SALT Report: May 2018

May 2, 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.

Colorado

Idaho

  • On July 1, 2018, updated click-through nexus legislation will take effect in Idaho. A "retailer engaged in business in the state" includes:
    • Any retailer that has an agreement, directly or indirectly, with one or more persons engaged in business in Idaho which, for a commission or other consideration, the persons refer potential purchasers to the retailer directly, whether by a link on an internet website, written or oral presentation, or otherwise; and
    • The cumulative gross receipts from sales by the retailer to purchasers who are referred by all retailers engaged in business in the state with such an agreement are greater than $10,000 during the immediately preceding 12 months.

Indiana

  • Effective June 30, 2018, cloud services will not be considered a retail transaction and are exempt from Indiana sales tax. Under the new law, the exemption will apply to end users who access prewritten software via the internet or through wireless media, whether by purchase, rent, lease or license.
  • An automobile dealership in Indiana did not receive a full refund of sales tax when selling a vehicle to an out-of-state customer because the transaction failed to qualify as exempt interstate commerce. Indiana law dictates that a vehicle purchase qualifying as interstate commerce is exempt from tax if the dealer physically delivers the vehicle to a delivery location out of state.

Kentucky

  • New legislation updates the Internal Revenue Code (IRC) conformity reference date for determining Kentucky income tax liability from December 31, 2015 to December 31, 2017. The update applies to tax years beginning after 2017. It does not apply to any IRC amendments made after 2017, except those extending provisions that would otherwise expire on that date.

Missouri

  • Effective, August 28, 2018, the corporate tax rate is lowered from 6.25% to 3.5% for tax years beginning after 2018. The bill also requires corporations to calculate their Missouri taxable income using a single-sales factor apportionment method beginning in 2019.

North Carolina

Oklahoma

Utah

  • Utah enacted legislation lowering state income tax rates from 5% to 4.95% for taxable years beginning on or after January 1, 2018. The legislation also phases in single sales factor apportionment for more corporations beginning in 2019.

Wisconsin

  • Effective April 18, 2018, sellers that collected Wisconsin sales tax on a nontaxable product may be entitled to an adjustment or refund if they return the tax and related interest to the buyers within 90 days of the adjustment or refund date. This provision applies when a seller has received at least two notices from the Department of Revenue indicating the product is not subject to tax.
  • Wisconsin set its Internal Revenue Code (IRC) conformity date at December 31, 2017, for tax years beginning after 2017, although many significant provisions from the federal Tax Cuts and Jobs Act (TCJA) are specifically not adopted. For tax year 2017, the IRC conformity date remains December 31, 2016.
  • Effective, July 1, 2018, state veterans organizations are exempt from sales and use tax, although products used to prepare, store, serve, sell or deliver food and beverages remain subject to tax.
  • Effective retroactively to September 1, 2017, Wisconsin enacted a sales and use tax exemption for title holding entities that hold property for religious, charitable, scientific, or educational organizations.
  • Effective January 1, 2018, the open forest land tax rate was reinstated. The Wisconsin Department of Natural Resources website provides forest tax rates.
  • Wisconsin enacted legislation concerning agreements by the Secretary of Revenue to allow third-party audits and estimates based on statistical sampling related to unclaimed property.
  • The provision regarding when a taxpayer cannot rely on a past audit was amended. The provision applies to taxes administered by the Department of Revenue. A taxpayer cannot rely on a past audit when:
    • The taxpayer provided incomplete or false information relevant to the tax issue in the prior audit determination;
    • The tax issue was settled in the prior audit determination by a written agreement entered into before April 5, 2018; or
    • The tax issue was settled in the prior audit determination by a written agreement entered into after April 4, 2018. In this case, the parties must have acknowledged that the department did not adopt the taxpayer’s position on the tax issue.
  • A taxpayer’s purchase of fuel and electricity used in operating air makeup units at its metal finishing plants was exempt from Wisconsin sales tax. Under the law, utilities used or consumed in the operation of the waste treatment facility are exempt from sales tax. These units were part of a system and were essential to effectively exhaust contaminants from the plant.
  • The Wisconsin Court of Appeals concluded the city’s property tax assessments appropriately included income from land. The city assessed the taxpayers’ five oil terminals and took into consideration the income-generating capability of certain throughput agreements, which were found to be inextricably intertwined with the land and transferrable to future purchasers.
  • Effective April 5, 2018, Wisconsin expanded the eligibility for qualified new business ventures, whose investors may receive certain tax credits for their investments. For taxable years beginning after 2017, a business may be certified if, among other requirements, it has not received more than $12 million in qualifying investments.
  • Effective for taxable years beginning on or after January 1, 2018, employers that make contributions to their employees’ college savings accounts are eligible for a tax credit. The maximum credit per employee is 25% of the amount contributed, up to a specified contribution limit.

The Wisconsin Department of Revenue updated a number of publications: