interesting piece on indirect taxes from the good folks at Alvarez &
most organizations, indirect taxes touch multiple business functions, such as
purchasing, sales and inventory management. For U.S. sales and use tax and
value-added tax (VAT), the consumer ultimately bears the burden of payment of
the tax. The burden of compliance, however, rests with the business, and the
cost of non-compliance can be substantial — customer dissatisfaction and, in
some cases, direct costs to the business for interest, penalties and where
taxes are not appropriately recovered.
ensure that businesses remain compliant, it is essential that companies
consider indirect taxes when engaging in business process changes and other
corporate initiatives. We have seen a number of corporate change programs where
this has not been the case, and the negative impact it has on day-to-day
transactional compliance often results in a significant amount of additional
work and resources to complete the sales and use tax and VAT returns.
edition of Tax Advisor Weekly discusses some key corporate
initiatives that have indirect tax implications and outlines the importance of
ensuring that these taxes are taken into account from the start. Apart from
ensuring that unnecessary cost and disruption are avoided, these projects also
provide an opportunity to tidy up sales and use tax and VAT determination and
reporting. In some cases, these projects may even yield substantial tax
refunds. The ROI on projects can substantially improve if tax is taken into
account at the onset and if the tax department remains a stakeholder throughout
Read the full post from the
Alvarez website here.
From the State and Local group at McDermott:
The Illinois Supreme Court recently struck down an Illinois Department of Revenue (Department) regulation sourcing sales to the location of order acceptance. While the Supreme Court found that the Taxpayers’ Bill of Rights protected the taxpayer from retrospective liability, going forward, Illinois retailers need to closely evaluate their filing positions. The decision will lead to a period of chaos for taxpayers, local governments and the Department.
Read the full article here.
KPMG state and local tax team:
States are increasingly attempting to address the
application of tax to the emerging technology and business models through new
law, court cases, and administrative rulings. To assist in tracking these
developments—which can be critical not only for technology providers, but also
for purchasers of technology—KPMG’s State and Local Tax practice has launched a
“technology checklist” to summarize state developments concerning the
taxability of software, daily-deal vouches, and other similar
technology-related items for the third quarter of 2013.
Read the third quarter
2013 report [PDF 378 KB] Introducing the Latest
“Techlist”: Guidance from the Third Quarter of 2013
the SALT group at PwC:
In its final report, issued on November 11,
2013, New York Governor Andrew Cuomo's Tax Reform and Fairness Commission made
several recommendations to reform the state's tax provisions. Noting that
"New York's taxes are still too high and its tax code too complex, placing
undue burdens on individuals and business," the Commission proposed that
the state: reform its corporate franchise tax and bank franchise tax, including
merging the two taxes and requiring mandatory combined reporting; modernizing
the sales tax; modifying the estate tax; updating local property tax
administration; and simplifying tax administration.
the full release from PwC here.
From the State Tax team at
November 13, 2013, legislation (House Bill 5) passed the Ohio House that, if
enacted, would make significant changes to Ohio’s local income tax regimes.
Specifically, municipalities that impose local income taxes on businesses and
individuals as of January 1, 2015 would be required to amend their laws to
conform to the limitations and conditions set forth in the bill. One of
the most significant changes relates to net operating losses. Currently, many
municipalities do not allow NOL deductions and carryforwards. House Bill 5
would require municipalities to allow NOLs and provide for a five-year
carryforward period. For the first five years, the NOL deduction would be
limited to 50 percent of the tax owed. After that point, a full deduction would
House Bill 5 would also make changes to the
municipal income tax withholding requirements. In general and subject to
certain exceptions, no municipal income tax withholding would be required if an
employee performs personal services in a municipality for 20 or fewer days. In
addition, House Bill 5 (1) specifies that certain entities that are
disregarded for federal income tax purposes (such as single-member LLCs) could
not be taxed at the entity level on their net profits; (2) adopts new
allocation and apportionment rules; (3) allows taxpayers to use alternative
apportionment at their discretion and provides procedures for doing so; (4)
allows taxpayers to make 5-year election to use separate accounting if they do
so in all municipalities where they pay tax; (5) imposes uniform standards with
respect to the filing of consolidated municipal income tax returns by
affiliated groups of corporations; (6) provides procedures for obtaining an
extension of time to file, which if granted, would extend the tax return due
date to the last day of the month following the month when the federal return
is due or would be due; and (7) provides uniform estimated tax payment
requirements and protest and assessment procedures.
