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April 08
Thomson Reuters Overview on Energy-Related Property Tax Incentives Now Available

Thomson Reuters today announced the new ONESOURCE Property Tax overview on energy-related property tax incentives and exemptions is now available. Ideal for tax executives managing property tax compliance or looking to invest in energy-related property, the report provides a general overview of the energy-saving tax incentives available to businesses in various states, including California, Colorado, Texas, and Washington DC.

“Knowing about each state’s unique tax laws is just the first step of many to benefit from these tax breaks,” said Amy Walker, Senior Research Specialist at Thomson Reuters. “As each state has different nuances to their energy-related exemptions, businesses also need to understand key criteria, deadlines and relevant dates to ensure their energy-related purchases and projects do indeed qualify.”

Sample highlights from the overview report include: 

  • In California, the State Board of Equalization (SBE) has issued a letter to county assessors regarding the statutory exclusion of construction of active solar energy systems from property tax assessment. This exclusion is incorporated in Cal. Rev. & Tax. Cd. § 73 which provides (1) that the term newly constructed does not include the construction or addition of any active solar energy system for property tax purposes, and (2) a sunset date of Jan. 1, 2017. Eligible construction completed on an active solar energy system before Jan. 1, 2017 will remain excluded from the definition of new construction under Cal. Rev. & Tax. Cd. § 73 until there is a subsequent change in ownership of the facility. Eligible new construction includes storage devices, power conditioning equipment, transfer equipment, and parts related to the functioning of those items. It includes only equipment used up to, but not including, the stage of conveyance or use of the electricity. All construction or addition of any active solar energy system on or after Jan. 1, 2017 will be considered assessable new construction. (California State Board of Equalization Letter to Assessors 2013/042, 09/23/2013.)
  • In Colorado, effective March 19, 2013, the following items are exempt from personal property tax: systems exclusively using solar energy; cogeneration systems that produce two forms of energy for industrial, commercial, heating or cooling purposes; cogeneration systems will be exempt beginning Oct.1, 2016.
  • As of Jan. 1, 2014, in Texas, energy storage systems, defined as systems that store energy to be used at a later time, are exempt from property tax. These systems must be used for the control of air pollution in a nonattainment area and can include chemical, mechanical or thermal devices. In addition, chief appraisers are now required to use the cost method of appraisal to determine the market value of commercial solar energy property constructed or installed on or after Jan. 1, 2014. There is a state-mandated 20 percent depreciation floor on the property.
  • In Washington DC, solar systems are exempted from personal property tax. Also, starting on Oct. 1, 2016, cogeneration systems are also exempted from personal property tax.

The special energy-related property tax overview report provides a high-level look at the type of information automatically incorporated in the ONESOURCE Property Tax software suite. Thomson Reuters in-house property tax research and content experts monitor changes in key property tax related dates for all 50 states and Puerto Rico. The report is available for download at no cost at https://tax.thomsonreuters.com/wp-content/pdf/property-tax/2014-Press-Release.pdf.​

March 31
Thomson Reuters Checkpoint Releases Special Report on Tax Implications of 2015 Presidential Budget Proposal

Thomson Reuters has released a special report focused on President Obama’s 2015 budget proposal, which includes tax proposals such as the expansion and permanent extension of the earned income tax credit, the enhancement and permanent extension of the research tax credit, a number of new international tax proposals, and a renewed push for pairing infrastructure investments with business tax reform.

The budget also includes a new $56 billion “Opportunity, Growth and Security Initiative,” with suggested spending and tax changes to cover its costs. 

“While it is uncertain whether any of the President’s tax proposals will become law, it is nonetheless critical for tax professionals to keep abreast of the tax reform debate in order to quickly respond to and comply with possible future changes,” said Catherine Murray, tax analyst at Thomson Reuters.  “Offering expert insight, the report offers guidance and resources to help businesses and individuals prepare for potential tax law changes that could have a significant impact on their bottom line.”

The special report is available at no cost at https://tax.thomsonreuters.com/2015Budget and provides commentary from Thomson Reuters’ tax experts in response to the President’s proposed budget, which includes: 

·        Business tax proposals targeted at closing loopholes, lowering the corporate tax rate, and strengthening investment.

·        Proposals to boost U.S. manufacturing and insourcing of jobs to encourage businesses to locate jobs and business activity in the U.S.

·        Proposals to reform the U.S. international tax system.

·        Proposed environmental and energy-related provisions.

·        Tax changes for individuals proposals.

