DECEMBER 2013 NEWS FROM SULLIVAN & ASSOCIATES, PC
Arizona – Corporate Income Tax – Gain from Sale of Subsidiary Was Business Income
The Arizona Court of Appeals recently held that a taxpayer’s gains from the sale of a wholly-owned subsidiary, with which it was engaged in a unitary business, were apportionable business income for Arizona corporate income tax purposes, despite the taxpayer’s election to treat the sale as a deemed asset sale under IRC §338(h)(10). The Court held that under the functional test for determining whether gain from a transaction is business income, income arising from property constitutes business income if the control and use of the property are closely related to the taxpayer’s regular trade or business. Prior to sale, the subsidiary’s assets were used to produce business income for the taxpayer. Also, in previous years, the taxpayer reported the income that the subsidiary produced as business income on its combined corporate income tax return. First Data Corp. v. Arizona Department of Revenue, Court of Appeals of Arizona, Division One, No. 1 CA-TX 11-0008 (November 26, 2013).
California – Personal Income Tax – Retroactively Reinstating Qualified Small Business Stock Gain Deferral and Exclusion
California recently enacted Assembly Bill 1412 which retroactively provides for individual taxpayers, capital gain deferral and exclusion regarding the sale of Qualified Small Business Stock (“QSBS”) in tax years 2008 through 2012. The new law reverses California Franchise Tax Board (“FTB”) procedures set forth in FTB Notice 2012-03, which provided for the retroactive assessment of tax for tax years 2008 through 2012.
Illinois – Sales and Use Tax – Provisions of Click-Through Nexus Law Held Void
The Illinois Supreme Court held that the definition provisions the sales tax click-through nexus law, are void and unenforceable because they impose a discriminatory tax on electronic commerce under the meaning of the federal Internet Tax Freedom Act. The Court held that the click-through nexus law is discriminatory because it imposes a use tax collection obligation on out-of-state retailers who maintain clickable links on websites while it does not impose a similar obligation on similar types of advertising, such as promotional codes, made available by out-of-state retailers through newspapers or other printed publications or over-the-air broadcasting. In addition, no other Illinois law imposes a similar obligation on other out-of-state retailers. The court did not address the question of whether the click-through nexus law violated the Commerce Clause of the U.S. Constitution. Performance Marketing Ass’n, Inc. v. Hamer, Illinois Supreme Court, No. 114496 (October 18, 2013).
Massachusetts – Sales and Use Tax – Cloud Computing Ruling Revised
The Massachusetts Department of Revenue has revised and reissued a letter ruling that addresses the sales and use taxability of cloud computing products due to additional information provided by the taxpayer. The products provide customers with the use of infrastructure, a platform, and an operating system software with which customers can perform a variety of activities, including, but not limited to, running the customers’ software applications. Customers must use an operating system to access the cloud computing products. Charges for cloud computing products sold by the taxpayer are not subject to tax when the products are used with the customer’s own application software or open-source (free) operating system software because there is no sale of prewritten software. Products that include operating system software licensed by the taxpayer from a third party are also not subject to tax. Massachusetts Letter Ruling 12-8.
New York – Sales Tax – US Supreme Court Denies Certiorari on Click Through Nexus Sales Tax Case
The U.S. Supreme Court recently declined to hear appeals by Internet retailers Amazon and Overstock.com related to New York State’s Internet sales tax law, which utilizes the concept of “click-through nexus.” Overstock.com, LLC v. New York State Department of Taxation and Finance, U.S. Supreme Court, Dkt. 13-252, petition for certiorari denied December 2, 2013; Amazon.com LLC v. New York State Department of Taxation and Finance, U.S. Supreme Court, Dkt. 13-259, petition for certiorari denied December 2, 2013.
Ohio – All Taxes – Guidance Issued for Domestic For-Profit Corporations Involved in Merger, Consolidation, or Conversion
The Ohio Department of Taxation (DOT) has issued a reminder for taxpayers regarding the new procedure for domestic for-profit corporations involved in a merger, consolidation, or conversion. Domestic for-profit corporations that are dissolving as a result of a merger, consolidation, or conversion will need to obtain a Certificate of Tax Clearance from the DOT. If a domestic for-profit corporation enters into a merger, consolidation, or conversion transaction and the new or surviving entity is not a corporation that is an Ohio chartered or foreign licensed corporation that is registered with the Ohio Secretary of State, then the domestic for-profit corporation must first obtain a Certificate of Tax Clearance from the DOT prior to the merger, consolidation, or conversion. Press Release, Ohio Department of Taxation, November 25, 2013.
