Tax Headlines

1827

Cantor Introduces Small Business Tax Bill; Sets Vote on Transportation Measure

House Majority Leader Eric Cantor, R-Va., unveiled legislation on March 21 that would grant a 20-percent tax cut to small businesses with under 500 employees as a way to spur job creation. The $45.9-billion measure would be paid by reduced federal spending included in the recently proposed fiscal year 2013 GOP budget proposal, Cantor told reporters. He said the House will likely vote on the tax bill by April 15. “Current marginal tax rates mean that small businesses are faced with enormous burdens that are sapping capital, resources and time,” Cantor stated.

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Nebraska ~ Property Tax: Claim of Unconstitutionality Not Allowed Under Illegal Tax Statute

A taxpayer who paid Nebraska property taxes levied by a learning community could not recover on a claim that the tax was unconstitutional and therefore illegal, the Nebraska Supreme Court has held. The taxpayer brought suit under the statute that allows taxpayers to recover for an illegal tax. However, even though that statute allows for an illegal tax recovery, it does not provide a remedy for recovering on an unconstitutionality claim.

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Indiana ~ Utilities, Miscellaneous Taxes: Comprehensive Changes to 911 Service Fees Enacted

Indiana has repealed existing provisions relating to funding enhanced 911 services and in its place enacted a monthly statewide 911 fee on each user of communications service in Indiana. Specifically, the statutes concerning the emergency telephone system fee, the enhanced wireless emergency telephone service, and the emergency telephone notification systems are repealed, effective July 1, 2012.

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Installment Interest Paid by State Under Condemnation Agreement Exempt; Settlement Interest Taxable (DeNaples, CA-3)

The Tax Court erred when it held that two married couples should have included in their gross income installment payment interest paid by a state (Pennsylvania) under a condemnation agreement. The state and the taxpayers negotiated a complete arm’s-length settlement of the state’s claims to the taxpayers’ property and because the taxpayers agreed to a lower variable interest rate for the purpose of extending credit to the state, the state’s obligation arose by voluntary bargaining. Since the state’s obligation to pay interest to the taxpayers arose out of voluntary bargaining, the state’s borrowing authority was implicated and, therefore, the interest was excludable under Code Sec. 103

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Senate Takes Aim Again at Big Oil

Senate Majority Leader Harry Reid, D-Nev., plans to take up another bill aimed at taxing big oil in order to pay for renewable energy tax credits that are set to expire. The Senate on March 19 began the legislative process for the Repeal Big Oil Tax Subsidies Bill (Sen 2204), offered by Sen. Robert Menendez, D-N.J., which would repeal five tax subsidies for the five largest integrated oil and gas companies and use the revenue to extend expired and expiring renewable energy tax incentives.

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House GOP Unveils Fiscal Year 2013 Budget Blueprint

House Budget Committee Chairman Paul Ryan, R-Wis., released the GOP budget for fiscal year 2013, largely a political document intended to show Republican priorities during the current election year. Called “The Path to Prosperity. A Blueprint for American Renewal,” the GOP budget is intended to be in contrast to Democratic spending and tax proposals that were outlined in President Obama’s budget proposal in February (TAXDAY, 2012/02/14, W.1). The GOP budget would reform the tax code and eliminate special interest loopholes, while simultaneously lowering tax rates and extending the Bush-era tax cuts. According to Ryan, his budget would promote job creation and end tax breaks that mainly benefit the politically well-connected.

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Indiana ~ Sales and Use Tax: Online Service Providers’ Promotional Materials Were Taxable

An out-of-state online service provider was liable for Indiana use tax on promotional materials sent to Indiana residents from out-of-state producers because the service provider purchased the production and mailing of the promotional materials in retail transactions. Relying on statutory law, the Indiana Supreme Court reasoned that a sale is a taxable retail sale whether or not the property transferred was in the same form as it was when acquired.

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Connecticut ~ Sales and Use Tax: School Teachers Were Representatives of Corporation For Purposes of Nexus

School teachers were in-state representatives of a bookseller corporation for purposes of establishing nexus to justify the imposition of Connecticut sales and use taxes. Connecticut law provides that “engaged in business in the state” is defined to mean and include but not be limited to a number of activities that subject an out-of-state retailer to sales and use taxation, one of which is having any representative, agent, salesman, canvasser, or solicitor who operates in Connecticut to sell, deliver or take orders.

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California ~ Personal Income, Sales and Use Taxes: Agreement Reached Between Governor, Legislative Leaders, and Unions on Fall Tax Initiative

California Gov. Jerry Brown, legislative leaders, and the Restoring California Coalition (comprised of the California Federation of Teachers, California Calls, the Courage Campaign and ACCE) announced that they have joined together to place a single revenue initiative on the November 2012 ballot that, if passed, would provide a temporary increase in the personal income tax rate for taxpayers with incomes exceeding $500,000 as well as a temporary increase in the sales and use tax rate. If passed, the initiative would increase the sales tax rate by 0.25 cent, which would sunset after 2016. The governor had previously proposed a 0.5-cent increase. Personal income tax rates would increase by:

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Tax Court Had Jurisdiction over U.S.-U.S. Virgin Island Income Tax Matter; IRS Notice of Deficiency Valid (Huff, TC)

A notice of deficiency issued by the IRS to a U.S. citizen who claimed to be a bona fide resident of the U.S. Virgin Islands for the tax years at issue was valid; therefore, the court had jurisdiction. The notice of deficiency had been issued after it was determined that the individual did not qualify for the income exclusion under Code Sec. 932(c)(4) and that he should have filed returns and paid taxes to the IRS.

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