State Tax Headlines

1789

Oklahoma ~ Property Tax: Statutory Exclusion of Certain Property From Charitable Exemption Held Invalid

A not-for-profit corporate owner’s operation of a low-income housing complex, which was acquired using the proceeds from the sale of county bonds the income from which was exempt from federal income tax, nonetheless qualified as a dedicated and devoted charitable use, and thus the complex was exempt from local Oklahoma property taxation pursuant to the applicable Oklahoma constitutional ad valorem tax exemption.

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California ~ Motor Fuel Tax: BOE Discusses State Tax Increase to Be Triggered if Federal Excise Tax Expires

The California State Board of Equalization (BOE) advises taxpayers that if the federal excise tax on fuel and federal highway funding to the states expires on June 30, 2012, the California excise taxes on diesel fuel and motor vehicle fuel will be adjusted beginning July 1, 2012. Authorization for the U.S. Department of Transportation to collect the federal excise taxes on fuel expires on June 30, 2012. These funds are deposited into the Federal Highway Trust Fund and disbursements from the fund are used for highway, bridge, and transit projects (surface transportation). As previously reported (TAXDAY, 2012/05/22, S.6), if Congress fails to act by June 30, 2012, and the federal excise tax and surface transportation funding expires, California and other states will no longer receive federal funds reimbursing them for the expenses they incur for highway and transit projects.

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Oklahoma ~ Personal Income Tax: Capital Gain Deduction Disallowed for Goodwill

A taxpayer could not take the Oklahoma capital gains deduction on his 2006 personal income tax return for gains received for goodwill and other intangibles from the sale of his ownership interest in a limited liability company (LLC). The taxpayer alleged that under 68 O.S. §2358, he was entitled to claim a capital gains deduction in 2006. The Oklahoma Tax Commission (OTC) denied the claim and argued that, until it was amended in 2007, 68 O.S. §2358 did not allow a deduction for intangibles and that the capital gains deduction for intangibles did not go into effect until the 2008 tax year.

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Louisiana ~ Corporate, Personal Income Taxes: Governor Rejects Alternative Fuel Tax Emergency Rule

Louisiana Gov. Bobby Jindal has rejected an emergency rule that clarified and provided additional guidance regarding the availability of and proper qualification criteria necessary to claim the alternative fuel credit against corporate and personal income taxes. The rule went into effect April 30, 2012. According to the governor’s report, the letter justifying the use of emergency rule-making procedures did not state a description of facts and circumstances that would constitute an “imminent peril to the public health, safety or welfare” of the state or the people as required by law. The governor also asked the Louisiana Department of Revenue (LDR) to withdraw Revenue Information Bulletins 12-025 (May 3, 2012) and 12-026 (May 4, 2012), which provide answers to frequently asked questions about the emergency rule.

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Michigan ~ Property Tax: March Board of Review May Adjust Erroneous Taxable Values

In an appeal of two cases involving the proper interpretation of the general property tax provisions, the Michigan Supreme Court held that, in one case, the failure to adjust the taxable values in the year immediately following a transfer of ownership of property produced erroneous taxable values because the taxable values were not in compliance with the general property tax provisions. Further, the general property tax provisions did not preclude a March board of review from correcting an erroneous taxable value that resulted from the failure of an assessor to adjust a property’s taxable value in the year immediately following its transfer. Accordingly, the court held that a March board of review may adjust the erroneous taxable value in a subsequent year in order to bring the current taxable value into compliance with the general property tax provisions.

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Louisiana ~ Sales and Use Tax: Procurement Processing Company Rebate Program Enacted

The Procurement Processing Company Rebate Program is enacted for Louisiana sales and use tax purposes. The Secretary of the Louisiana Department of Economic Development is authorized to enter into a contract with a procurement processing company (PPC) to recruit to Louisiana purchasing companies that will have a significant positive economic benefit to the state and will generate sales of items subject to sales and use taxes.

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Connecticut ~ Corporate, Personal Income Taxes: Taxation of Manufacturing Reinvestment Accounts, Job Expansion Credit Modified

Connecticut Gov. Dannel Malloy has signed legislation affecting the corporate business and personal income tax provisions for calculating tax liability for manufacturing reinvestment account deposits and distributions and expanding application of the job expansion tax credit. Provisions of the legislation affecting sales and use taxes (TAXDAY, 2012/06/19, S.7), insurance assessments (TAXDAY, 2012/06/19, S.11), and other taxes (TAXDAY, 2012/06/19, S.6) are covered separately.

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California ~ Unclaimed Property: Eleventh Amendment Barred Federal Claims

In a not-for-publication memorandum, it was held that a federal §1983 claim that the California Controller disobeyed the state unclaimed property law was barred by the Eleventh Amendment because the claim was premised solely on compliance with state law. Summary judgment on that claim and a variety of other claims by nine individuals was affirmed. The other unclaimed property claims involved mail notice procedure in the law; the state’s use of auditors; retroactive interest and restitution; whether the Controller wrongfully withheld property; and whether one individual’s ancestors were entitled to more than they received from the Controller.

Suever v. Connell, U.S. Court of Appeals, Ninth Circuit, No. 10-17127, June 15, 2012, ¶405-683

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