·        Estate and gift tax proposals, which include returning the estate, generation-skipping transfer, and gift tax exemption and rates to 2009 levels.

The report is an example of the practical, insightful information available on Thomson Reuters Checkpoint, which provides research, news, analysis, and productivity tools to tax, audit, accounting, legal, trade, and finance professionals.  For guidance on the developments noted here, visit Tax Desk, Federal Tax Coordinator, Federal Tax Handbook, and U.S. Tax Reporter: Income. For training on the latest tax developments, visit Monthly Tax Alert, Federal Tax Update, Obamacare:  The Individual Mandate, and Obamacare: The Employer Mandate.​

February 18
Thomson Reuters Launches Checkpoint Learning CPE Courses for Apple® iPad to Address Mobile Needs of Today’s Accounting Professional

From the folks at Thomson Reuters: Thomson Reuters announces Checkpoint Learning CPE courses for Apple iPads.  With the entire learning experience available on the iPad®, from course browsing and purchasing, to course completion and submission, accounting and tax professionals can train while traveling, waiting in line, or whenever they have time and internet connectivity. 

“Mobile learning is one of the emerging trends in professional education,” said Ken Koskay, senior vice president of learning solutions for the Tax & Accounting business of Thomson Reuters.  “And with tablet use on the rise, particularly for businesses, Checkpoint Learning courses for the iPad will enable our customers to complete training anytime, anywhere.” 

According to a recent study by Forrester Research Inc., 60 percent of North American online consumers will own a tablet in 2017, and 18 percent of total tablet purchases will be made directly by enterprises.  Forrester also notes that the Apple iPad continues to dominate the market, with 52 percent of respondents using an iPad as their primary work tablet.

“The learning curve to figure out navigation on the iPad is minimal — the interface is very intuitive and easy to use” added Koskay.

Checkpoint Learning courses are easily and quickly accessed directly from iPads, laptops or desktops.

“One of the great features of Checkpoint Learning is the ability to start a course on one device, say a laptop, and later complete the course on an iPad.  Our courses are fairly agnostic with respect to the device used for access,” said Koskay.

Offering the same full-length, high-quality content available on Checkpoint Learning, mobile users can continue to meet CPE requirements and get vital industry updates, but now with greater ease of where, when, and how they want to access these courses. 

Forty select high-quality Checkpoint Learning CPE courses are now available for the iPad, with more titles scheduled for release later this year. 

For more information about Checkpoint Learning courses for Apple iPad, visit
http://cl.thomsonreuters.com/NewsAndUpdates/Mobile.

February 12
Defending an Equitable Apportionment Case

Here’s a great article from Peter Faber at McDermott on what to keep in mind when faced with an equitable apportionment challenge or when making the case for use of an alternative apportionment methodology:

State revenue departments have become aggressive in recent years in asserting that statutory apportionment formulas do not fairly reflect the in-state activities of corporations.  This article offers practical suggestions for resisting attempts by revenue departments to depart from the statutory formula and impose alternative apportionment. 

Read the full article here.​

February 12
Businesses with a Robust Employment-Related Tax and Payment Compliance Program Report Greater Profitability and Employee Satisfaction

ROSELAND, N.J. – February 10, 2014 – ADP®, a leading global provider of Human Capital Management (HCM) solutions, today shared the results of a new survey concluding that a strong employment-related tax and payment compliance program can help lead to benefits beyond financial performance. The survey, conducted by CFO Research and sponsored by ADP, found that prioritizing compliance can also help lead to a more engaged workforce, improved corporate culture and a sharper competitive edge.

“Our data shows that compliance is growing in its importance to successful companies of all sizes,” said Mark Benjamin, President of Global Enterprise Solutions at ADP. “Unfortunately, some companies are so overwhelmed by the complexity involved in managing employment-related tax and payment compliance that they don’t know where to begin. The good news is that many organizations that are investing in a compliance program and making it a priority are seeing significant, and sometimes unexpected, payoffs for their businesses.”

Compliance Challenges

Companies today are under increased pressure to ensure they’re in compliance with applicable laws, even as the volume and complexity of regulations multiply. Indeed, survey respondents say the need to conform to multiple jurisdictions (70 percent) and ensure privacy and data security (49 percent) increase the difficulty of managing employment-related tax and payment compliance.

Due to these challenges, some managers do not make compliance management a priority. Of the senior finance and HR executives surveyed, more than 33 percent consider compliance to be a low priority, and 33 percent of respondents say they would give their company a “C” grade for the way compliance is handled within their organization.

