Tax Headlines

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Senate Defeats Competing Student Loan Bills

he Senate on May 24 defeated a pair of bills that would have extended the current 3.4-percent interest rate of federal student loans as both parties continued their stalemate over how to offset the $5.9-billion cost of the measure. Both bills failed to reach the 60-vote threshold, with a 34-to-62 defeat of the Republican alternative, the Interest Rate Reduction Bill (Sen 2366) followed by the Democratic plan, the Stop the Student Loan Interest Rate Hike Bill of 2012 (Sen 2343) falling by a margin of 51 to 43.

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Vermont ~ Corporate, Personal Income Taxes: IRC Conformity Date Updated, Minimum Tax Reduced, and More

Enacted legislation updates the Internal Revenue Code (IRC) conformity date for Vermont personal and corporate income tax purposes, increases the minimum tax for corporations with gross receipts in excess of $2 million, enacts a personal income tax disaster credit for qualified commercial building expenditures associated with the Hurricane Irene disaster, exempts certain partnerships and limited liability companies from the estimated tax payment requirements for nonresident owners, and changes the date on which interest will begin to accrue for corporate income tax overpayments.

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Kansas ~ Multiple Taxes: Income Tax Rate Reduction, Business Income Exemption, and Other Changes Enacted

Kansas Gov. Sam Brownback has signed legislation that makes numerous changes to personal income, sales and use, property, and severance taxes. As previously reported (TAXDAY, 2012/05/23, S.17), the legislation includes a personal income tax rate reduction and restructure, as well as an exemption for certain non-wage business income.

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Kansas ~ Multiple Taxes: Governor Approves Restructure of Personal Income Tax Rates; Other Changes

Kansas Governor Sam Brownback has signed legislation that implements a number of significant changes to corporate and personal income taxes. As previously reported (TAXDAY, 2012/03/23, S.8), the legislation collapses the current three-bracket structure for personal income taxes (3.5%, 6.25%, and 6.45%) into a two-bracket system using rates of 3.0% and 4.9%.

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Florida ~ Sales and Use Tax: Online Travel Company Not Subjected to Tourist Development Tax

A Florida court has determined that an online travel company (OTC) is not liable for the tourist development tax (TDT) because the original legislative intent of the tax does not apply to the OTC’s business model. According to the court, in 1949 when the tax was passed, it was the clear intention of the Legislature that the tax burden be placed on the operator of a hotel or motel. Moreover, the Legislature did not envision the so-called “merchant model” of business utilized by the OTC. However, the court did allude that an OTC could be subject to the TDT with a change to the statute.

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IRS Announces Interest Rates Unchanged for Calendar Quarter Beginning July 1, 2012 (IR-2012-55; Rev. Rul. 2012-16)

The IRS has announced that the interest rates for the calendar quarter beginning July 1, 2012, will remain at 3 percent for overpayments (2 percent in the case of a corporation), 3 percent for underpayments and 5 percent for large corporate underpayments. The interest rate for the portion of a corporate overpayment exceeding $10,000 remains at 0.5 percent. The interest rates are computed by using the federal short-term rate based on daily compounding determined during April 2012.

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Alabama ~ Personal Income Tax: Treatment of Earned Income of Pass-Through Entities Amended

Alabama has enacted legislation, consistent with changes made by the Department of Revenue, that modifies the personal income tax treatment of certain income received by resident individual owners of pass-through entities. Specifically, the term “gross income” includes a resident’s proportionate share of any income arising from a Subchapter K entity, Alabama S corporation, estate, or trust, regardless of the geographic source of the income

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