Tax Headlines

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IRS Releases Additional Guidance on Energy-Efficient Commercial Buildings Deduction (Notice 2012-22)

The IRS has released additional guidance relating to the deduction for energy-efficient commercial buildings under Code Sec. 179D. Under the “permanent rule,” property that would be energy-efficient commercial property but for the failure to achieve the target 50-percent reduction in energy and power costs required by Code Sec. 179(c)(1)(D) is partially qualifying commercial building property if it is installed as part of a system that satisfies the applicable energy savings percentage.

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Iowa ~ Sales and Use Tax: Click-Through and Affiliate Nexus Bill Introduced

A bill containing both affiliate and click-through nexus provisions relating to the sales and use tax collection responsibilities of remote sellers has been introduced in the Iowa Senate. The bill provides that a retailer will be presumed to be maintaining a place of business in Iowa if any person that has substantial nexus in the state, other than a common carrier, engages in any of the six activities specified in the bill.

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Idaho ~ Sales and Use Tax: SST Conformity Legislation Introduced

A bill has been introduced in the Idaho House of Representatives that would conform the state’s laws to the Streamlined Sales and Use Tax (SST) Agreement. If enacted, the bill would qualify Idaho to be a full participating state in the SST Agreement and, in addition, would qualify Idaho for inclusion under recently introduced U.S. Senate Bill 1832, known as the “Marketplace Fairness Act.”

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President Signs Payroll Tax-Cut Bill

President Obama on February 22 signed the Middle Class Tax Relief and Job Creation Act of 2012 (HR 3630). The new law extends through December 2012 a reduction in employment tax rates from 6.2 percent to 4.2 percent for employees and the self-employed, scaled back unemployment benefits from 93 weeks to 63 weeks in most states, and retention of the current Medicare reimbursement to physicians that otherwise would face a 27-percent reduction.

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New Jersey ~ Corporate Income Tax: Intercompany Transfer Pricing and Advance Pricing Agreement Guidance Issued

The New Jersey Division of Taxation has issued guidance on the corporation business tax (CBT) treatment of intercompany transfer pricing and advance pricing agreements (APAs). The Internal Revenue Service (IRS) provides an APA program that provides a voluntary process whereby the IRS and taxpayers resolve transfer pricing issues under IRC §482 in a cooperative manner on a prospective basis. Under N.J.S.A. 54:10A-10, the director of the division may make adjustments in any tax report or tax returns as may be necessary to make a fair and reasonable determination of the amount of CBT payable. The division has advised taxpayers that in most cases, when arriving at a “fair and reasonable tax,” the division will use IRC §482 standards in auditing and adjusting items above line 28 of Schedule A of the CBT return. If a taxpayer can demonstrate that it has met the standards of IRC §482, no adjustments are likely to be made above Line 28 of Schedule A.

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Missouri ~ Sales and Use Tax: Taxability of Computer Software, Licenses, Maintenance Agreements, Load-and-Leave Discussed

The Missouri Department of Revenue has issued letter rulings discussing the application of sales and use tax to canned software, custom software, software licenses, mandatory and optional maintenance agreements, nondownloadable software kept by a vendor, and load-and-leave. Specifically, the taxpayers’ purchases of canned computer software downloaded electronically over the Internet are not subject to Missouri sales tax because the taxpayers never take possession of any tangible personal property. Likewise, the taxpayers’ purchases of customized software programs downloaded by tangible format or electronically through the Internet are not subject to sales or use tax. However, purchases of canned software by tangible format that has been adapted for the taxpayers’ use are not purchases of custom software and are subject to sales or use tax.

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