Tax Headlines


Highway Bill Stalls in Senate

The Senate on March 6, 2012, failed to advance the Highway Investment, Job Creation and Economic Growth Bill of 2012 (Sen 1813), which incorporates revisions from relevant committees, including a tax title approved by the Senate Finance Committee. The measure fell on a procedural vote to take up the bill by a margin of 52 to 44; the threshold to approve the motion requires 60 votes.

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Tennessee ~ Multiple Taxes: 2011 Return and Payment Due Date Extended to April 17

The Tennessee Department of Revenue has announced that returns and payments of franchise and excise tax, Hall income tax, and gift tax normally due April 15, 2012, will be due April 17, 2012, due to the federal observance of Emancipation Day on April 16, 2012. (TAXDAY, 2012/02/02, S. 28) Legislation enacted in 2011 permits the due dates to be extended when the due date falls on any federal holiday recognized by the Internal Revenue Service.

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New Jersey ~ Corporate Income Tax: Telecommuting Employee Established Sufficient Nexus

A Delaware corporation with offices in Maryland that regularly and consistently permitted one of its employees to telecommute full-time from her New Jersey residence was doing business in New Jersey, was subject to the corporation business tax (CBT), and was required to file CBT returns. The employee developed and wrote software code from a laptop computer from her residence in New Jersey and then uploaded it to a repository on the company’s computer server in another state.

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Arizona ~ Corporate, Personal Income Taxes: Renewable Energy Production Tax Credit Rules Adopted

The Arizona Department of Revenue has adopted new rules relating to the corporate and individual income tax credits for renewable energy production. The new rules specify the types of information that must be included on initial and renewal applications, require that copies of invoices or receipts be made available to the department upon request, and note that an owner must submit separate applications for each qualified energy generator.

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Co-Owners of Two Residences Limited on Deducting Interest on Acquisition Indebtedness and Home Equity Indebtedness; Limitation Applied on Per-Residence Basis (Sophy, TC)

Individual co-owners of two residences were limited in deducting interest on $1 million of acquisition indebtedness and on $100,000 of home equity indebtedness. The indebtedness limitations were properly applied on a per-residence basis, regardless of the number of residence owners and whether the co-owners were married to one another. The statutory language of Code Sec. 163(h)(3)(B)(i) defined the word taxpayer with respect to acquisition indebtedness only in relation to the qualified residence, not the indebtedness.

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Kansas ~ Personal Income, Sales and Use Taxes: Late Filing Fees Waived for Businesses Impacted by Tornado

The Kansas Department of Revenue has announced that in light of the recent tornado in the city of Harveyville, the department will waive late filing fees associated with withholding tax and state sales tax liabilities for businesses in Harveyville and Wabaunsee County that were affected by the weather and that file these taxes late. Businesses not affected by the storms are required to file monthly state sales and withholding taxes on time. Businesses needing replacement copies of their tax returns can call the department at (785) 368-8222 for free replacements.

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California ~ Personal Income Tax: Update Provided on Nonconformity to Self-Employment Tax Deduction

The California Franchise Tax Board (FTB) has announced that self-employed taxpayers who have already filed a California personal income tax return for 2011 using the higher federal self-employment tax deduction rate do not need to file an amended California return. This is a change from the FTB’s original guidance, which stated that previously filed returns had to be amended. As previously reported, California does not conform to the increased federal deduction percentage for 2011 and 2012. (TAXDAY, 2012/03/01, S.4)

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CCH Weekly Report from Washington, D.C.

The Treasury Inspector General for Tax Administration (TIGTA) issued the following reports finding that:

The Business Master File Case Creation Nonfiler Identification Process (BMF CCNIP) for targeting business nonfilers has increased the number of returns secured, but possibly only as a result of an increase in the total closed inventory (TAXDAY, 2012/03/02, T.1). TIGTA made four recommendations for the Enterprise Collection Strategy, Small Business/ Self-Employed Division (ECS), including that ECS determine the causes of increases or decreases in closure types and make selection code adjustments.

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Guidance Issued on Vehicle Depreciation Deduction Limitations (Rev. Proc. 2012-23)

The IRS has issued the tables indicating the depreciation deductions for owners of passenger automobiles, trucks and vans first placed in service during calendar year 2012. For passenger automobiles, the deduction limitations for the first three tax years are: $3,160 ($11,160 if bonus depreciation applies), $5,100, and $3,050, respectively, and $1,875 for each succeeding year.

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