SALT Report: April 2017

April 3, 2017

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.

Arkansas

Effective for tax years beginning on or after January 1, 2017, the filing deadline for franchise tax reports is the close of business on the last day of the corporation’s preceding fiscal year. It previously had been the close of business on December 31 of the preceding calendar year.

California

The California Franchise Tax Board provided guidance on credits and deductions for taxes paid to other states. California allows its residents who may be taxed on their income by California and another state an Other State Tax Credit to alleviate the issue of double taxation.

Georgia

The Georgia House of Representatives passed a sales and use tax bill expanding the definition of “dealers” related to remote seller notice requirements. If enacted, dealers meeting the following criteria would have a sales and use tax collection obligation: those whose retail sales of tangible personal property are delivered electronically or physically to a location in Georgia for use, consumption, distribution, or storage for use in Georgia in the previous or current calendar year that:

  • Obtained more than $250,000 in gross revenue; or
  • Conducted at least 200 separate retail sales

Indiana

An Indiana manufacturer objected to additional corporate income tax that was assessed based on an interest addback, throwback sales and net operating losses (NOLs), but was denied as a result of insufficient documentation.

  • Interest expense deductions were claimed on the basis of two intercompany loan agreements with the taxpayer’s parent corporation. However, there was no evidence the taxpayer made actual payments, nor could the taxpayer demonstrate the interest rate was determined on the basis of an "arm’s-length relationship" and that it intended to repay the principal amount.
  • The taxpayer did not establish that it had a plant or office in throwback states, that it was subject to income or franchise tax there, or that its containers contributed to income from those states. Accordingly, sales to customers from those states were properly treated as "throwback" sales attributable to Indiana.
  • The taxpayer failed to establish that the department’s adjustment of its net operating losses, attributable to the denied interest expenses in prior years and carried forward to years under the audit time frame, were improper.

Virginia

  • Effective July 1, 2017, dealers selling and installing certain products, from fences and venetian blinds to window shades and cabinets, will be required to pay the tax on their purchase or use of these items in the same manner as other real property contractors. See the Real Property Contractor Guidance Document for details.
  • A Virginia Tax Amnesty Program will be administered by the Department of Taxation during the 2017-2018 fiscal year. Taxpayers who failed to file a required return or pay tax administered by the Department of Taxation may apply for amnesty, with certain exceptions.

Wisconsin

  • State corporate and partnership return due dates now conform to federal due dates, applicable to taxable years beginning on or after January 1, 2016. See the Wisconsin Department of Revenue’s chart showing both unextended and extended due dates for 2016 tax returns.
    • Although the legislation changed the partnership return due date to March 15, the notice provides that the department will accept as timely 2016 returns and payments filed and paid by the due date applicable under prior law (i.e., April 18, 2017) because the legislation was enacted close to the due date.
    • See Schenck’s recent Tax Central Alert: Changes to tax return due dates for more information
  • Kewaunee County adopted a local county sales and use tax of 0.5%, effective April 1, 2017.

Updated guides and publications:

  • Publication No. 505, Taxpayers’ Appeal Rights of Office Audit Adjustments, covers taxpayers’ appeal rights and refund claim procedures of office audit adjustments for corporation franchise and income, personal income, sales and use, withholding, and excise taxes, and homestead credit or farmland preservation credit claims.
  • Fact Sheet 1115, Farmland Preservation Credit, notes that a claimant filing Schedule FC-A must have owned the farmland on which the claim is based at the end of the taxable year. Previously, the fact sheet stated that the claimant must have paid, or must have been legally responsible for paying, the property taxes.
  • Publication 515, Non-Statistical Sampling, provides guidance regarding nonstatistical sampling in sales and use tax field audits reflective of the department's interpretations of laws enacted by the Wisconsin Legislature as of December 31, 2016.