News

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 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.

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]

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]

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]

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]

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]

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]

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]

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]