Tax Headlines

1827

California ~ Multiple Taxes: Bill Would Repeal Multistate Tax Compact Provisions, Expand Collection Authority

A bill passed by the California Legislature would repeal the state’s Multistate Tax Compact provisions for California corporation franchise and income tax purposes and clarify existing law regarding elections. In addition, the bill would expand the definition of a “state tax liability” for purposes of issuing withholding orders for taxes and expand the state’s Financial Institution Record Match (FIRM) program to collect delinquent amounts payable to the State Board of Equalization (BOE) and the Employment Development Department (EDD).

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Supreme Court Largely Upholds “Obamacare”; Government Cannot Impose Individual Mandate, But It Can Penalize Failure to Carry Insurance; Penalty Is Not Tax Under Anti-Injunction Act; Medicaid Expansion Unconstitutional (National Federation of Independent Business v Sebelius, SCt)

The U.S. Supreme Court has upheld most of the Patient Protection and Affordable Care Act of 2010 (P.L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152) (collectively, PPACA or ACA). The key provision of the law –the requirement that individuals pay a penalty if they fail to carry health insurance for themselves and their dependents –was held constitutional, although the requirement to purchase insurance, and the mechanism used to expand Medicaid coverage were not.

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Lawmakers Reach Agreement on Two-Year Reauthorization of Highway Bill, Excise Taxes

House and Senate lawmakers on June 28 reached an agreement to reauthorize the fuel and ticket excise taxes that support the highway trust fund through the end of fiscal year 2014. Lawmakers announced they had reached a conference agreement on the Surface Transportation Extension Bill of 2012 (HR 4348), but progress toward House and Senate floor votes apparently slowed as members sought estimates on the legislation from the Congressional Budget Office and the Department of Transportation.

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New Jersey ~ Personal Income, Property Taxes: Legislature Passes FY 2013 Budget, Delays Tax Cuts

The New Jersey Legislature, on July 25, 2012, passed a fiscal year 2013 $31.7 billion state budget that includes many of the provisions proposed by Gov. Chris Christie (TAXDAY, 2012/02/23, S.21)) but excludes a 10% cut in gross (personal) income tax rates to be phased in over three years. Instead, the bill places $183 million for a tax cut in escrow until January 2013, which would be used for property tax relief pending revenue growth in the state.

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Connecticut ~ Sales and Use Tax: U.S. Supreme Court Asked Whether Teachers Created Nexus for Mail-Order Bookseller

The Connecticut Commissioner of Revenue Services had asked the U.S. Supreme Court whether an out-of-state mail order company that sells books to teachers and students was liable for sales and use tax deficiency assessments because the teachers acted as the corporation’s representatives for purposes of establishing nexus to justify imposition of the taxes under the Commerce Clause. The Connecticut Supreme Court held that the teachers were in-state representatives of the bookseller corporation in that they served as the sole conduit through which the corporation advertises, markets, sells, and delivers its products to Connecticut schoolchildren. Although individual teachers may decide not to participate in the program, those who do participate distribute the corporation’s catalogs, flyers, order forms, and other materials to children in their classrooms. The company is able to sell its products in Connecticut only through the teachers who participate in its program. (TAXDAY, 2012/03/20, S.8)

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Donation of House for Burning by Fire Department Not Property Interest, Charitable Deduction Denied, Penalties Not Imposed (Patel, TC)

A fire department that was allowed to burn a married couple’s house for practice did not receive a property interest, and so the taxpayers were denied a charitable contribution deduction for the value of the house that was burned but penalties were not imposed. The taxpayers purchased the land with the house on it with the intent of demolishing the house and building a new one. The donation was the right to burn the house, not the taxpayers’ entire interest in the property, which included the land.

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Ways and Means Subcommittees Mull Mix of Income Security Programs, Tax Credits

Members of two House Ways and Means subcommittees considered whether the current mix of income safety net programs and marginal tax rates provide a disincentive for poorer Americans to seek employment. At a joint hearing of the Human Resources and Select Revenue Measures Subcommittees on June 27, lawmakers took testimony from a panel of expert witnesses about workers who earn roughly $40,000 annually but are not much better off financially than those supported by welfare benefits and tax credits.

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Alabama ~ Sales and Use Tax: State Department of Transportation Immune From Tax Assessment Appeal

The Alabama Court of Civil Appeals reversed a summary judgment entered by the circuit court in favor of a construction and excavation company concerning its sales and use tax assessment appeal because the Alabama Department of Transportation had absolute immunity and the claims asserted against that agency had to be dismissed. The taxpayer was assessed for unpaid sales and use tax on materials it purchased in the performance of contracts with the Department of Transportation.

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IRS Announces Efforts to Help U.S. Citizens Overseas Comply with Tax Obligations (IR-2012-65)

The IRS has announced a plan to help U.S. citizens residing overseas, including dual citizens, catch up with tax filing obligations and provide assistance for individuals with foreign retirement plan issues. The new procedure will go into effect on September 1, 2012, and will allow taxpayers who are low compliance risks to get current with their tax requirements without facing penalties or additional enforcement action. Eligible individuals generally will have simple tax returns and owe $1,500 or less in tax for any of the covered years.

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