Tax Headlines

1827

Charter Schools, Retirement Systems Recommend Safe Harbors and Grandfathering for Government Plans

IRS officials at a July 9 hearing on an advanced notice of proposed rulemaking concerning the determination of government plan status under Code Sec. 414(d) (ANPRM REG-157714-06 ; TAXDAY 2011/11/08, I.2 ) received numerous recommendations on how to revise the proposed rules. IRS officials heard comments and asked numerous questions of 16 representatives, most from public charter schools, retirement systems and utility companies.

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Rhode Island ~ Personal Income Tax: Administrative Remedies Not Exhausted

Affirming the assessment, the state supreme court determined that the Rhode Island personal income taxpayers failed to exhaust the administrative remedies available. The Division of Taxation filed a collection action against the taxpayers for more than $1 million in assessed, but unpaid, taxes from several years. The division mailed a “10 day demand for taxes due” for each year of the assessments by certified mail; signed receipts were returned to the division. The division then mailed a “notice of intent to levy” by certified mail, which was returned as unclaimed. The taxpayers did not respond to the 10-day demand notices. Under the applicable rules, judicial review of the administrative agency’s final decision is available if, and only if, the aggrieved party has exhausted all administrative remedies available within the agency. The taxpayers could not wait to be sued for income taxes and then object to the assessment or payment in the collection proceedings.

The taxpayers also unsuccessfully argued that the division’s assessments were barred by the statute of limitations. The court noted that the statute of limitations is an affirmative defense and must therefore be raised in the taxpayer’s answer. If this defense was not pled, then it is waived. As the taxpayers did not raise the defense when they had the opportunity to do so, they could not use it later. Thus, the division’s assessment was affirmed.

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Pennsylvania ~ Multiple Taxes: Sales Factor Apportionment, New Credits Enacted

Legislation has been signed into law that enacts several changes to the Pennsylvania corporate income tax, including a single sales factor apportionment formula, an automatic extension of time to file, and changes to existing credits. New credits against the corporate net income tax, the personal income tax, the capital/stock franchise tax, the bank and financial company shares tax, and the insurance gross premiums tax are also created. Finally, changes are made to personal income tax provisions relating to the filing of returns for deceased individuals.

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Missouri ~ Personal Income Tax: Challenge to Earnings Tax Initiative Provisions Rejected

The Missouri Supreme Court has rejected a challenge to a law that requires Kansas City to obtain periodic voter approval in order to continue to impose its earnings tax. Proposition A, approved by a majority of voters at the November 2, 2010 statewide election, provides that the city may continue to impose its earnings tax only if the question of whether to continue the tax for each five-year period is submitted to the city’s voters and is approved by a majority of those voting on the question.

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CCH Weekly Report from Washington, D.C.

With Congress on recess, the president signed into law legislation that reauthorizes the fuel and ticket excise taxes that support the Highway Trust Fund through the end of fiscal year 2014 and extends for one year, until July 1, 2013, the current interest rate of 3.4 percent on all new, subsidized Federal Direct Stafford Loans for undergraduate students.

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Louisiana ~ Property Tax: Claim That Tax Sales Were Void Was Timely

A former property owner’s claim that Louisiana ad valorem property tax sales were null and void was timely made and the owner sufficiently established that genuine issues of material fact remain as to whether the sheriff provided notice of the tax delinquencies and the tax sales to the record property owner as required by the Due Process Clause of the 14th Amendment of the U.S. Constitution. Such failure would render the tax sales entirely null and void. Accordingly, the Louisiana Supreme Court found summary judgment to quiet tax titles in favor of the tax purchaser was not warranted.

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District of Columbia ~ Corporate, Personal Income Taxes: Retirement Withholding, Bond Interest, Rate Change and EFT Addressed in Budget Act

The District of Columbia has enacted the Fiscal Year 2013 Budget Support Act of 2012, which contains provisions affecting personal income tax withholding, the taxation of bond interest, the personal income tax rate for high-income earners, and the threshold for electronic funds transfer for corporate income and other nonindividual taxpayers.

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IRS Issues Guidance on ERISA Notice Requirements Relating to Pension Plan Limitations (Notice 2012-46)

The IRS has released guidance, in the form of questions and answers regarding requirements imposed by the Employment Retirement Income Security Act (ERISA) §101(j), which requires notice to be given to participants and beneficiaries relating to benefit limitations on pension plans imposed under ERISA §206(g). Code Sec. 436 contains provisions parallel to ERISA §206(g), and provides benefit limitations to pension plans depending on each plan’s funding level, which is measured by the plan’s adjusted funding target attainment percentage (AFTAP).

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