the full posting or listen to the podcast here.
the State and Local team at Alston & Bird:
This advisory focuses on five of the more
challenging issues that arise in connection with unclaimed property audits and
that businesses should carefully consider in their efforts to comply with state
unclaimed property/escheat laws. Although in most instances these issues do not
lend themselves to easy or clear answers, the authors present a number of
practical insights and suggestions to help mitigate some of the problems and
place businesses in a position to assert more effective audit defense
Read the full article here.
Hayes Holderness at McDermott Will & Emery:
When a member of a consolidated group sells all
the stock of another member of that group, the seller and buyer may make a
joint election under IRC section 338(h)(10) whereby the corporation whose stock
was sold is deemed to have sold all of its assets to a new corporation that is
a subsidiary of the buyer. The corporation whose stock was sold is then
treated as having distributed the proceeds from the deemed asset sale in a
constructive liquidation while still a member of the seller’s consolidated
group. As a result of the 338(h)(10) election, the buyer is able to step
up the income tax basis in the assets of the corporation whose stock was sold
to fair market value, even though ordinarily a sale of a corporation’s stock
does not affect the income tax basis of the corporation’s assets. While
the income tax consequences – at least at the federal level – of a 338(h)(10)
election are clear, the consequences for state and local taxes can be murky.
This article examines the application of the real property transfer taxes
in New York State and New York City to transactions involving 338(h)(10)
elections and concludes that such elections should not trigger these taxes.
the full article here.
November 14, at 10am PST, join Kerstin Nemec,
Vice President of Business Incentives for ADP’s Added Value Services division,
and key members of her team as they share their deep knowledge and insights on
the latest and greatest with tax credits and incentives. Because so many of the
current regulatory changes relating to tax credits and incentives are highly
time-sensitive, this session may be critical in helping you take full advantage
of all the various opportunities available to you.
Asensio, VP Government Affairs, ADP
VanHuysen, Director of Tax, ADP
Pieroni, Senior Director of Tax, ADP
Migdail, Partner, DLA Piper
areas of focus will include:
Hiring Credits: What will happen in 2014 and what should you being doing now?
Act: There is still time. Claim your credits before the window closes.
Legislative Changes: What you need to do before the program changes and how to
prepare for the future
webinar is eligible for 1 RCH or 1 CPE credit. More
information about this webinar is available here.
McMillen and Associates, Inc. (DMA) is excited to announce another in our
series of complimentary CPE accredited seminars. The following is a list of upcoming events:
States Sales/Use & Property Tax Seminar
de Rey Marriott Hotel
de Rey, CA
to Sales/Use Tax Seminar
to Property Tax Seminar
Commodity Tax & Property Tax Update
Commodity Tax & Property Tax Update
West Georgia Street
the links above for additional information on these great complimentary
the SALT group at PwC:
A New Jersey tax court found that the corporate limited partner of
a New Jersey limited partnership was subject to the state's Corporation
Business Tax. The reasons for the corporate partner's nexus with New Jersey
included: (1) the partner and limited partnership were in the same line of
business; (2) they were both parties to the same New Jersey-governed cash management
agreement; (3) they had common agents, managers, officers, and directors; and
(4) they shared a principal place of business in New Jersey.
New Jersey taxpayers that have, or are
considering, refund claims asserting the absence of nexus when their only
contact with the state is a limited partnership interest may find this decision
instructive. The opinion outlines the types of contacts with New Jersey and
relationships with in-state limited partnerships that could create nexus with
the full alert here.