Upcoming National Meeting

2020 SALT Basics School

The COST SALT Basics School includes 3 separate tracks – Sales Tax, Income Tax and SALT (an overview of all state taxes) taught by leading authorities in the SALT community and is a great educational opportunity for tax professionals with 0 – 3 years of experience; tax professionals transitioning between transactional and income taxes and vice versa.

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Newsletters & Media

Cost Conscious

ISSUE 19-25; December 13, 2019

TODAY’S TOPIC: Late Filing Penalties on State Returns? – With the federal return due date now one month later, and since most states do not allow a corresponding extension, many taxpayers are finding themselves without sufficient time to accurately file state returns. Which of the following best describes whether your company has incurred any late filing penalties for state returns?

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Bloomberg TAX

Stolen 401(k) Funds • Corporate Comment on OECD Plan • NAV REITs

 

This weekend roundup of Bloomberg Tax Insights includes multinational corporations' comments on the OECD's "Unified Approach"; the fiduciary duty of sponsors and administrators to protect 401(k) funds; net asset value (NAV) REITs; old and new challenges in purchase price allocations; and how not to claim a change of domicile.

Trump Gets High Court Review on Financial Records Subpoenas (2)

 

The U.S. Supreme Court agreed to consider President Donald Trump’s bid to keep his financial and tax records secret, setting up a major constitutional and political showdown in the middle of next year’s election campaign.

Challenges Eyed to Nebraska Tax Guidance on Foreign Income

 

Multinational corporations in Nebraska may head to court against recent guidance that requires them to include foreign income on their state tax returns.

Businesses Get Tax Break for State Charity Donations, IRS Says

 

The Internal Revenue Service clarified that businesses that donate to charitable funds in exchange for a state tax credit can deduct those costs from their federal tax returns, according to a proposal issued Friday.

IRS Proposes Rules on Charitable Contributions Tied to SALT Cap

 

The IRS released proposed rules Dec. 13 tied to its efforts to curb state attempts to skirt the $10,000 cap on state and local tax deductions.

Alabama DOR Announces Change in Procedure for Claiming Corporate Income, Individual Income Tax Credits

 

The Alabama Department of Revenue (DOR) Dec. 1 announced a change in procedures for claiming economic incentives, beginning Jan. 17, 2020. Before the incentives are claimed on corporate income and individual income tax returns, taxpayers, including those who receive income from pass-through entities, must register to use My Alabama Taxes. Taxpayers must submit an online form that provides important information regarding the credits, including certification from administering agencies showing that the taxpayer qualifies for the credit, attachments supporting the credit claim, and other pertinent documents attesting that the credit is allowable. Credits that aren't requested online before they are claimed won't be processed after January 2020. Detailed instructions on how to file an online claim for the specified incentives will be posted on the DOR's website on Jan. 17, 2020. [Ala. Dep't of Revenue, News Release, 12/01/19]

Alaska DOR Adopts Regulations on Oil, Gas Production Excise Tax

 

The Alaska Department of Revenue Dec. 10 adopted changes to regulations regarding depreciation and the weighted average cost of capital for transportation of oil by a vessel and LNG transportation facilities under the oil and gas production excise tax. The rules include measures: 1) providing for the determination of depreciation and allowance for a return on investment for vessels transporting oil and LNG transportation facilities; 2) repealing provisions concerning the calculation of costs of transportation for oil or gas; and 3) replacing the current model used to calculate the cost of capital allowance, incorporating both the depreciation cost and the after-tax return on capital for transporting vessels or facilities. The regulations take effect Jan. 1, 2020. [Alaska Dep't of Revenue, Reg. Section 55.191 et al., 12/10/19]

Arkansas Supreme Court Dismisses Online Travel Companies' Gross Receipts Tax Appeal for Lack of Jurisdiction

 

The Arkansas Supreme Court Dec. 16 dismissed a group of online travel companies' appeal of a summary judgment order in a case concerning liability for hotel accommodations gross receipts excise tax. Arkansas municipalities filed a class-action complaint alleging that the companies failed to collect or remit the full amount of gross-receipts taxes imposed on hotel accommodations. The trial court granted the municipalities' motion for partial summary judgment on the issue of liability, concluding in a preliminary order that the companies are liable for taxes on the full gross receipts they receive from customers. The supreme court found that: 1) the circuit court specifically stated its order was preliminary and that it was retaining jurisdiction to determine the appropriate relief; and 2) the circuit court didn't enter a rule 54(b) certification certifying the order as a final appealable order. Therefore, the supreme court dismissed the appeal for lack of jurisdiction. [Hotels.com, LP v. Pine Bluff Advert. & Promotion Comm'n., Ark., No. CV-18-668, 2019 Ark. 384, 12/12/19]

California Appeals Office Sustains Taxpayer's Income Tax Assessment Despite Their Tax Preparer's Criminal Fraud Conviction

