SALT Report: January 2018

January 3, 2018

Each month, our State and Local Tax team will provide highlights of recent state tax law changes that may affect you. Updates are sorted by state so that you can easily view the changes that impact the state(s) in which you are doing business.

Contact any member of our State and Local Tax team for specific guidance.

California

  • Under the California throwback rule, sales of tangible personal property are sourced to California if the property is shipped from a location in California and the purchaser is the U.S. government or the taxpayer is not taxable in the purchaser’s state. Under R&TC Section 25122, a taxpayer is taxable in another state if in that state it is subject to a net income tax, a franchise tax measured by net income, a franchise tax for the privilege of doing business, or a corporate stock tax.

Per an article in the December 2017 FTB news, if the taxpayer is required to file a return and pay tax in other states due to that state’s nexus standard, the sales to those states do not have to be thrown back to California. This can include Texas and Tennessee franchise tax, Ohio CAT, Washington B&O and Georgia net worth tax.

Colorado

  • All sales tax licenses used for collecting and filing Colorado and local sales taxes expired on December 31, 2017. Renewed licenses have a two-year validity period beginning from January 1, 2018. Each physical location must have its own license and pay a $16 renewal fee, even those that recently applied for and received licenses.

Connecticut

  • Effective October 31, 2017, to November 30, 2018, the Fresh Start tax amnesty program offers an opportunity for eligible taxpayers to voluntarily come forward and pay their unreported tax liabilities without penalties and interest assessed for tax returns due on or before December 31, 2016.

Minnesota

  • The Minnesota Department of Revenue updated Sales Tax Fact Sheet 145 for businesses involved in industrial production.

Pennsylvania

  • The flat-dollar cap on the net operating loss (NOL) deduction will not be available for the tax years beginning in 2017. The NOL limitation of 30% of taxable income will continue to be effective for taxable years beginning in 2017.

Washington

  • An out-of-state diamond and gold wholesaler established nexus with Washington because it owned tangible personal property in the state through its 5-day jewelry consignment arrangement with various Washington jewelry retailers.

Wisconsin

The following publications were released or updated: