State and local tax rules are in constant flux, and it can be difficult to stay on top of all of the current developments. Luckily, we’re here to help. Check out our recent article to learn more about some current hot topics, including sales tax reporting requirements, economic standards, and more!
The Ohio Department of Taxation began sending Failure to File notices by regular mail on June 5, 2017 to taxpayers who:
- Have not filed an Ohio School District Income Tax Return Form SD 100 for 2013, 2014 and/or 2015; and
- Appear to have lived in a taxing school district based on the school district number and/or mailing address reported on the taxpayer’s Ohio Individual Income Tax Return (Ohio Form IT-1040) filed for 2013, 2014, and/or 2015.
To learn more about the Ohio School District Income Tax, read their Guide.
If you receive(d) a notice and need assistance, please contact a member of our State and Local Tax Team.
The Tax Foundation has recently published their 2017 State Business Tax Climate Index. This is a great tool for businesses and taxpayers to compare how well their state’s tax structures stack up against other states. The number one state in this year’s index is Wyoming, and the worst-ranked state is New Jersey. Click here to learn more and see how your state ranks.
The final leg of our Midwest SALT Tour through Mankato, Sioux Falls, and Fargo will take place November 8, 9, and 10. This Sales Tax Update will discuss current legislation and the ways in which taxes impact your business, as well as what you can do to limit your exposure and potential liabilities. For more information and to register for one of these sessions, visit www.eidebailly.com/SALTtour.
As a result of a $900 million budget shortfall, Louisiana lawmakers have passed the following tax measures aimed at bridging the revenue gap. Some of the more important changes are as follows:
Income/Franchise Tax Changes (effective 1/1/2017):
- Expansion of franchise tax:
- “Domestic Corporation” now includes partnerships, joint ventures, and LLCs electing to be taxed as C Corporations for federal income tax purposes.
- Expansion of franchise tax nexus for out of state taxpayers – nexus for corporations that own interest in partnerships with Louisiana operations.
- Net Operating Loss (NOL) Reduction – NOL deduction cannot exceed 72% of Louisiana taxable income.
- NOL Carryover ordering – must use loss carryovers starting with the loss for the most recent taxable year. Older NOLs may expire since taxpayers would have to first use newer NOLs.
- Modification of corporation income tax rate to flat rate of 6.5% (contingent).
- Addback of intercompany interest, intangible expenses and management fees unless certain exceptions are met.
- Modification of federal income tax deduction (contingent).
Sale/Use Tax Changes:
- Effective 4/1/16 through 6/30/2018, the legislation increases the sales tax rate by 1% (bringing the rate to 5%). Referred to as the “Clean Penny” Legislation, the legislation includes its own set of exclusions and exemptions apart from the exclusions and exemptions that apply to the original 4% sales tax rate (referred to as “Old Penny”).
- Old Pennies (the original 4% sales tax) – law modifies the list of exclusions and exemptions, specifically as they relate to the 2% basic rate (sub component of the 4% tax). It is important to note the inconsistencies between the exclusions and exemptions offered under the Clean Penny and Old Penny laws.
- Affiliate Nexus provisions – the legislations drastically expands the definition of a “dealer.”
For additional background regarding the legislation, please visit the tax foundation website.
Colorado’s sales and use tax notice and reporting requirements for remote retailers…Still Alive! Previously, the District Court granted DMA’s motion for summary judgement and granted an injunction against the Department of Revenue from enforcing such requirement. However, on February 22 the U.S. Court of Appeals for the Tenth Circuit held that the requirements do not violate the Commerce Clause. In other words, (depending on any further litigation/appeals) Colorado can reinvigorate its efforts to force certain out-of-state retailers selling to in-state customers to:
1) notify Colorado customers that they are obligated to self-report and remit use tax on their purchases;
2) to provide Colorado customers with an annual report, detailing a customer’s purchases in the previous year;
3) notify the customer that the retailer was required to report the customer’s name and amount of purchases to the Department; and
4) report to the Department, the name, billing address, shipping address and total amount of purchases made by Colorado customers.
While Colorado has led the charge, many others states may jump on the reporting requirement band wagon.
Read Sutherland’s full legal alert outlining the background on Colorado’s Use Tax Reporting Requirements, District Court Ruling, Tenth Circuit Ruling, and the possibility of Future Congressional Intervention here.
Over the last several years, North Carolina has been incrementally revising its tax structure. On September 18, 2015, Governor Pat McCrory signed House Bill 97 (H.B. 97), which contained several additional changes to North Carolina tax law. Two noteworthy provisions relate to the apportionment formula, and they include:
- The phase in of single sales factor apportionment. The phase in occurs over three years beginning in 2016, replacing the existing double-weighted sales factor apportionment for both income and franchise tax.
- Requirement to file an informational report, showing the company’s 2014 sales factor as if it were computed using market based sourcing rules. This requirement only affects corporate multistate taxpayers with apportionable income greater than $10 million, and North Carolina apportionment percentage less than 100%.
The Corporation must include, with its 2015 filing, Form CD-400 MS, Market-Based Sourcing Information Report. The 2014 sales factor is required to be computed based on the market-based provisions outlined in H.B. 97. A potential non-filing penalty of $5,000 may be assessed for failure to file the informational report. The collected information will assist North Carolina is deciding whether to transition from cost-of–performance sourcing to market based sourcing.
More information can be found on the North Carolina Department of Revenue website.