Tax Headlines


Applicable Federal Rates for May 2012 Released (Rev. Rul. 2012-13)

Various prescribed rates for federal income tax purposes for May 2012 have been provided by the IRS. The annual short-term, mid-term, and long-term applicable federal interest rates (AFRs) are 0.28 percent, 1.30 percent and 2.89 percent, respectively. The semiannual short-term, mid-term, and long-term AFRs are 0.28 percent, 1.30 percent and 2.87 percent, respectively. Quarterly short-term, mid-term and long-term AFRs are 0.28 percent, 1.30 percent and 2.86 percent, respectively. Finally, the monthly short-term, mid-term and long-term rates are 0.28 percent, 1.30 percent and 2.85 percent, respectively.

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Tax Reform Hearing Focuses on Retirement Security

Lawmakers on the House Ways and Means Committee were advised on April 17 not to make changes to current retirement programs that might discourage employers from sponsoring plans for their workers. Judy Miller, chief of actuarial issues and director of retirement policy for the American Society of Pension Professionals and Actuaries, testified that current federal tax incentives can transform taxable bonuses for business owners into retirement savings contributions that benefit both owners and employees. “This incentive for the business owner to contribute for other employees results in a distribution of tax benefit that is more progressive than the current income tax structure,” Miller said.

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Wyoming ~ Property, Severance Taxes: Mining Agreement Required Taxpayers to Pay Taxes on Royalties

Taxpayers that entered into a mining lease that granted a mining company the right to conduct mining operations on the taxpayers’ two separate parcels of property were obligated to pay Wyoming ad valorem property taxes and severance taxes related to the mineral production because the plain language of the mining lease reflected the parties’ intent that the taxpayers pay their share of the taxes on both parcels of property. Throughout the term of the mining lease, the mining company made royalty payments to the taxpayers, but withheld amounts asserted by the mining company to reflect the taxpayers’ share of ad valorem and severance taxes.

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Alabama ~ Sales and Use Tax: Online Travel Companies Not Subject to Lodgings Taxes

The Alabama Supreme Court affirmed a trial court’s order holding that a group of online travel companies (OTCs) were not subject to Alabama state or local lodgings taxes because the OTCs were not engaged in the business of renting or furnishing hotel rooms. Specifically, the Alabama Supreme Court adopted the trial court’s order in its entirety as its opinion.

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Senate Rejects “Buffett Rule”

The Senate on April 16 rejected, by a 51-to-45 margin, a procedural motion with a 60-vote threshold to take up a Democrat-backed bill (the Paying a Fair Share Bill of 2012 (Sen 2230)) that would levy a minimum 30-percent tax rate on the adjusted gross incomes of households earning more than $1 million annually.

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Idaho ~ Property Tax: Pre-Tax Repossession and Sale of Property by High-Value Security Interest Holder Addressed

Recently enacted Idaho legislation addresses a taxpayer’s repossession and sale of personal property before the payment of the applicable tax where the taxpayer holds a high-value purchase money security interest. Specifically, if a taxpayer holding a purchase money security interest wants to repossess and sell a specific piece of personal property, and the market value of that personal property exceeds $20,000, then that taxpayer must provide the local tax collector with a request to segregate that specific piece of personal property from the rest of the taxpayer’s taxable personal property.

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