NOVEMBER 2013 NEWS FROM SULLIVAN & ASSOCIATES, PC
As the seasons change so do the mind of the Fiefdoms. The New Jersey tax court has recently decided to change its mind on the proper nexus standard for its now defunct throwout rule, albeit three years after it ceased to be in existence. This position may result in some material refund opportunities for taxpayers. While up in New England, Massachusetts has been quite busy becoming Taxachusetts again; but in an odd turn of events, things have taken a significant right turn recently. In July of this year, a new law was passed to impose sales tax on most “computer services” in the state. The taxation of these services was not at all popular. Well I guess some unhappy business owners started throwing computers into the Boston Harbor, exclaiming taxation without representation, or something of that ilk, since Massachusetts has now decided to retroactively repeal this piece of legislation. Hopefully, this will lead to the repeal of a lot of the other unfriendly tax initiatives recently enacted in the Bay State. Have a great rest of your November.
Illinois – Corporate Income Tax – Insurance Company Not Required in Combined Group
The Illinois Fourth District Appellate Court recently overturned a trial court ruling and determined that a captive insurance company was an insurance company for Illinois corporate income tax purposes, and was therefore not includable in the corporate Illinois combined filing. Under Illinois law, insurance companies cannot be included in a combined return with noninsurance affiliates because insurance companies are required to apportion business income using a different single-factor apportionment formula based on direct premiums written. Although a significant amount of the insurance company’s income for the tax years in question was generated from intercompany trademark royalty payments and interest, rather than from insurance premiums paid by affiliates, it was still an insurance company since the company was licensed as an insurance company under Vermont law, and the Internal Revenue Service (IRS) treated it as an insurance company under separate federal audits and did not dispute its status. Wendy’s International, Inc., v. Hamer, 2013 IL App (4th) 110678, No 4-11-0678 (Oct. 7, 2013).
Massachusetts – Corporate Income Tax- Common Ownership Provision for Combined Reporting Discussed
Two corporations that were involved in a transaction that qualified as a tax-free spin-off for federal income tax purposes were under common ownership for Massachusetts corporate excise tax purposes and, therefore, must be included in a combined group. The federal test to determine voting power did not apply to the facts here. The federal test requires that a parent corporation own stock in another corporation that possesses at least 80% of the total voting power of the stock of such corporation. However, Massachusetts looks at whether more than 50% of the voting control of each member of the combined group is owned by a common owner or owners. The Massachusetts rule focuses on actual voting control, while the federal rule seeks to determine the voting power held by each share of stock. Therefore, in the instance case, since the common owner held more than 50% of the voting control of the two corporations during the applicable period, the two corporations were under common ownership for purposes of combined reporting. Massachusetts Department of Revenue Letter Ruling 13-7.
Massachusetts – Sales and Use Tax – Tax on Computer Services Repealed
Massachusetts has signed legislation that eliminates sales and use tax on computer system design services and the modification, integration, enhancement, installation or configuration of standardized software. The repeal is effective retroactive to July 31, 2013, the date the tax initially took effect. Persons who failed to collect or pay tax on these transactions will not be subject to penalties. Vendors are required to make reasonable efforts to return to purchasers any tax that was collected but not remitted. Any taxpayer who remitted tax on these services is entitled to a refund. Abatement applications must be filed by December 31, 2013. The Department of Revenue has announced that vendors may also obtain refunds by electronically amending their returns on WebFile for Business. Vendors must return these refunds to customers within 30 days of receipt. Ch. 95 (H.B. 3662).
Michigan – All Taxes – New Law Revises VDA Program
A new law amends Michigan’s voluntary disclosure agreement (VDA) programs so as to:
- Include the new Michigan corporate income tax (CIT) among the taxes covered by the “look-back” period of a VDA;
- Provide for a combined 48-month look-back period for the former Michigan single business tax (SBT), Michigan Business Tax (MBT), and the CIT; and
- Require the refund of SBT, MBT, and/or CIT taxes to a taxpayer that entered into a VDA after October 1, 2012, and before May 1, 2013, if the combined look-back period under that agreement exceeded 48 months.
