Upcoming National Meeting

2019 State and Local Tax Workshop for the Tech Industry

One and a half day conference focusing on state and local tax issues for technology companies. Leading practitioners from across the U.S. will get those new to the area of state and local tax up to speed on all types of taxes, including sales and use, income, property and local taxes, and will provide in-depth panel discussions on other specific state and local issues impacting the tech industry.

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Newsletters & Media

Cost Conscious

ISSUE 19-14; July 12, 2019

Impact of the Wayfair Ruling One Year Later – The U.S. Supreme Court’s decision in Wayfair overruling the Quill physical presence test was issued over a year ago. Which of the following best describes the impact of the decision and state responses to it on your company?

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Bloomberg TAX

Massive State Income Tax Cut Seals Ohio GOP Budget Compromise

 

An eleventh-hour deal struck by Ohio's Republican-controlled House, Senate, and Gov. Mike DeWine (R) will slash state income tax rates as part of a budget bill overhauling myriad facets of the state tax code.

Idaho Wants to Retain Private Insurance Option for Poor

 

Idaho is seeking federal approval to let low-income individuals in the state have the option of receiving tax credits to remain in the state's private health insurance marketplace or enrolling in Medicaid.

Arizona DOR Publishes Transaction Privilege Tax Newsletter Update

 

The Arizona Department of Revenue July 1 published a newsletter on corporate income, individual income and transaction privilege sales and use taxes. The publication includes information on: 1) criteria for businesses that are required to file and pay electronically; 2) online lodging marketplaces registration requirements with the DOR; 3) tax changes for the City of Scottsdale and the City of Flagstaff; and 4) licensing requirements to be fulfilled by taxpayers engaging property management companies. The DOR also noted filing reminders for taxpayers, which included the transaction privilege tax return due date of July 22; paper returns must be received by July 30, and electronic returns by July 31. [Ariz. Dep't of Revenue, TPT Newsletter, 07/01/19]

Arkansas Finance Department Issues Revenue Legal Opinion on Sales, Use Tax Exemption for Solar Equipment

 

The Arkansas Department of Finance and Administration (DFA) June 17 issued a revenue legal opinion concerning the manufacturing exemption for sales and use tax on solar equipment. Taxpayer developed a solar energy generation facility in the state and queried whether the solar equipment and material installed at the solar farm would qualify for the exemption. The DFA explained that the exemption would apply to: 1) certain items of machinery and equipment used directly in generating electricity for retail sale to the general public; 2) computers and related peripheral equipment that directly control or measure the manufacturing process; and 3) a contractor's purchases of qualifying equipment in connection with a construction contract with a manufacturer who will use the machinery or equipment to generate electricity. [Ark. Dep't of Fin. & Admin., Opinion No. 20190510, 06/17/19]

California Appeals Office Affirms FTB's Denial of Taxpayers Claim for Refund, Denies Petition for Rehearing

 

The California Office of Tax Appeals (OTA) May 7 denied Taxpayers' petition for a rehearing of its decision affirming the Franchise Tax Board's (FTB) denial of Taxpayers' claim for a refund. Taxpayers, a husband and wife, filed a joint state income tax return excluding a portion of husband's military retirement income from their taxable income. Taxpayers argued that the OTA's decision for denial was contrary to law. Taxpayers petition for rehearing made numerous legal arguments to support their claim that the income in question was properly excluded from their gross income. However, the OTA found that it had already considered and rejected the technical merits of these and other similar arguments made in Taxpayers' petition. Also, a petition for rehearing was not an opportunity to raise new issues or arguments that could have been addressed before. Therefore, the OTA denied Taxpayers petition for a rehearing. [Cal. Office Tax App., Case Nos. 18011725, 18011727, 05/07/19]

California Appeals Office Finds Half of Taxpayer's Out-of-State Wages Taxable as Community Property

 

The California Office of Tax Appeals (OTA) April 4 sustained the Franchise Tax Board's (FTB) proposed individual assessments, with modifications in accordance with the FTB's concessions. Taxpayer husband, a California resident, began employment in Delaware. Taxpayer and his wife filed a joint individual income tax return, deducting the full amount of husband's wages from federal adjusted gross income. The FTB disallowed the deduction. Taxpayers appealed. The OTA found: 1) Taxpayer's job was without a fixed end date, which suggested his intent to make his home in Delaware; 2) Taxpayer's spouse and minor children remained in California, which suggested that he intended to return; and 3) Taxpayer's domicile for the year at issue was unclear, but the OTA presumed that Taxpayer retained his prior domicile and found that his wages constituted community property. Accordingly, the OTA sustained FTB's proposed assessment on half of husband's wages. [Cal. Office Tax App., Case No. 18011264, 04/04/19]

California Appeals Office Finds Taxpayer Didn't Provide Good Cause for New Hearing

 

The California Office of Tax Appeals (OTA) April 25 found that Taxpayer didn't provide good cause for a new hearing. Taxpayer didn't appear for the duly noticed oral hearing, and the OTA sustained the Franchise Tax Board's proposed individual income tax assessment and late-filing penalty imposition. Taxpayer filed a rehearing petition, claiming that he was unable to appear at the hearing due to unforeseen requirements of his job. The OTA found that Taxpayer didn't: 1) appear for the hearing despite having confirmed in writing he would; and 2) notify the OTA prior to the hearing that he couldn't attend. Because Taxpayer's reasons didn't satisfy any of the five grounds for a rehearing pursuant to Cal. Code Regs. tit. 18, Section 30604, the OTA denied the petition. [Cal. Office Tax App., Case No. 18042834, 04/25/19]

California Appeals Office Finds Taxpayer Failed to Prove FTB's Proposed Individual Income Tax Assessment Erroneous