Compliance as an Opportunity

In sharp contrast, the survey shows companies that invest in robust compliance management acknowledge it can deliver business results. Fifty-nine percent of respondents say employment-related tax and payment compliance has a positive impact on employee productivity and operational efficiency, while 50 percent say it has a positive impact on their company’s overall profitability.

“The two-thirds of executives who give their companies a high grade for compliance are working for organizations that also make it a top priority,” said David W. Owens, editorial director at CFO Research. “These companies are more likely to recognize the real benefits that can be delivered by effective compliance programs.”

“Executives are noticing how effective compliance management can help build structural capital and boost the bottom line,” Benjamin added. “The benefits of effective compliance can be enterprise-wide and give leaders the competitive edge they need in today’s marketplace.”

Respondents also note how employment-related tax and payment compliance may help lead to surprising payoffs they didn’t expect, such as a boost in employee satisfaction (70 percent) and employee engagement (63 percent), as well as improved corporate brand and reputation (55 percent). Leadership teams are recognizing how these improvements can help strengthen their businesses and enable them to better respond to future regulatory changes. In fact, of the companies who responded to the survey, 63 percent view investing in compliance as a best practice rather than a burden.

Full report findings are available to download from http://bit.ly/Bottom-Line-on-Compliance. An infographic with greater detail on the compliance continuum is viewable at http://bit.ly/CompContinuum.​

February 07
Multistate Tax Alert: Los Angeles Business Tax Update

From the State Tax Group at Deloitte:

During the prior year, the City instituted a Tax Amnesty Program from September 1 through December 2, 2013, whereby businesses were provided an opportunity to pay any outstanding tax, interest and fees owed to the City and have all applicable penalties waived with respect to the LABT as well as certain other City taxes.

The City has indicated that following the amnesty period, the Office of Finance will “vigorously pursue a range of enforcement actions, as applicable,” such as assessment of a 10 percent negligence penalty in addition to the delinquency penalties discussed above for potential total penalties of up to 50 percent of the liability; and expansion of the City’s audit program and on-site investigations.

Read the full article here, which also includes a summary of the Los Angeles Business Tax.​

January 29
Food, Teeth, Yachts, Alcohol and Marijuana — Thomson Reuters Reveals Quirky Sales Tax Laws

New York, Jan. 28, 2014 — The Tax & Accounting business of Thomson Reuters today revealed a sampling of quirky sales tax changes passed or implemented in 2013.

·        Hungry for revenue, two Massachusetts cities increased the tax on meals from 6.25 percent to 7 percent. The cities? Sandwich and Salisbury.

·        Straighter teeth just got cheaper in Arizona. Orthodontic devices are no longer subject to sales and use tax.

·        Connecticut did away with its luxury tax on yachts, and tax is exempted all together if the boat is docked 60 days or less a year.

·        In North Carolina, chiropractors must collect sales tax on nutritional supplements and vitamins provided as part of a patient’s treatment plan, and students must pay sales tax on meals purchased on college campuses.

·        Rhode Island eliminated sales and use tax on wine and spirits sold at package and liquor stores from Dec. 1, 2013, through March 31, 2015.

·        The legalization of recreational marijuana comes with a hefty tax. Both Washington and Colorado are taxing pot at a whopping 25 percent. 

·        In Washington state, hiring a personal chef is a taxable service, and the chef is required to collect sales tax. However, if a meal is prepared with raw or undercooked eggs, fish, meat or poultry and refrigerated or frozen for consumption at a later time, and cooked prior to consumption to prevent food-borne illness, then the tax is waived.   

The research division at the Tax & Accounting business of Thomson Reuters continually monitors regulatory developments around the world so the thousands of new rules and rates enacted each year are reflected in the company’s indirect tax software platform. ONESOURCE Indirect Tax is used by leading global companies to seamlessly and accurately comply with tax regulations. For more information, visit: http://onesourceindirecttax.com.​

January 17
Texas: Comptroller Explains How Series LLC Must File Franchise Tax Report as a Single Entity

From the State and Local group at Deloitte:

Responding to a commonly asked question as to how a series limited liability company (series LLC) must report its activities for Texas revised franchise “margin” tax purposes, the Texas Comptroller explains that a series LLC is treated as a single legal entity.

