Tax Headlines


North Carolina ~ Corporate Income Tax: DOR Revises Interpretation of Net Economic Loss Deduction Computation

The North Carolina Department of Revenue has revised its interpretation of how the corporate income tax net economic loss deduction is computed. Under North Carolina law, the net economic loss for any year is the amount by which allowable deductions for the year other than prior year losses exceed income from all sources in the year including any income not subject to North Carolina corporate income tax. The department is now interpreting this provision to mean that although deductions are not taxable, income deducted may not reduce a loss in the year the loss is created.

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Genuine Issues of Material Fact Existed Regarding Whether Foreign Trust Owner’s Failure to File Annual Returns Was Due to Reasonable Cause (James, DC Fla.)

A genuine issue of material fact existed with respect to penalties assessed against a foreign trust owner for his failure to file Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. Questions remained regarding whether the individual’s accountant advised him not to file the return and whether the individual reasonably relied upon such advice.

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Pennsylvania ~ Sales and Use Tax: Appeal Denied in Online Travel Company Case

The Pennsylvania Supreme Court has denied a petition for allowance of appeal in a case in which the Commonwealth Court held that an online travel company (OTC) was not liable for Philadelphia hotel tax on the difference between the room rates it contracted with hotels and the rates, including fees, it charged its customers for rooms because the OTC was not an “operator” under the ordinance ( TAXDAY, 2012/02/03, S.26 ).

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Hawaii ~ Sales and Use Tax: Transition Period Allowed for Local Contact, Information Reporting for Transient Accommodations

The Hawaii Department of Taxation announced that it will provide a six-month transition period to allow taxpayers to meet the transient accommodations tax requirements relating to local contacts and information reporting enacted by Act 326 (H.B. 2078), Laws 2012. As previously reported, Act 326 enacts a transient accommodations tax provision that requires the designation of a local contact for each transient accommodation, requires local contact information to be provided to certain nongovernmental entities, requires certain relevant information regarding transient accommodations operators to be provided to the department, provides for penalties, and requires the display of transient accommodation registration identification numbers on certain websites. (TAXDAY, 2012/07/16, S.12 ) Act 326 is effective July 1, 2012, and repealed on December 31, 2015.

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California ~ Sales and Use Tax: Click-Through and Affiliate Nexus Provisions Operative September 15

California Director of Finance Ana Matosantos has certified that federal law authorizing states to require a seller to collect sales or use taxes on the sales of goods or services to in-state purchasers without regard to the location of the seller was not enacted by July 31, 2012, the deadline specified in Ch. 313 (A.B. 155), Laws 2011.

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