New Jersey – Corporate Income Tax – Ownership Interest in Limited Partnership Created Nexus for Corporation
A corporation was deemed to have nexus with New Jersey and required to file corporate business tax returns where the corporation owned 99% of a limited partnership that operated 25 supermarkets in New Jersey. The court noted that the corporation and the limited partnership were in the same line of business, were dependent upon each other, and almost all of the corporation’s officers worked out of an office located in the state that was listed as the headquarters of the limited partnership. The court also noted that the corporation and the limited partnership also had a significant overlap of officers and a cash management agreement that included the corporation, the limited partnership and other affiliates as the basis for its determination that the corporation had nexus with the state. Village Super Market of PA v. Director, Division of Taxation, New Jersey Tax Court, No. 021002-2010 (October 23, 2013).
New Jersey – Corporate Income Tax – Ruling Applied Economic Nexus Standard to Throwout Rule
A recent New Jersey Tax Court ruling required the Division of Taxation, when using the throwout rule, to apply the same economic presence nexus standard it used for determining New Jersey nexus when deciding whether a taxpayer is subject to tax in another state. The throwout rule was effective between 2002 and 2010. It required taxpayers to exclude receipts that would be assigned to a state or to any foreign country “in which the taxpayer is not subject to a tax on or measured by profits or income, or business presence or business activity” when calculating their appointment formula sales factor denominator. This resulted in taxpayers apportioning a greater percentage of their income to New Jersey because the throwout rule reduced a percentage of income assigned elsewhere for sales factor purposes. The throwout rule has been repealed for tax years after 2010.
The issue before the court was whether the state could use a different nexus standard in determining whether the taxpayer, an intangible holding company located in North Carolina, was “subject to tax” in a state so that receipts should be thrown out of the sales factor denominator that it used in determining whether an entity was subject to tax in New Jersey. The Division of Taxation argued that the taxpayer was required to actually file returns in other states to be considered subject to tax and thus not subject to throwout. The taxpayer argued that the state should apply its own economic nexus standard in determining whether the taxpayer was subject to tax in the other state. Therefore, if the taxpayer would be subject to tax in the other state under an economic nexus standard, the throwout rule should not apply. Lorillard Licensing Co. LLC v. Division of Taxation, No. 008772-2006 (N.J. T.C. 2013).
New York – Corporate Income Tax – Income from Equipment Finance Agreements Was Business Income
An appellate court has affirmed the tax appeals tribunal’s conclusion that the income from certain equipment finance agreements between a corporation and various government entities was business income and not investment income. The tribunal determined that the agreements did not constitute stocks, bonds, or other securities within the meaning of the applicable tax law, and therefore the income derived from these agreements was business income rather than investment income. Xerox Corp. v. New York State Tax Appeals Tribunal, Appellate Division of the Supreme Court of New York, Third Department, No. 514464 (October 24, 2013).
OCTOBER 2013 NEWS FROM SULLIVAN & ASSOCIATES, PC
As we enter Day 15 of the federal government shutdown, things are getting interesting as the clock is ticking on a possible default. Well, at least the IRS has decided to cease the issuing of liens and levies during this time. This just seems like the right thing to do. While here in the Empire State, our esteemed governor has decided to take away the drivers licenses of taxpayers who owe, according to the state, more than $10,000 in back taxes. Not quite sure how those two are related, but I guess scare tactics are in vogue these days. You have to just love state government. Enjoy the rest of your October.
Federal – All Taxes – IRS Ceases Issuing Liens and Levies During Shutdown
The Internal Revenue Service is putting the brakes on tax liens and levies during the federal government shutdown. The IRS said in a web posting that it is not sending out levies or liens, either those generated systemically or those manually generated by employees, during the government shutdown. This contradicts a position previously announced by the IRS. http://www.irs.gov/uac/Newsroom/IRS-Operations-During-The-Lapse-In-Appropriations.
Connecticut – All Taxes – Amnesty Program Continues Until November 15th
Connecticut’s Amnesty marches on for persons and businesses owing any tax for any taxable period ending on or before November 30, 2012. This tax amnesty program ends 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). H.B. 6704.
New York – Personal Income Tax – Trips to Provide Care for Relative Counted as Days in State
A recent New York case held that days spent in New York for the treatment of a serious illness for a relative should be counted in determining whether a non-domiciliary is a state resident for income tax purposes However, the individuals were not subject to tax as residents of New York City. There was credible testimony, supported by credit card statements, telephone records, and affidavits, establishing clear and convincing evidence that on each of the days in question the individuals were not in New York City. Knoebel, New York Division of Tax Appeals, Administrative Law Judge Unit, DTA No. 824117.
