SC&H Group Blog: "Expertise Beyond the Numbers"

State & Local Tax Updates: California Corporate Tax Cost Recovery Fees; Illinois Harney Decision; and Pennsylvania Abandon Property Tax

Through its content-sharing partnership with Thomson Reuters Checkpoint, SC&H Group’s State and Local Tax practice has compiled the following round up of actionable state tax news.

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AlaskaCigarette, Alcohol & Miscellaneous Taxes — State and municipal tobacco taxes/vehicle rental tax.
L. 2014, H193, effective 10/08/2014, authorizes the Department of Revenue to enter into an agreement with a municipality that imposes a tax on cigarettes to conduct joint audits of cigarette taxpayers and to also enter into an agreement with such a municipality to sell cigarette tax stamps and collect cigarette tax revenue on behalf of that municipality. The legislation also authorizes the Department to share with a municipality state tobacco tax and vehicle rental tax returns or reports filed with the Department provided the municipality grants similar privileges to the Department, provides adequate safeguards for the confidentiality of the returns and reports, and uses the returns and reports only for tax purposes.

CaliforniaCorporate Income Tax — 2014/2015 cost recovery fee amounts.
The California Franchise Tax Board has advised its staff of the new cost recovery fee amounts beginning July 1, 2014, for the 2014/2015 fiscal year. The cost recovery fee is assessed to recover program costs when individuals and businesses fail to file tax returns upon demand or fail to pay their delinquent taxes, is compromised of two separate fees—the filing enforcement fee and the collection fee—and is reviewed annually. For fiscal year 2014/2015, for corporations and limited liability companies treated as corporations, the filing enforcement fee is $96 and the collection fee is $310. ( California FTB Public Service Bulletin 14-21, 06/30/2014 .)








CaliforniaCorporate Income Tax — California community development financial institution tax credit.
The California Department of Insurance has adopted, effective June 26, 2014, emergency regulations (Cal. Code Regs. §§ 2696.20, 2696.22, 2696.24, 2696.26, 2696.28, 2696.30, 2696.32, Tit. 10) for the purpose of implementing Cal. Rev. & Tax. Cd. § 12209 , Cal. Rev. & Tax. Cd. § 17053.57 , and Cal. Rev. & Tax. Cd. § 23657 . These statutory provisions provide a corporate income, personal income, and insurance premium tax credit for a portion of each qualified investment made by a taxpayer into a community development financial institution that is certified by the Department of Insurance, California Organized Investment Network (COIN), or any successor. The regulatory action establishes the community development financial institution certification and tax credit allocation program in the COIN for the benefit of economically disadvantaged communities and people in California.

CaliforniaCredits and Incentives — Community development financial institution tax credit.
The California Department of Insurance has adopted, effective June 26, 2014, emergency regulations, (Cal. Code Regs. §§ 2696.20, 2696.22, 2696.24, 2696.26, 2696.28, 2696.30, 2696.32, Tit. 10) for the purpose of implementing Cal. Rev. & Tax. Cd. § 12209 , Cal. Rev. & Tax. Cd. § 17053.57 , and Cal. Rev. & Tax. Cd. § 23657 . These statutory provisions provide a corporate income, personal income, and insurance premium tax credit for a portion of each qualified investment made by a taxpayer into a community development financial institution that is certified by the Department of Insurance, California Organized Investment Network (COIN), or any successor. The regulatory action establishes the community development financial institution certification and tax credit allocation program in the COIN for the benefit of economically disadvantaged communities and people in California.

CaliforniaGeneral Administrative Provisions — Managed audit program authorized for various SBE taxes.
L. 2014, A2009, effective 01/01/2015, authorizes a managed audit program for various taxes and fees administered by the State Board of Equalization (SBE). Taxpayers are not required to participate in the program, and the SBE will determine which taxpayer accounts are eligible for it. A taxpayer’s account will be eligible to participate in the program if: (1) the taxpayer’s business involves few or no statutory exemptions; (2) the taxpayer’s business involves a single or a small number of clearly defined taxability issues; (3) the taxpayer is subject to a qualifying tax and agrees to participate in the program; and (4) the taxpayer has the resources to comply with the managed audit instructions provided by SBE. A taxpayer participating in the program will have to examine its books and records to determine if it has any unreported tax liability for the audit period and make available to the SBE for verification all computations and books and records examined. Upon completion of the managed audit and verification by the SBE, interest on any unpaid liability will be computed at one-half the rate that would otherwise be imposed for liabilities covered by the audit period. The managed audit program authorized by the bill, which is similar to the managed audit program currently in effect for sales and use taxes, applies to the following: the motor vehicle fuel tax; the use fuel tax; the cigarette and tobacco products tax; the alcoholic beverage tax; the energy resources surcharge; the emergency telephone users surcharge; the hazardous substances tax; the integrated waste management fee; the oil spill response, prevention, and administration fees; the underground storage tank maintenance fee; fees collected pursuant to the fee collection procedures law; and the diesel fuel tax.