Read the full alert here.​

January 13
Nexus Updates from Indiana and Washington State

The SALT team at KPMG recently published two alerts on nexus determinations that highlight the fact-specific nature of this issue:

Indiana

In two recent rulings the Indiana Department of Revenue addressed whether the presence of catalogs stored in Indiana prior to distribution would create nexus for out-of-state companies. The taxpayer requesting the ruling stored its customers’ catalogs at its facility in Indiana prior to the catalogs being distributed to recipients across the country, including Indiana. The taxpayer requested guidance on whether the presence of the catalogs at the Indiana facility would create income tax and/or sales and use tax nexus for its customers.

With respect to adjusted gross income tax nexus, nonresident corporations are subject to tax on income derived from sources within Indiana, including income from tangible property located in the state and income from doing business in state. The Department observed that the mere presence of the catalogs, in and of themselves, was not generating any income for the taxpayer. Furthermore, the presence of the catalogs in Indiana did not constitute "doing business" as outlined in Indiana’s income tax regulations. For retail sales and use tax purposes, the Department noted that the Quill case requires a taxpayer to have some sort of physical presence in a state before the state can compel an out-of-state taxpayer to collect and remit sales and use taxes. However, the Department concluded that the catalogs alone fell short of the physical presence standard articulated in Quill and were not sufficient to create “substantial nexus” with Indiana. Based upon the facts provided, the Department concluded that the taxpayer’s customers did not appear to have an income tax or sales tax filing requirement as a result of having catalogs stored in the state.

Washington

In a recent opinion, a Washington State appeals court addressed whether an Oregon corporation selling fuel to Washington customers had B&O tax nexus. All of the taxpayer’s retail fuel establishments were located in Oregon; however, the taxpayer made wholesale sales of fuel to approximately 40 Washington customers. The fuel was delivered to the customers in trucks owned and operated by the taxpayer and the price of the fuel was marked up to reflect the delivery costs. The taxpayer did not make efforts to secure additional Washington customers and had never sent employees into the state to solicit sales or to attend to customer’s needs. In the taxpayer’s view, its customers purchased fuel solely based on price and therefore these efforts would be moot. In the course of a B&O tax audit, it was determined that the taxpayer made $48 million of fuel sales to Washington State customers during the audit period and had driven 141,491 miles on Washington roads delivering the purchased fuel. The Department assessed the taxpayer for unpaid B&O tax, interest, and penalties.

After a superior court affirmed the assessment, the taxpayer appealed directly to the Washington State Supreme Court, which transferred the case to the appeals court. The taxpayer appeared to argue that it did not have substantial nexus with the state because it did not perform any solicitation-related or market-facing activities in Washington, which it asserted was required to establish nexus. Additionally, because Quill made clear that simply delivering goods into the state by common carrier did not create nexus, the taxpayer argued that delivering fuel in its own trucks should likewise be insufficient to create nexus. The court disagreed with all of the taxpayer’s arguments. The taxpayer’s activities in the state—its sales of fuel and delivery of fuel for additional charges to Washington customers—were substantial and occurred on a regular basis. The court rejected the taxpayer’s position that physical presence had to be coupled with market-facing or sales enhancing activities; noting that physical presence was sufficient and regardless, the taxpayer’s delivery function did enable it to continue to make sales to Washington customers. With respect to the delivery in its own trucks versus by common carrier, the court noted that the bright line rule established in Quill was not available to the taxpayer because it did not use a common carrier for its fuel deliveries.

Check out these and other timely alerts at KPMG’s This Week in State Tax webpage.​

January 07
New York - Tax reform heats up, changes likely

​From the SALT group at PwC:

New York Governor Andrew Cuomo issued a press release on January 6, 2014 in which he endorsed many of the recommendations previously made by his Tax Reform and Fairness Commission and the Tax Relief Commission.  This endorsement increases the likelihood for tax reform in New York.  The Governor's press release highlights several areas expected to be addressed by the legislature this year, including a merger of the corporate franchise tax and bank franchise tax, elimination of the corporate income tax on upstate manufacturers, a refundable credit against corporate and personal income tax based on a percentage of property tax paid, and other changes.  The more detailed reform proposals previously issued by the Commissions also included requiring mandatory combined reporting, imposing economic nexus standards, single sales factor apportionment with customer sourcing rules, modernizing the sales tax, modifying the estate tax, updating local property tax administration, and simplifying tax administration. These proposals are also likely to be presented to the legislature.  All New York taxpayers should consider the implications of tax reform and analyze the provisions in the upcoming FY 14-15 executive budget, which is expected by the end of January.​

Read the full alert here​.

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