New York – Various Taxes- Driver License Suspensions Begin for Tax Delinquents Owing Back Taxes
Under a new initiative, New York announced that the state will suspend New York State driver licenses of taxpayers who owe more than $10,000 in back taxes. The program is the result of legislation introduced as part of the Executive Budget and signed into law earlier this year. http://www.governor.ny.gov/press/08052013Tax-Delinquents
New York – Sales and Use Tax – Hosted Software Services Taxable
The New York Division of Taxation recently held that a taxpayer’s sales of a hosted software solutions system that assists law firms in the management and organization of their law offices, provided via the Internet, constitutes sales of prewritten computer software that are subject to New York sales and use tax because the taxpayer grants its customers a license to use its software. This is true even if no “copy” of the software is downloaded or transferred to the customer. Prewritten software remains taxable even if it is enhanced or modified for a specific purchaser. However, if the charge for custom modification or enhancement is separately stated on the invoice or bill, the charge for custom modification is exempt.
The situs of the sale for purposes of determining the proper local tax rate and jurisdiction is the location associated with the license to use (i.e., the location of the customer’s employees that use the software). TSB-A-13(32)S.
IRS Expands Voluntary Classification Settlement Program
The joys of tax season coupled with some snow in the Northeast has really kicked March off with a bang. In an interesting move, the IRS has jumped on the aggressive employee vs. independent contractor bandwagon by expanding its voluntary classification settlement program. The states have been on a tirade in this area for the last few years, and now the Feds are expanding this program to encourage worker re-classification. Seems like a bit of hard ball “collusion” between the Fiefdoms and the Federal government if you ask me. The times, they really are a changing. Have a great month, and enjoy March Madness.
The IRS has expanded its Voluntary Classification Settlement Program (VCSP), which allows taxpayers to achieve legal certainty by reclassifying their workers as employees for future tax periods. Several eligibility requirements have been changed to allow more employers, particularly larger ones, to apply for the VCSP. The program, which provides partial relief from federal payroll taxes for eligible employers who are treating their workers, or a class or group of workers, as independent contractors and want to treat them as employees. Businesses, tax-exempt organizations, and government entities can apply to participate in the VCSP by filing Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before they want to begin treating the workers as employees.
Under the program as expanded, employers under IRS audit (other than an employment tax audit) can qualify for the VCSP. In addition, employers allowed into the program will no longer be subject to the “special” six-year statute of limitations. Further, until June 30, 2013, the IRS is waiving the eligibility requirement that an employer must file Forms 1099 with respect to workers they are seeking to reclassify for the past three years. To be eligible for the VCSP, an employer must currently be treating workers as nonemployees and consistently have treated them as such in the past, and not be under audit on a payroll tax issue. Further, the employer cannot currently be under audit by the Department of Labor or a state agency concerning worker classification, or be challenging worker classification in court. IR-2013-23.
Delaware – Income/Franchise – New Law Deletes Imputed Capital Addback Requirement Imposed on Bank Branches
A new law was recently passed that removes language in the Bank Franchise Tax law requiring imputed capital addbacks for out-of-state banks with Delaware branches. The law is effective immediately for tax years beginning after December 31, 2012. S.B.1.
New Jersey – Corporate & Personal Income Taxes – Angel Investor Credit Enacted
An angel investor credit is allowed against the New Jersey corporation business tax (CBT) or the gross (personal) income tax for privilege periods or taxable years beginning on or after January 1, 2012. A taxpayer must apply to, and be approved by, the Economic Development Authority (EDA) to be eligible for the credit. The credit is equal to 10% of the qualified investment made by the taxpayer in a New Jersey emerging technology business up to a maximum allowed credit of $500,000 for the taxable year for each qualified investment made by the taxpayer. The amount of the credits approved by the EDA and the Director of the Division of Taxation may not exceed a cumulative total of $25,000,000 in any calendar year.A “New Jersey emerging technology business” is a company:
- with fewer than 225 employees, of whom at least 75% are filling a position in New Jersey,
- that is doing business, employing or owning capital or property, or maintaining an office in the state, and
- that has qualified research expenses paid or incurred for research conducted in the state, and
- conducts pilot scale manufacturing in the state; or
- conducts technology commercialization in the state in the fields of advanced computing, advanced materials, biotechnology, electronic device technology, information technology, life sciences, medical device, technology, mobile communications technology, or renewable energy technology.
