SALT Report: June 2018

June 5, 2018

Welcome to the SALT Report. 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.

Alabama

  • The Alabama tax amnesty program waives all interest and penalties associated with eligible taxes due before, or for tax periods that began before, Jan. 1, 2017. The application period runs July 1 through September 30, 2018.

Georgia

Illinois

  • The Illinois House of Representatives passed a bill providing relief from the new $10,000 cap on the federal state and local tax deduction beginning after the 2017 tax year. The Illinois bill proposes a credit against corporate and personal income tax liability for taxpayers who contribute to a new Illinois Excellence Fund that would be used exclusively for "public purposes," which would qualify as charitable contributions.
  • Publication 129, Pass-Through Entity Income, was updated to explain the tax obligations involved with distributions from partnerships, S corporations, and fiduciaries to partners, shareholders and beneficiaries.

Indiana

  • Indiana is offering a one-time voluntary disclosure opportunity through December 31, 2018. Out-of-state online retailers that have inventory in third-party Indiana warehouses and sell to Indiana customers can enter into an agreement with Indiana to fulfill sales, use and income tax obligations.
  • Indiana amended the corporate income rate calculation retroactive to January 1, 2018. The corporate rate is being phased down every year on July 1 until 2021, and it will now be calculated in number of days, instead of months. The state also amended the industrial recovery tax credit such that a pass-through entity can now allocate the credit among its partners, beneficiaries or members for projects meeting certain criteria.

Kansas

  • Contractors and subcontractors must collect and remit the tax on their taxable labor services. Labor services on realty cannot be resold, so general contractors cannot use resale certificates to purchase contractor labor services. Any subcontractor performing taxable services on realty for a general contractor must charge the general contractor sales tax. Additional information is available in Information Guide No. KS-1525.

Maryland

  • Maryland will begin phasing in single sales factor apportionment for corporate income tax purposes, beginning with tax years after December 31, 2017. There is an exception for certain corporations with worldwide headquarters in Maryland. Currently, certain manufacturers must already use a single-sales factor formula.

Michigan

  • The Michigan legislature amended provisions surrounding the personal property tax exemption for industrial or commercial personal property. Owners of eligible property must claim the exemption no later than February 20 of the first year the exemption is claimed. An exemption remains in effect until the personal property is no longer eligible, at which time the property owner must file a rescission by February 20 of the year the property loses eligibility. Owners who fail to do so will be liable for repayment of any additional taxes with interest.

Nevada

New Jersey

North Carolina

Pennsylvania

  • Beginning January 1, 2018, Pennsylvania business locations that pay $5,000 or more annually for the following are required to withhold 3.07% from the payments and remit it to the Pennsylvania Department of Revenue:
    • Payments for nonemployee compensation or business income sourced to Pennsylvania if made to a nonresident individual or disregarded entity that has a nonresident member.
    • Business real estate lease payments made to a nonresident lessor.

Read PA Fact Sheet 1099-MISC for more information.

Texas

  • The Texas Tax Amnesty program provides relief from penalties and interest on tax due for periods prior to January 1, 2018. The program runs through June 29, 2018.

Washington

Wisconsin

  • The Wisconsin Department of Revenue Tax Bulletin No. 201 includes the following information:
    • Starting June 1, businesses must update their North American Industry Classification System (NAICS) code in My Tax Account; take a moment to review this number and confirm it is accurate before proceeding into the system
    • An explanation on how combined groups must reconcile corporations on the combined corporation franchise or income tax return
    • Sales to Puerto Rico and other U.S. territories are considered foreign source income for the water's edge test; however, these sales are considered U.S. sales for determining the apportionment percentage and throwback sales
    • Wisconsin will have a sales tax holiday August 1-5, 2018
    • Eligible Wisconsin residents can claim a $100-per-child sales tax rebate through July 2, 2018
    • Explanation surrounding sales and use tax duties for lodging marketplaces and persons who provide short-term lodging using a third-party website
    • Effective July 1, 2018, the Village of Sister Bay will impose a 0.5% premier resort area tax, which is filed separately from sales and use tax
  • Wisconsin conforms to the federal personal income tax treatment of qualified transportation benefits. Taxpayers can exclude the following amounts from employee wages for 2018:
    • $260 per month for qualified parking; and
    • $260 per month for commuter highway vehicle transportation and transit passes.
  • Through newly enacted legislation, the Department of Revenue may deliver notices electronically if the intended recipient consents to receiving such notices electronically. These notices will be considered to be received by the intended recipient on the date that the department electronically transmits the information or electronically notifies the person that the information is available to be accessed by the person. Additionally, the department’s records of electronic transmission shall constitute appropriate and sufficient proof of delivery and be admissible in any action or proceeding.
  • The Wisconsin legislature revised the definition of "solid waste" to include any garbage, refuse or sludge from an air pollution control facility. Solid waste does not include slag generated by the production or processing of iron or steel and that is managed as an item of value in a controlled manner and is not discarded.   
  • Around May 23, 2018, the Wisconsin Department of Revenue mailed Notices of Amount Due if a tax return was filed electronically on or before April 18, 2018, the return had an amount due reported, and the department has not received payment.
  • The Wisconsin Department of Revenue was granted a summary determination because its performance of an audit and issuance of a deficiency notice to a taxpayer was timely. By law, deficiency notices should be issued within four years of the date an income tax return was filed, which had been done. Further, the taxpayer’s embezzled funds for which she was convicted were considered taxable income that had to be paid even though she received her discharge from bankruptcy.
  • The 2018 Guide for 70.75 Reassessments, was updated to explain the property tax reassessment procedure, which allows owners of property with an aggregate assessed valuation of not less than 5% of the assessed valuation of all the taxable property in any taxation district to submit a written petition for reassessment to the department.
  • Wisconsin legislation revised provisions relating to board of review proceedings and provides for the elimination of the property tax assessment freeze applicable to certain replacement property.
  • The Department of Revenue may grant an individual a temporary certification of property assessors valid for 90 days. Previously, a temporary certification was valid until the results of the next certification examination were issued, but in any event not for more than 100 days.