Rick Strohmaier Partner Grant Thornton LLP Recent SALT developments Incomefranchise tax Sales tax nexus Unclaimed property Incomefranchise tax Apportionment Multistate Tax Commission adopted amendments to Model General Allocation and Apportionment Regulations ID: 659991
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Slide1
Recent SALT Developments
Rick Strohmaier, Partner
Grant Thornton LLPSlide2
Recent SALT developments
Income/franchise tax
Sales tax nexus
Unclaimed propertySlide3
Income/franchise tax
Apportionment
Multistate Tax Commission adopted amendments to Model General Allocation and Apportionment Regulations
Most changes reflect shift to market-based sourcing for sales other than sales of TPPProvides detailed sourcing rules Montana enacted legislation adopting market-based sourcing and throwout ruleTax years beginning after Dec. 31, 2017Connecticut Department of Revenue Services issued guidance on single sales factor apportionment and market-based sourcing
Detailed market-based sourcing provisions with many examplesSlide4
Income/franchise tax
Apportionment (cont'd)
Tennessee enacted single sales factor apportionment election for certain manufacturing businesses
Tax years beginning on or after Jan. 1, 2017In Genentech, Massachusetts Supreme Judicial Court rejected claim that single sales factor apportionment formula for manufacturers violates Commerce ClauseCalifornia FTB issued two Technical Advice Memoranda to clarify certain matters for apportioning taxpayersTAM 2017-02: Apportioning net recognized built-in gains for purposes of computing S corporation built-in gains tax
TAM 2017-03: Application of IRC Sections 382 to 384 (corporate ownership changes) for California apportionment purposesSlide5
Income/franchise tax
Tax
reform
Minnesota omnibus tax bill Financial institution apportionment rules apply to broader scope of entitiesExemption for insurance companies narrowedCertain insurance companies must be included in combined reportsNew York budget bill closes tax loopholes, extends top personal income tax rate for two yearsNon-captive RIC/REIT provisionsTreatment of disregarded entities for tax credit purposes
Sales of partnership assets subject to IRC Section 1060
Kansas legislature, overriding a veto, enacted legislation that increases personal income tax rates and repeals exemption for non-wage business incomeSlide6
Sales tax nexus
Indiana, North Dakota and Wyoming have recently enacted bright-line nexus (anti-
Quill
) laws for remote sellersRequired to collect sales tax if more than $100,000 in sales or at least 200 separate transactions in state during a calendar yearIndiana and Wyoming: Effective July 1, 2017 North Dakota: Contingent on U.S. Supreme Court overturning Quill
In Wayfair, South Dakota circuit court held law challenging
Quill
's physical presence requirement is unconstitutional
First time a court has considered constitutionality of legislation that disregards physical presence requirement for sales tax
Massachusetts DOR has announced bright-line sales tax nexus standard for remote Internet vendors
Effective July 1, 2017, over $500,000 in sales and at least 100 transactions in state Slide7
Sales tax nexus (cont'd)
In
American Catalog Mailers
, Tennessee chancery court granted order prohibiting enforcement of bright-line nexus ruleOut-of-state dealers with annual sales in state greater than $500,000 Minnesota omnibus tax bill extends nexus to marketplace providersEntities that facilitate sales for retailer by listing or advertising in any forum and collecting and transmitting payment to retailerEffective on earlier of (1) July 1, 2019; or (2) Quill
overturnedColorado DOR entered into settlement agreement for remote seller notice and reporting requirements
Non-collecting retailers must provide: (1) notice to purchasers they may be subject to sales tax; (2) annual summary of sales to purchasers; and (3) annual customer information report to DOR
Enacted in 2010, but suspended due to protracted litigation
Will begin enforcing July 1, 2017Slide8
Unclaimed property
In February 2017, Delaware enacted historic overhaul of unclaimed property law
Enacted partially in response to U.S. District Court ruling in
Temple-Inland
Certain audit procedures violated substantive due process
Technique used to estimate holder's Delaware unclaimed property liability subjected taxpayer to liability imposed by multiple jurisdictions
Adopted many concepts and provisions of 2016 Revised Uniform Unclaimed Property Act
Certain holders under audit may be able to enter a voluntary disclosure program or expedite the auditSlide9
Questions?Slide10
Presenter Contact Information
Rick Strohmaier, Tax Partner
State and Local Tax
Grant Thornton LLP171 N. Clark Street, Suite 200Chicago, IL 60601D: (312) 602-8528rick.strohmaier@us.gt.comSlide11
Disclaimer
This Grant Thornton LLP presentation is not a comprehensive analysis of the subject matters covered and may include proposed guidance that is subject to change before it is issued in final form. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this presentation. The views and interpretations expressed in the presentation are those of the presenters and the presentation is not intended to provide accounting or other advice or guidance with respect to the matters covered.
For additional information on matters covered in this presentation, contact your Grant Thornton, LLP adviser.