S.B. 581.
New York City—Personal Income Tax – Credit Enacted for General Corporation Tax Paid by S Corporations
Under recently enacted legislation, a New York City personal income tax credit is allowed to city residents for certain general corporation tax payments made by New York S corporations. The credit is available for taxable years beginning on or after January 1, 2014, and before July 1, 2015.If city taxable income is $35,000 or less, the credit is 100% of the applicable pro rata amount of tax paid. If city taxable income is more than $35,000 but less than $100,000, the credit percentage is calculated as follows: subtract from 100% a percentage determined by subtracting $35,000 from city taxable income, dividing the result by $65,000, and multiplying by 100%. If city taxable income is $100,000 or more, no credit is allowed. S.B. 2320.
Supreme Court Grants Review in Gillette
So the Northeast gets pounded by a fun little storm called Nemo, and tax season has begun, isn’t winter fun? Now, it is quite impressive to see Connecticut step so quickly into the 21st century regarding identity theft. It usually takes the fiefdoms years upon years to catch up on issues like this. Considering all the press regarding identity and tax refund theft, it is great to see a tax department take preventative measures in this area. The real question becomes can they administer this program while causing minimal harm? I’m betting not; Let’s hope I’m wrong. Have a great February.
California – Corporate Income Tax – Supreme Court Grants Review in Gillette
The California Supreme court recently granted the Franchise Tax Board’s (“FTB”) petition for review of the California Court of Appeal’s decision in The Gillette Company, et al., v. California Franchise Tax Board (“Gillette”). In that decision, the California Court of Appeals upheld the right of the taxpayers to elect to allocate and apportion income to California using the Multistate Tax Compact (the “Compact”) as statutorily adopted in California Revenue and Taxation Code. The election at issue allowed the taxpayers to apply the Compact’s equally-weighted, three-factor apportionment formula (property, payroll and sales), while eliminating the double weighting of the sales factor applicable to most taxpayers. The Gillette Company, et al. v. California Franchise Tax Board, 2013 Cal. LEXIS 282 (Jan. 16, 2013), petition for review granted.
This case has considerable tax implications for businesses with significant California sourced revenues, and taxpayers may want to consider electing to apply the Compact methodology, both prospectively and retroactively, if the election would yield a material tax benefit.
Connecticut – Personal Income Tax – Refund Protection Program Announced
The Connecticut Department of Revenue Services (DRS) announced that it is launching a new taxpayer refund protection program to help prevent identity theft and tax fraud. Under the refund protection program, some taxpayers will be notified in writing, asked to call the DRS, and requested to provide additional identity information before refunds are issued, which may result in a small delay in receiving a refund for affected taxpayers. In addition, the DRS notes that taxpayers who do not choose direct deposit for refunds of less than $5,000 will receive their refund in the form of a debit card that can either be cashed at any VISA-affiliated bank or used to make purchases from vendors that accept VISA. News Release, Connecticut Department of Revenue Services, January 28, 2013.
Michigan – Income/Franchise Tax – Tax Provisions Amended Involving Business Losses & Sales Factor Computations
The Michigan Business Tax (MBT) was recently amended indicating that for purposes of computing a “business loss,” a taxpayer that acquires the assets of another corporation in a transaction described under Internal Revenue Code section 381(a)(1) or (2) may deduct any business loss attributable to that distributor or transferor corporation. In addition, sourcing rules for goods in transit were amended in the same legislation. The amendment stated that property stored in transit for 60 days or more prior to receipt by the purchaser or the purchaser’s designee, or in the case of a dock sale not picked up for 60 days or more, shall be deemed to have come to rest at this ultimate destination. Property stored in transit for fewer than 60 days prior to receipt by the purchaser or the purchaser’s designee, or in the case of a dock sale not picked up before 60 days, is not deemed to have come to rest at this ultimate destination. S.B. 1037.
New York – Income Tax- State Adopts Amendments to Combined Filing Regulations
The New York State Department of Taxation and Finance (the “Department”) recently adopted amendments to the combined reporting regulations applicable to general business corporations (including REITs and RICs) subject to the tax (Franchise Tax) imposed by New York Tax Law. The new regulation, Reg. Sec. 6-2.3(c), sets forth 10 steps that should be used to determine whether a combined report is required and, if so, which corporations are included in that combined report. The amended regulation changes its syntax to eliminate language that infers that all corporations must be combined regardless of whether they had substantial intercorporate transactions. Further, the new regulation adds New York S corporations and non-New York taxpayer federal S corporations to the list of corporations eliminated from combination. New York Reg. Sec. 6-2.3(c).
