SALT Report: September 2018

September 6, 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. Please review this table to learn which states have enacted economic nexus threshold. In many states, exposure begins October 1.

We are busy discussing sales tax and nexus with clients. Please contact us to start the conversation.

Connecticut

  • Connecticut recently enacted legislation establishing a pass-through entity tax, applicable to taxable years beginning on or after January 1, 2018.

Florida

Idaho

  • Idaho adopted a temporary rule addressing the state’s corporate income tax treatment of IRC Sec. 965 income. The IRC Sec. 965 income, in its entirety, is recognized and included on a taxpayer’s federal return for its last tax year beginning before 2018.

Illinois

  • Effective July 27, 2018, sales made at a trade show by an out-of-state retailer can create sales tax nexus with Illinois and are subject to both state and local tax. Remote sellers at Illinois trade shows do not have nexus if they meet three conditions:
    • The retailer attends no more than two trade shows a year
    • The retailer spends no more than eight days total at those two trade shows
    • The receipts from the two trade shows do not exceed $10,000

Minnesota

  • Minnesota released guidance on how the federal Tax Cuts and Jobs Act affects tax year 2017 returns and how to treat deferred foreign income adjustments. Minnesota has not conformed to changes made by the Tax Cuts and Jobs Act, and as a result, certain Minnesota taxpayers may be required to subtract federally reported deferred foreign income (DFI) on their state corporate income tax returns as Minnesota does not include DFI in net income.

New Jersey

New York

  • New York issued notices N-18-7 and N-18-8 explaining the treatment of Internal Revenue Code (IRC) Sec. 965 repatriation amounts for tax year 2017. Taxpayers must use their federal IRC 965 Transition Tax Statement when following the instructions in the notices. If a taxpayer with IRC Sec. 965 amounts already filed its 2017 New York return, it must file an amended return using the new instructions.

North Carolina

  • The North Carolina Department of Revenue will require remote sellers to collect and remit the applicable sales and use tax on taxable retail sales sourced to North Carolina if, in the previous or current calendar year, the remote seller:
    • Has gross sales in excess of $100,000 sourced to North Carolina, or
    • Has 200 or more separate transactions sourced to North Carolina ("threshold")

This provision is effective November 1, 2018, or 60 days after a remote seller meets the threshold, whichever is later.

Remote sellers who want to comply with the laws of multiple states, including North Carolina, can register with the Streamlined Sales Tax Registration System. To register only with North Carolina use the department’s online business registration portal or submit a completed Form NC-BR, Business Registration Application, on the department’s website.

Rhode Island

  • Effective August 22, 2018, Rhode Island adopted regulations concerning the corporate income tax treatment of IRC Sec. 965 income for C corporations. The IRC Sec. 965 income, in its entirety, is recognized and included on a taxpayer’s federal return for its last tax year beginning before 2018.

The regulations require C corporations to include net IRC Sec. 965 income as Rhode Island income, but only be for the 2017 tax year. Net IRC Sec. 965 income does not include federal deductions provided under IRC Sec. 965. In addition, a taxpayer may not defer any payment of the transition tax for Rhode Island purposes.

Pennsylvania

Wisconsin

  • The Wisconsin Department of Revenue updated the Construction Contract Exemption article. Products sold in a construction contract are exempt if the total price of the products is less than 10% of the contract price, including change orders or extra work billed. This exemption first applies to contracts entered into or extended, modified, or renewed on December 1, 2017.
  • The Wisconsin Court of Appeals affirmed a circuit court decision that a housekeeping services provider’s rendering of laundry services and related management services to nursing homes, retirement centers, and rehabilitation facilities was subject to sales tax because the primary purpose of the taxpayer’s contracts with its clients was to render laundry services.
  • Updated publications:
    • Publication No. 244, Hunting Preserves and Gun Clubs, discusses the taxability of sales and purchases by hunting preserves and gun clubs, including seller’s permit requirements and occasional sales.
    • Publication No. 82, Unclaimed Property: Revised Holder Report Guide, summarizes reporting requirements for holders of unclaimed property. The Wisconsin Unclaimed Property Section is located at the Department of Revenue and is no longer at the Office of the State Treasurer. Beginning May 1, 2019, insurers are required to compare the records of its life insurance policies, annuity contracts, or retained asset accounts with the Death Master File every six months.
    • The Wisconsin Tax Bulletin contains articles on various sales and use tax topics, including:
      • Refunds of tax paid in error during the August 1-5, 2018 sales tax holiday
      • The electronics and information technology manufacturing zone exemption
      • College Savings Account Withdrawals
      • IRS Audit Adjustments And Reporting Losses
      • Manufacturing And Agriculture Credit
      • Veteran Disability Severance Payments
      • The exemption for building materials purchased by a contractor for an exempt entity
      • Summertime services and activities
      • Nonresidents’ boats registered with the U.S. Coast Guard
      • Cigarette and tobacco products tax return and filing option changes
      • The launch of a "My Case Manager" feature containing information about field audits