CaliforniaInsurance — Community development financial institution tax credit.
The California Department of Insurance has adopted, effective June 26, 2014, emergency regulations (Cal. Code Regs. §§ 2696.20, 2696.22, 2696.24, 2696.26, 2696.28, 2696.30, 2696.32, Tit. 10) for the purpose of implementing Cal. Rev. & Tax. Cd. § 12209 , Cal. Rev. & Tax. Cd. § 17053.57 , and Cal. Rev. & Tax. Cd. § 23657 . These statutory provisions provide a corporate income, personal income, and insurance premium tax credit for a portion of each qualified investment made by a taxpayer into a community development financial institution that is certified by the Department of Insurance, California Organized Investment Network (COIN), or any successor. The regulatory action establishes the community development financial institution certification and tax credit allocation program in the COIN for the benefit of economically disadvantaged communities and people in California.

CaliforniaPersonal Income Tax — 2014/2015 cost recovery fee amounts.
The California Franchise Tax Board has advised its staff of the new cost recovery fee amounts beginning July 1, 2014, for the 2014/2015 fiscal year. The cost recovery fee is assessed to recover program costs when individuals and businesses fail to file tax returns upon demand or fail to pay their delinquent taxes, is compromised of two separate fees—the filing enforcement fee and the collection fee—and is reviewed annually. For fiscal year 2014/2015, for individuals, the filing enforcement fee is $76 and the collection fee is $194. ( California FTB Public Service Bulletin 14-21, 06/30/2014 .)

CaliforniaPersonal Income Tax — Community development financial institution tax credit.
The California Department of Insurance has adopted, effective June 26, 2014, emergency regulations (Cal. Code Regs. §§ 2696.20, 2696.22, 2696.24, 2696.26, 2696.28, 2696.30, 2696.32, Tit. 10) for the purpose of implementing Cal. Rev. & Tax. Cd. § 12209 , Cal. Rev. & Tax. Cd. § 17053.57 , and Cal. Rev. & Tax. Cd. § 23657 . These statutory provisions provide a corporate income, personal income, and insurance premium tax credit for a portion of each qualified investment made by a taxpayer into a community development financial institution that is certified by the Department of Insurance, California Organized Investment Network (COIN), or any successor. The regulatory action establishes the community development financial institution certification and tax credit allocation program in the COIN for the benefit of economically disadvantaged communities and people in California.

CaliforniaPartnership — 2014/2015 cost recovery fee amounts.
The California Franchise Tax Board has advised its staff of the new cost recovery fee amounts beginning July 1, 2014, for the 2014/2015 fiscal year. The cost recovery fee is assessed to recover program costs when individuals and businesses fail to file tax returns upon demand or fail to pay their delinquent taxes, is compromised of two separate fees—the filing enforcement fee and the collection fee—and is reviewed annually. For fiscal year 2014/2015, for general partnerships, limited partnerships, limited liability partnerships, and limited liability companies treated as partnerships, the filing enforcement fee is $76 and the collection fee is $194. ( California FTB Public Service Bulletin 14-21, 06/30/2014 .)

CaliforniaSales And Use Tax — Green tech manufacturing equipment in California.
The California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) has done an emergency readoption, effective June 30, 2014, to maintain the effectiveness of amendments to emergency regulations (Cal Code Regs. §§ 10030 – 10036, Tit. 4) that incorporated “advanced manufacturing” processes, as authorized and defined in 2012 legislation, into the existing sales and use tax exclusion program already available for manufacturers of alternative source products and advanced transportation products. The emergency regulations also clarified eligibility and evaluation criteria for reviewing applications from manufacturers of energy efficiency products, which are considered alternative source products, and made a number of administrative changes.

ConnecticutSales And Use Tax — Sales tax holiday.
The Connecticut Department of Revenue Services has issued a reminder that the annual 1-week sales and use tax exclusion for clothing and footwear costing less than $300 runs from Sunday, August 17 through Saturday, August 23, 2014. (CT DRS examples of clothing and footwear that are exempt or taxable during sales tax free week, Conn. Dept. of Rev. Services, 07/11/2014.)