 

The California Office of Tax Appeals (OTA) March 27 found that Taxpayer failed to demonstrate error in the Franchise Tax Board's (FTB) revised proposed individual income tax assessment. The FTB issued Taxpayer a notice of proposed assessment that increased Taxpayer's taxable income and proposed additional and premature distribution tax. Taxpayer contended that the pension income was received while living in Florida and shouldn't be taxed. The FTB through a letter acknowledged Taxpayer's protest and requested documentation showing that the pension income was received before becoming a state resident. Taxpayer failed to respond. The FTB issued a notice of action affirming the proposed assessment. Taxpayer appealed. The OTA found that: 1) the pension income from Florida was used to determine the California tax rate that applies to Taxpayer's California-source income; and 2) Taxpayer didn't demonstrate an error in the FTB's assessment. Accordingly, the OTA sustained the FTB's determination. [Cal. Office Tax App., Case No. 18010936, 03/27/19]

California Appeals Office Finds Taxpayers Didn't Demonstrate Loss From Property Sale Was Erroneously Recharacterized

 

The California Office of Tax Appeals (OTA) April 9 found that Taxpayers didn't demonstrate that the Franchise Tax Board (FTB) erroneously recharacterized their ordinary loss from the sale of real property to a capital loss for individual income tax purposes. The FTB issued a notice of proposed adjusted carryover amount recalculating and recharacterizing Taxpayers' reported ordinary loss as a capital loss. Taxpayers appealed arguing that the loss should be treated as ordinary and not capital in nature. The OTA found that: 1) Taxpayers failed to show that they were in the trade or business of property rental or property leasing; 2) the casual rental of the land for grazing purposes at a nominal fee doesn't evidence use of the land in a bona fide rental business; and 3) Taxpayers failed to provide any support that they earned money from leasing the property. Accordingly, the OTA modified and sustained the FTB's determination. [Cal. Office Tax App., Case No. 18010805, 04/09/19]

California Appeals Office Finds Taxpayers Not Entitled to Exclude Cancellation of Debt Income, Claim Deductions

 

The California Office of Tax Appeals (OTA) April 16 found Taxpayers weren't entitled to exclude their cancellation of debt income and failed to present evidence of their itemized deductions for the 2014 tax year. Taxpayers filed their tax return but didn't report their cancellation of debt income on the return. The Franchise Tax Board (FTB) audited Taxpayers' return and issued a notice of proposed assessment, imposing additional tax and interest. Taxpayers appealed. The OTA found that: 1) California, decoupling from the federal tax treatment, didn't allow cancellation of debt income to be excluded from gross income; and 2) Taxpayers failed to provide evidence to show entitlement to the claimed itemized deductions. Therefore, the OTA sustained the FTB's proposed assessment. [Cal. Office Tax App., Case No. 18010908, 04/16/19]

Tax Notes

Connecticut Governor Signs Bill to Ease TIF Requirements

 

Connecticut Gov. Ned Lamont (D) has signed a bill into law that will speed up the process for establishing municipal tax increment financing districts.

Michigan County Sued Over Property Seizure for Tax Underpayment

 

A woman is suing a Michigan county after it foreclosed on her property over just hundreds of dollars in tax debt.

Hawaii Governor Allows Film Tax Credit Increase to Become Law

 

Hawaii Gov. David Ige (D) has reversed his decision to veto a bill expanding the state’s film tax credit, instead allowing the legislation to become law without his signature.

Kentucky Appellate Court: Liability Coverage Charges Not Taxable

 

Charges for liability coverage on rental items are not subject to sales tax, the Kentucky Court of Appeals has held.

Cannabis Banks Bill Advances in California

 

A California bill to create special banks for the state's legal cannabis industry has moved one step closer to passage.

Chicago Cubs Owner May Have Gamed the Property Tax System

 

The Cook County Assessor's Office is taking another look at the suburban home of Chicago Cubs co-owner Todd Ricketts after allegations that the businessman has underpaid property taxes for years.

Maryland's EV Credit Drained Before Fiscal Year's Start

 

Funding for Maryland’s recently expanded excise tax credit for plug-in electric vehicles ran out before the state's new fiscal year began on July 1.

Montana Organizations Push for Marijuana Legalization, Taxation

 

Two organizations are working on ballot initiatives that would legalize and tax recreational marijuana in Montana.

North Carolina Governor Offers Budget Compromise Without Business Tax Cuts

 

North Carolina Gov. Roy Cooper (D) and Democratic leaders have proposed a budget compromise that would eliminate franchise tax cuts and other corporate tax reductions from the budget he recently vetoed.

Kentucky Commission Says Pipeline Is Tangible Property

 

An underground pipeline is tangible personal property rather than real property for state tax purposes, a Kentucky commission recently held.

Featured Resources

COST - Council on State Taxation

Amicus Briefs

Jefferson Parish v. Walmart.com

COST filed an amicus brief on the merits on June 20, 2019 stressing to the Louisiana Supreme Court that a marketplace facilitator does not meet the definition of a “dealer” under the State’s law, violates due process because adequate notice was not provided, and the Parish of Jefferson’s interpretation could result in retroactive imposition of a tax from the Louisiana Dep’t of Revenue and 62 other

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

Letter to the Joint Revenue Committee in Opposition to House Bill 220 – Corporate Income Tax on Certain Retailers

COST testimony in opposition to H.B. 220, which COST argues is facially discriminatory because it imposes a corporate income tax solely on two industries: certain retailers and accommodation and food services providers that have 100 shareholders or more. If Wyoming were to adopt the tax contemplated in H.B. 220, it would be an outlier. Although states may limit their corporate income taxes to corp