be discovered here.
Maryland – Updates Reported
Sales and Use Tax Exemption Certificate Renewal Online Application: The Comptroller of Maryland (Comptroller) has revealed an announcement relating to the method by which an exempt group for gross sales and use tax functions can renew its exempt standing utilizing the net software. This announcement states that the appliance should be accomplished by a licensed officer, and that a licensed officer is an individual formally empowered by the enterprise entity to conduct enterprise on its behalf, or an individual who can act in an official capability on behalf of the group, akin to an government director, CEO, CFO, COO, president, secretary, treasurer, deacon, elder, pastor, or every other officer specified by the foundations of operation, Articles of Incorporation, or Bylaws. Further, in an effort to full the renewal course of, the group will need to have the next data: (i) the FEIN for the group; and (ii) directions for an exemption certificates renewal letter mailed to the group. The announcement says that the group ought to print a replica of every web page through the on-line renewal software to maintain for its data. Upon profitable renewal, the announcement states that the group will obtain a brand new Maryland Sales and Use Tax Exemption Certificate with an expiration date of 5 years from the present expiration (September 30, 2027) and that new Certificates shall be mailed in September 2022. The announcement references that if further data is required to course of the appliance, the Comptroller’s workplace will contact the group through written correspondence. The announcement additionally gives a contact quantity within the occasion of questions relating to the renewal software. More data may be discovered here.
Mississippi – Updates Reported
Guidance On Pass-Through Entity Election: On July 28, 2022, the Mississippi Department of Revenue (Department) revealed Guidance with respect to the pass-through entity election that was signed into regulation by the 2022 Legislative Session on April 14, 2022. This Guidance addresses numerous areas pertinent to the pass-through entity election, which is efficient from and after January 1, 2022, together with areas akin to: eligibility for the election; making or revoking the election; submitting an Electing Pass-Through Entity Return; estimated tax funds; composite returns and credit for taxes paid in different states by the electing pass-through entity; and the quantity of the credit score allowed with respect to people and companies which can be house owners, members, companions, or shareholders of an electing pass-through entity. More data may be discovered here.
North Carolina – Updates Reported
Temporary Reduction in Late Payment Penalty: On June 30, 2022, the North Carolina Department of Revenue (Department) revealed an Important Notice addressing laws that was handed within the 2021 General Assembly. Effective July 1, 2022, that 2021 laws modified the calculation of the Failure to Pay Tax When Due Penalty. That penalty is imposed if a taxpayer doesn’t pay the quantity of tax that’s owed to the Department by the due date of the relevant return, and such penalty is a share of the online tax that the taxpayer didn’t pay by the due date of that return. Pursuant to that 2021 laws, the General Assembly, in response to this Notice, enacted laws to alter the calculation of the penalty from the present flat fee of 10% to a graduated fee, efficient July 1, 2022. However, the Notice additional states that on June 29, 2022, Governor Cooper signed into regulation a continuance of the present penalty fee of 10% by means of December 2022; then quickly lowering that penalty fee to five% from January 2023 to June 2024; after which reintroduces the graduated penalty fee in July 2024. The Notice units forth a desk summarizing these adjustments, and additional states that any questions relating to this Notice may be addressed by means of the Department’s Customer Interaction Center on the contact data throughout the Notice. More data may be discovered here.
South Carolina – Updates Reported
Sales Tax Holiday Dates and List of Exempt/Non-Exempt Items: On June 28, 2022, the South Carolina Department of Revenue (Department) revealed Information Letter #22-10, addressing the gross sales tax holidays for 2022, in addition to setting forth an inventory of exempt and non-exempt objects. According to this Information Letter, gross sales tax holidays for 2022 will embody eligible gross sales happening from August 5 by means of August 7, 2022. The eligible objects usually embody clothes and niknaks; footwear; college provides; computer systems, laptop software program, printers, and provides; and sure mattress and bathtub provides. Non-exempt objects embody objects to be used in a commerce or enterprise; clothes or footwear leases; watches; eyewear; and different objects as referenced within the Letter. Further, the Information Letter units forth examples of those exempt and taxable objects within the itemizing hooked up to the Letter. More data may be discovered here.
Tennessee – Updates Reported
Franchise Tax Ruling Did Not Require Add-Back of Short-Term Trade Payables: On June 6, 2022, the Tennessee Department of Revenue (Department) posted Letter Ruling #22-03, dated May 4, 2022, addressing the applicability of the Tennessee franchise tax add-back requirement for short-term intercompany commerce payables. The info of this Ruling concerned a company “Taxpayer” that manufactures, assembles, and sells sure merchandise, with such merchandise being usually manufactured and assembled at an affiliated plant. The Taxpayer conducts operations throughout the United States by means of its U.S. Branch. The U.S. Branch, in response to the Ruling, serves primarily to make sure that the merchandise of the varied enterprise teams circulation easily from the Taxpayer to prospects in North and South America; and, particularly, the US Branch gives administrative management and coordination with Taxpayer’s main prospects within the United States. The info additionally reveal that when a buyer within the United States locations an order for merchandise, the U.S. Branch purchases the stock from an affiliate, which creates a short-term intercompany commerce payable that’s based mostly upon an IRS-approved Advance Pricing Agreement that establishes an applicable “arm’s length” value for the stock bought by the U.S. Branch from the affiliate. The commerce payable created from such buy is settled on a month-to-month foundation. The Taxpayer information its Tennessee franchise and excise return on a separate entity foundation and stories the actions of the U.S. Branch. The Taxpayer has not made an election to compute web price on a consolidated foundation. In response to the query of whether or not the Taxpayer should add again the commerce payables in arriving at its web price when calculating the franchise tax legal responsibility, the Department decided that the Taxpayer isn’t required to so add again these short-term intercompany commerce payables owed by the U.S. Branch to the affiliate. While Tennessee Code Annotated Section 67-4-2107(b)(1) requires that the debt of a company owed to an affiliate company should be added again to its franchise tax base calculation if its capital inventory is insufficient for its enterprise wants, and however Franchise Tax Rule 1320-06-01-.15, which governs the quantity of affiliated debt that should be included in a company’s franchise tax base, the Department takes the place on this Ruling that account or commerce payables which can be present liabilities usually are not thought of affiliated debt. The Department then referenced that the U.S. Branch commerce payables owed to the affiliate are settled on a month-to-month foundation, and due to this fact it seems that the Taxpayer appropriately classifies such commerce payables as a present legal responsibility for monetary reporting functions. The Department thus concluded that the add-back provisions don’t apply. More data may be discovered here.
Texas – Updates Reported
Back-to-School Sales Tax Holiday Tips for Sellers: The Comptroller’s Office has revealed a phase in its July Tax Policy News addressing some tips for sellers through the back-to-school gross sales tax holidays, which begins August 5 and lasts by means of August 7, 2022. That phase states that if you’re a vendor of things that might qualify for the gross sales tax vacation, these tips revealed by the Comptroller will help in dealing with particular conditions akin to rain checks, promoting, and tax reporting. The Comptroller then discusses the varieties of objects that qualify for the gross sales tax vacation, which predominantly are clothes, footwear, and different objects, in addition to college provides; in comparison with non-qualifying objects, which usually embody textbooks, computer systems, software program, clothes and footwear used for athletic actions, jewellery, and purses, amongst many different non-qualifying objects. The Comptroller goes on to offer tips with respect to promoting backpacks and college provides; college provides purchased utilizing a enterprise account; on-line purchases and phone orders; layaways and rain checks; promoting non-qualified objects; and reporting the relevant tax. More data may be discovered here.