 

The California Office of Tax Appeals (OTA) Oct. 15 sustained the Franchise Tax Board's (FTB) individual income tax assessment based on a final federal determination. Taxpayers hired a tax preparer who filed false state and federal returns on their behalf, claiming deductions for non-deductible expenses. The IRS audited Taxpayers and disallowed the deductions. Taxpayers didn't notify the FTB of the IRS's action. Subsequently, the tax preparer was criminally charged and convicted of tax fraud. Taxpayers argued they should not have to pay the additional tax because they were victims. The OTA found no basis to conclude that the FTB incorrectly disallowed the deductions. Accordingly, the OTA sustained the FTB's assessment. [Cal. Office Tax App., Case No. 18093824, 10/15/19]

California Appeals Office Finds Taxpayers Income Tax Refund Claim Not Timely Filed

 

The California Office of Tax Appeals (OTA) Oct. 11 denied Taxpayer's individual income tax refund claim because it was not timely filed. Taxpayer late-filed his 2012 tax return. The Franchise Tax Board (FTB) revised his return and entered into a repayment plan with Taxpayer. After Taxpayer paid the balance, he filed an amended return for 2012 claiming a net operating loss carryback from 2014. Taxpayer sought a refund for his 2012 overpayment but the FTB denied it as untimely. Taxpayer claimed the statute of limitations was tolled due to his financial disability. The OTA held that: 1) Taxpayer's two visits to an urgent care facility for a chest cough of moderate severity over a period of five days didn't demonstrate an impairment that prevented him from managing his financial affairs; and 2) his wife's medical issues were also insufficient to establish financial disability. Accordingly, the OTA sustained the FTB's action. [Cal. Office Tax App., Case No. 18063261, 10/11/19]

Tax Notes

Tax Foundation Paper Maps Out Potential Post-Wayfair Pitfalls

 

The post-Wayfair landscape is littered with potential legal landmines that states should attempt to avoid when constructing their remote sales tax systems, according to a Tax Foundation paper.

Michigan Governor Signs Marketplace Facilitator Bills

 

Michigan Gov. Gretchen Whitmer (D) has approved a package of bills requiring marketplace facilitators to collect and remit sales taxes on remote sales.

Honolulu Council Approves New B&B Property Tax Class

 

The Honolulu City Council has approved a new property tax category for homes operated as bed-and-breakfasts.

Pennsylvania Lawmakers Unveil 5 Options for Reforming Education Property Taxes

 

An informal legislative work group released five options for reducing Pennsylvania's school property tax burden and tasked party whips with determining which has a viable path forward.

Louisiana Local Tax Board Funding Held Unconstitutional

 

The provision funding Louisiana’s Uniform Local Sales Tax Board through a percentage of local taxes violates the state constitution, the state high court has ruled.

Utah Legislature to Meet in Special Session on Tax Reform Bill

 

Utah lawmakers will meet in a special legislative session December 12 to consider a tax reform package proposed by Republican lawmakers.

Clearer Goals Urged for Washington State’s Boeing Tax Credits

 

A Washington legislative committee has approved a report recommending that lawmakers clarify whether billions of dollars in tax breaks approved for the Boeing Co. were intended to bolster in-state employment.

Nebraska Issues Guidance on Treatment of GILTI, FDII

 

Global intangible low-taxed income must be included in Nebraska taxable income, according to guidance from the Department of Revenue.

First Circuit Allows Truckers’ Challenge to Rhode Island Tolls

 

The First Circuit has ruled that a constitutional challenge to Rhode Island’s tolls on truckers is not barred by the Tax Injunction Act.

Connecticut Settles Hospital Provider Tax Litigation

 

Connecticut Gov. Ned Lamont (D) announced that the state has settled a lawsuit with hospitals challenging the hospital provider tax.

Featured Resources

COST - Council on State Taxation

Amicus Briefs

Express Scripts Inc., v. State of Washington, Dep’t of Rev.

COST on July 22 filed an amicus curiae brief with the Washington Supreme Court urging the Court to review a case, Express Scripts Inc., v. State of Washington, Dep’t of Rev., addressing whether “pass-through” funds should be included in the B&O tax base and whether taxpayers are entitled to retroactive relief when relying on written DOR advice under the State's Taxpayer Bill of Rights.

COST - Council on State Taxation

COST Studies, Articles & Reports

2019 State and Local Amnesty Programs

This report tracks state and local tax amnesty programs by state for 2019.

COST - Council on State Taxation

COST Comments & Testimony

Testimony in Support of House Bill 75 – Local Political Subdivision Property Tax Complaints

COST supports Ohio House Bill 75 which requires a local political subdivision to notify property owners that a property tax valuation complaint may be filed along with requiring a formal resolution process prior to the subdivision contesting a property owner’s valuation.