Monthly Archives: July 2013

JULY 2013 NEWS FROM SULLIVAN & ASSOCIATES, PC

The summer is in full swing, and it appears that the federal government is suffering from a bout of heat induced rationality, and has decided to delay the health care mandate for businesses. Call me crazy, but I’m not a big fan of passing such a significant piece of legislation before we even understand it, and the true costs associated with its implementation and enforcement. Allowing small businesses another year to acclimate to this change and to plan for it was the right thing to do. On the Amazon law front, Maine has now jumped into the deep end of the pool, and the plague just continues to spread. I hope you enjoyed your Independence Day, and that the rest of your July goes swimmingly.

Affordable Care Act – Employer Health Care Mandate Delayed

The Obama administration announced a one-year delay in complying with the employer health care mandate. The Affordable Care Act (ACA), required employers with 50 or more employees to offer affordable health insurance to employees or face a $2,000 fine per employee These provisions were supposed to begin in 2014. The administration is expected to publish guidelines describing the transitional rules shortly.

Connecticut – All Taxes – Amnesty Program Created; Non-Participation Penalties Apply

Connecticut recently passed a law that requires the establishment of a tax amnesty program for persons owing any tax for any taxable period ending on or before November 30, 2012. This tax amnesty program will be conducted during the period from September 16, 2013 to November 15, 2013. If qualifying participants pay their tax and interest due in full on or before November 15, 2013, 75% of the interest due shall be forgiven and any related civil penalties will be waived.

Qualifying persons that fail to participate in this amnesty program (i.e., persons owing any tax for a qualifying taxable period for which a tax return was required by law to be filed with the department and for which no return has been previously filed by such persons, and such persons fail to file a timely amnesty application under this program with respect to such taxable period) are subject to a non-waivable penalty equal to 25% of the tax owed for qualifying taxable period(s).

The following taxpayers are not eligible to participate in this program:

  • Taxpayers party to any criminal investigation or to any criminal litigation that is pending on July 1, 2013, in any court of the United States or Connecticut,
  • Taxpayers who are a party to a closing agreement with the department,
  • Taxpayers that have an offer of compromise that has been accepted by the department, or
  • Taxpayers who are a party to a managed audit agreement.

H.B. 6704.

Connecticut – Income/Franchise – New Law Extends Temporary 20% Corporate Business Tax Surcharge Through 2015

A new law extends Connecticut’s temporary 20% corporation income tax surcharge for an additional two years, therefore including the 2014 and 2015 income years. This corporate business tax surcharge applies to companies whose corporation tax liability exceeds $250 and that either i) have at least $100 million in annual gross income in those years, or ii) file combined or unitary returns, regardless of the amount of annual gross income. H.B. 6704.

Louisiana – All Taxes – Amnesty Enacted with Significant Penalties Imposed for Non-Participation

The Louisiana Tax Delinquency Amnesty Act of 2013 (the “Act”), was recently signed into law. Under the Act, the Louisiana Department of Revenue (“LADOR”) is required to establish a tax amnesty program for a period of at least two months duration occurring prior to December 31, 2013; for a period of at least one month between July 1, 2014, and December 31, 2014; for a period of at least one month between July 1, 2015, and December 31, 2015.

To participate in the amnesty program, eligible taxpayers must apply on forms prescribed by the Secretary of the LADOR and pay all of the tax, fees, and costs, if applicable, and any interest due upon filing the amnesty application. Taxpayers that are approved for amnesty during the 2013 amnesty period will receive full penalty abatement and reduced interest (one-half of the interest associated with the tax will be waived). Taxpayers that are approved for amnesty during the 2014 amnesty period will receive a waiver of 15% of all penalties associated with the tax, but no interest abatement. Taxpayers that are approved for amnesty during the 2015 amnesty period will receive a waiver of 10% of all penalties associated with the tax, but no interest abatement.

Following the termination of the tax amnesty period, if the LADOR issues a deficiency assessment for a period for which amnesty was taken, the LADOR has the authority to impose penalties and institute civil proceedings or criminal proceedings, but only with respect to the difference between the amount shown on the amnesty application and the correct amount of tax due. The LADOR may by regulation impose a cost of collection penalty not to exceed 20% of any additional deficiency assessed for any taxable period for which amnesty was taken. This penalty shall be in addition to all other applicable penalties, fees, or costs. H.B. 456.

Maine – Sales Tax – New Law Contains Remote Seller Click-Through & Affiliate Nexus Provisions

A new Maine law states that a seller is presumed to be engaged in the business of selling tangible personal property or taxable services for use in Maine for state sales/use tax collection and remittance purposes if an “affiliated person” has a substantial in-state physical presence.

Further, the new Amazon provisions dictate that a seller is presumed to be engaged in the business of selling tangible personal property or taxable services for use in Maine if the seller enters into an agreement with a person under which the person, for a commission or other consideration, while within Maine, directly or indirectly refers potential customers, whether by a link on an Internet website, by telemarketing, by an in-person presentation or otherwise, to the seller; and the cumulative gross receipts from retail sales by the seller to in-state customers who are referred to the seller by all persons with this type of an agreement with the seller are in excess of $10,000 during the preceding twelve months. H.P. 251.

New York – MTA Payroll Tax – Court Finds Levy Constitutional

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In 2009 the New York State Legislature passed the Metropolitan Commuter Transportation Mobility Tax Law (MTCTMT or the MTA Payroll Tax). The tax was assessed against employers and was based on employees’ wages for employers located in the Metropolitan Commuter Transportation District (MCTD). The MTA Payroll Tax, which was held unconstitutional by the State Supreme Court in 2012, has now been held to be constitutional by the Appellate Division. It is unclear whether the appeals process will continue, although the Nassau County Executive who brought the suit has vowed to appeal. Unfortunately, at this stage the tax continues to be law and is being enforced by the New York Division of Taxation and Finance. Mangano v Silver, 2013 NY Slip Op 04783, Appellate Division, Second Department (June 26, 2013).

Oregon – Corporate Income Tax – New Law Modifies and Repeals Intercompany Expense “Addback” Statute

Oregon has repealed its addback of intangible expenses and costs paid to related members, effective for tax years beginning on or after January 1, 2013. In addition, the legislation retroactively expands the safe harbor for a related member that is a foreign corporation not connected with a US trade or business. Taxpayers that added back expenses should consider refund claims to the extent they qualify under the retroactive application of the safe harbor exception. H.B. 3069.