Tax Headlines

1827

Nebraska ~ Corporate Income Tax: Sourcing of Sales for Apportionment Amended

Newly enacted legislation amends the apportionment sourcing rules for sales of property other than tangible personal property applicable to the Nebraska corporate income tax purposes. Under the current law, sales of property other than tangible personal property are Nebraska sales if the corporation performed the income-producing activities which gave rise to the sales in the state. If the corporation performed the activity both in and out of Nebraska, the sale is a Nebraska sale if a greater proportion of the activity was performed in Nebraska than in any other state based on the costs of performance. Amendments to the sourcing rules are outlined below.

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Hawaii ~ Sales and Use Tax: House Repasses Click-Through, Affiliate Nexus Provisions With Some Changes

The Hawaii House of Representatives has again passed legislation containing use tax click-through nexus and affiliate nexus provisions that would, if enacted, take effect on July 1, 2112, if the state does not, by June 30, 2013, enact a law in accordance with any federal law authorizing the states to require a seller to collect taxes on sales of goods to in-state purchasers without regard to the location of the seller. Under the legislation, a person “engaged in business in the state” would include a seller, including an entity affiliated with a seller within the meaning of IRC §1504, that has substantial nexus with Hawaii for purposes of the Commerce Clause of the U.S. Constitution and upon whom federal law permits the state to impose use tax.

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Excise Tax Refund Process Remanded to IRS; Notice 2006-50 Vacated Prospectively (In re Long Distance Telephone Service Federal Excise Tax Refund Litigation, DC D.C.)

On remand from CA-D.C., the federal district court for the District of Columbia has prospectively vacated Notice 2006-50, 2006-1 CB 1141, and remanded the matter to the IRS. Notice 2006-50 provided for the IRS’s telephone excise tax refund scheme after the tax was held to be illegal. The notice provided a one-time exclusive mechanism for taxpayers to obtain a refund for those excise taxes erroneously collected between February 2003 and August 2006. The notice required that individual taxpayers request this refund on their 2006 federal income tax returns.

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Proposed Regulations Issued Regarding Fees Imposed by Patient Protection and Affordable Care Act (NPRM REG-136008-11)

The IRS has issued proposed regulations that implement and provide guidance on the fees imposed by the Patient Protection and Affordable Care Act (P.L. 111-148) on issuers of certain health insurance policies and plan sponsors of certain self-insured health plans to fund the Patient-Centered Outcomes Research Trust Fund. The proposed regulations impact the issuers and plan sponsors that are required to pay those fees.

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President Presses for Buffett Rule

President Obama on April 11 took the second opportunity in two days to press for congressional approval of the so-called “Buffett Rule.” Named after the billionaire investor, the legislation (Paying a Fair Share Bill of 2012 (Sen 2230)) would impose a minimum 30-percent tax rate on the adjusted gross incomes of households earning more than $1 million annually.

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Corporation Denied Deductions for Contributions to Welfare Benefit Plan; No Constructive Receipt of Income on Termination of Insurance Policies; Penalties Imposed (White, TCM)

A married couple’s corporation’s deduction of contributions to a purported welfare benefit plan was disallowed. The husband was a doctor and the wife a nurse, and they owned a corporation that purchased a welfare benefit plan. The corporation made contributions to the plan over several years, for which the taxpayers claimed deductions. The plan used the contributions to purchase life insurance policies on the taxpayers and their two children. After several years, the initial plan terminated, and the taxpayers transferred the insurance policies to a new plan.

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