SALT Report: December 2018

December 14, 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.

All states

  • Reminder—the sales tax rules have changed as a result of the U.S. Supreme Court’s Wayfair decision. In many states, exposure began October 1.
    We are busy discussing sales tax and nexus with clients. Please contact us to start the conversation.

California

  • The California Franchise Tax Board modified its ruling to provide business entity members of limited liability companies (LLCs) additional clarity and guidance for "doing business" scenarios, including their return filing and tax payment requirements when classified as partnerships for tax purposes.

Idaho

  • Idaho issued a temporary rule for reporting Internal Revenue Code Section 965 income on the Idaho income tax return. Internal Revenue Code Sections 965(b) and 965(c) dividend deductions or adjustments passed though from the pass-through entity to the owner in the distributive share may be deducted when calculating Idaho taxable income.

Illinois

  • Companies that provide transportation services in Illinois must use a special apportionment formula to determine corporate income tax liability.

Iowa

  • Iowa issued guidance on the reporting and taxation of Internal Revenue Code Section 965 repatriation income for the 2017 tax year.
  • Iowa provided guidance to taxpayers about the federal Domestic Production Activities Deduction. Iowa does not conform to the federal repeal of Internal Revenue Code Section 199 for 2018. Taxpayers will be able to claim the deduction for Iowa tax purposes in 2018, but the deduction will not be available after 2018.

New Jersey

  • New Jersey’s tax amnesty program began November 15, 2018 and will run through January 15, 2019. Eligible taxpayers can file and pay their past due taxes with reduced interest and no penalties.
  • The New Jersey Division of Taxation provided additional guidance on the reporting and taxation of Internal Revenue Code Section 965 repatriation income.
  • Effective November 1, 2018, marketplace facilitators must comply with new sales tax registration, collection and remittance requirements on sales of tangible personal property, specified digital products, and services delivered into New Jersey.

New Mexico

  • Individual taxpayers and small businesses may qualify for forgiveness of penalties and interest on overdue taxes with New Mexico’s Fresh Start Program. Taxpayers must enroll by December 31 and pay outstanding taxes within 180 days.

Ohio

  • Ohio’s current physical presence standard for nexus still applies to out-of-state sellers. Despite the U.S. Supreme Court’s South Dakota v. Wayfair ruling, the General Assembly must take action to require all out-of-state sellers to collect and remit sales tax.

Oklahoma

  • Oklahoma issued guidance on the treatment of foreign earnings subject to the federal Internal Revenue Code Section 965 repatriation transition tax and global intangible low-taxed income (GILTI) included in federal income under Internal Revenue Code Section 951A.

Oregon

  • Oregon issued guidance regarding inclusion of accumulated deferred foreign income under Internal Revenue Code Section 965, noting that Oregon will exclude the amounts from the sales factor.

South Dakota

Texas

  • Texas provided guidance on the Wayfair decision, and plans to adopt new rules for remote sellers in early 2019 that could take effect in late 2019. Until further notice, the current physical presence nexus standard applies.

Wyoming

  • Beginning February 1, 2019, remote sellers will be required to collect and remit sales tax if their gross revenue from Wyoming sales exceeds $100,000 or it engages in at least 200 sales transactions in the state. The Wyoming Department of Revenue issued a Sales and Use Tax Bulletin for Remote Sellers.

Wisconsin