New York – Sales Tax – Collection on a Court Judgment for a Taxable Lease is Still Subject to Sales Tax
New York State Department of Taxation and Finance concluded that when a Petitioner enters into a true lease of taxable equipment, and the lessee defaults and the Petitioner eventually wins a court judgment against the lessee for a portion of the amount due under the lease, any collection of the judgment would be taxable. The Division also concluded that Petitioner’s subsequent recovery of a part of a bad debt involving a taxable sale would not be subject to sales tax if Petitioner never received any bad debt credit or refund in regard to that bad debt. TSB-A-13(3)S.
Texas – Corporate Income Tax – Telecommunications Provider not Entitled to Cost of Goods Sold (COGS) Deduction
A taxpayer could not take a cost of goods sold (COGS) deduction for Texas franchise tax purposes for costs associated with providing a service that is sold in a mixed transaction. The taxpayer sold telecommunication products such as local and long-distance telephone, Internet access, and video and requested a refund of franchise tax based on its claim of a COGS deduction.
The comptroller denied the request on the grounds that Texas franchise tax law does not authorize a taxable entity to take a COGS deduction for costs associated with providing a service that is sold in a mixed transaction. For franchise tax purposes, the telecommunication products that the taxpayer sold in 2008 were determined to be services. Decision, Hearing No. 102,735, Texas Comptroller of Public Accounts, October 24, 2012, released January 2013.
The Fiscal Cliff Bill is dubbed the American Taxpayer Relief Act of 2012 (H.R. 8)
So I guess the Mayan cliff was somewhat avoided, or was it the Fiscal Apocalypse? I lose track. I won’t get into my thoughts on our elected “leaders,” but they did come up with something that will raise some revenue, but very little happened on the expense side of the ledger. Things that make you go hmmm. It will be interesting to see how the next few rounds of this melodrama play out. Stay tuned. I hope you all enjoyed the holidays. Have a great January.
Please find a summary of the major provisions below:
INCOME TAXES
Permanently extend most of the individual income tax relief provided in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) for unmarried taxpayers with income of $400,000 or less and married taxpayers with income of $450,000 or less.
Permanently set the top marginal tax rate at 39.6 percent (up from 35 percent in 2012) for unmarried taxpayers with income over $400,000 and married taxpayers with income over $450,000.
Permanently set the top rate on income from capital gains and qualified dividends at 20 percent (up from 15 percent in 2012) for unmarried taxpayers with income over $400,000 and married taxpayers with income over $450,000.
Increase the individual AMT exemption to $50,600 for unmarried filers and $78,750 for married filers for 2012, permanently index those exemption amounts for inflation beginning in 2013, and allow nonrefundable personal credits against the AMT.
Permanently reinstate the personal exemption phase-out (PEP) and limitation on itemized deductions (Pease) for single taxpayers with adjusted gross income (AGI) above $250,000 and joint filers with AGI over $300,000, with the thresholds indexed annually for inflation.
CORPORATE TAXES
Extend through 2013 an array of expired and expiring tax provisions such as the research and experimentation credit, the subpart F active financing exception, and the look-through rule for payments between related controlled foreign corporations.
ESTATE TAXES
Permanently set the top estate tax rate at 40 percent for estates worth more than $5 million.
PAYROLL TAXES
The new law does not extend the reduction in payroll taxes that was in effect in 2011 and 2012.
OBAMACARE TAXES
Does not reduce or delay new tax increases on earned and unearned income that were enacted under the Patient Protection and Affordable Care Act of 2010 and that took effect on January 1, 2013.
Throwback Rules for Sales to Other States and Foreign Jurisdictions Addressed
Welcome to the inaugural newsletter from Sullivan & Associates PC. This newsletter will focus mostly on state and local matters, with other tax news occasionally sprinkled in.
I guess the fall has kicked off in the taxpayers favor. First, a New York court finally deems its inherently unfair, prejudicial, and burdensome Metropolitan Commuter Transportation Mobility Tax unconstitutional, and then three state tax amnesties commence. Not a bad month for state taxpayers. Enjoy the baseball playoffs and have a great October.