IllinoisSales And Use Tax — Final sourcing rules—Hartney decision.
The Illinois Department of Revenue has issued final regulations (86 Ill. Admin. Code §§ 220.115, 270.115, 320.115, 370.115, 395.115, 630.120, 670.115, 690.115, 693.115 and 695.115), effective June 25, 2014, to provide guidance to local retailers on sourcing to determine local tax liabilities. The local retailers’ occupation tax liability is based on the location where the retailer is “engaged in the business of selling tangible personal property.” The final regulations replace the emergency and proposed permanent rules the Department imposed after the Department’s prior regulations were invalidated by the Illinois Supreme Court in Hartney Fuel Oil Co. v. Hamer , Ill. S. Ct., Dkt. No. 115130, 11/21/2013, reported in State & Local Taxes Weekly, Vol. 24, No. 48, 11/25/2013.

MassachusettsCorporate Income Tax — Confidentiality of tax information.
L. 2014, S2211 (c. 158), effective 10/09/2014, allows disclosure of tax return information for individuals or households to a Massachusetts government agency, if the agency certifies that the information is relevant to determining the eligibility of an individual or household for benefits provided by said agency.

MassachusettsGeneral Administrative Provisions — Confidentiality of tax information.
L. 2014, S2211 (c. 158), effective 10/09/2014, allows disclosure of tax return information for individuals or households to a Massachusetts government agency, if the agency certifies that the information is relevant to determining the eligibility of an individual or household for benefits provided by said agency.

MassachusettsGeneral Administrative Provisions — 2015 budget bill.
On July 11, 2014, Governor Deval Patrick signed the 2015 budget bill (H4001), which among other things, authorizes the Commissioner to establish a tax amnesty program, delays implementation of the FAS 109 deduction for another year, makes more cases eligible for the expedited small claims tax appeal procedure, clarifies the method for calculating the net worth of a business corporation and the Massachusetts adjusted basis of property, extends the historic rehabilitation credit for three years, clarifies the role of a principal reporting corporation for purposes of combined reporting and authorizes the creation of special commission to study and report on the inventory tax.

MassachusettsPersonal Income Tax — Confidentiality of tax information.
L. 2014, S2211 (c. 158), effective 10/09/2014, allows disclosure of tax return information for individuals or households to a Massachusetts government agency, if the agency certifies that the information is relevant to determining the eligibility of an individual or household for benefits provided by said agency.

MassachusettsSales And Use Tax — Confidentiality of tax information.
L. 2014, S2211 (c. 158), effective 10/09/2014, allows disclosure of tax return information for individuals or households to a Massachusetts government agency, if the agency certifies that the information is relevant to determining the eligibility of an individual or household for benefits provided by said agency.

MissouriCorporate Income Tax — Refund setoff.
L. 2014, H1710, effective 08/28/2014, authorizes each individual or corporation that is entitled to a tax refund to designate a portion or all of the refund amount due to the newly created Missouri National Guard Foundation Fund. The minimum designation must be $1 on a single return or $2 on a combined return. An individual or corporation that is not entitled to a tax refund may contribute to the fund by sending a separate check or draft designated for the fund. This setoff provision expires on December 31, 2020, unless reauthorized.

MissouriPersonal Income Tax — Refund setoff.
L. 2014, H1710, effective 08/28/2014, authorizes each individual or corporation that is entitled to a tax refund to designate a portion or all of the refund amount due to the newly created Missouri National Guard Foundation Fund. The minimum designation must be $1 on a single return or $2 on a combined return. An individual or corporation that is not entitled to a tax refund may contribute to the fund by sending a separate check or draft designated for the fund. This setoff provision expires on December 31, 2020, unless reauthorized.

MississippiFuels And Minerals — IFTA quarterly reports.
The Mississippi Department of Revenue has issued new information regarding the quarterly filing of International Fuel Tax Agreement (IFTA) tax reports. Prior to October 6, 2014, taxpayers may continue to file quarterly tax reports online through the Department’s electronic filing system using a downloadable worksheet in Excel format. After October 6, 2014, the IFTA quarterly tax reports may be filed online through the Department’s Taxpayer Access Point (TAP) system, which will provide two options for filing: either manually keying the data or uploading the data via an Excel spreadsheet. The current Excel spreadsheet format will not work on TAP, and a new format located on the Department’s website must be used to complete the filing online. Taxpayers should not email the template to the Department. (International Fuel Tax Agreement, Quarterly Tax Reports, Mississippi Department of Revenue, 07/10/2014.)

New HampshireReal Property — Reclassifying land—current use status.
The New Hampshire Supreme Court affirmed a decision of the New Hampshire Board of Tax and Land Appeals (BTLA) that had dismissed a petition for reclassification by the Town of Charlestown (Town) of three parcels owned by TransCanada Hydro Northeast, Inc (TransCanada). In April 2007, TransCanada received current use tax assessment status as open space land from the Town and the land was assessed on the basis of their current use from tax year 2007 through 2012. In November 2012, the Town petitioned the BTLA for reclassification of the three parcels on the grounds that the three parcels were part of a development involving land use for the purpose of generating electricity and thus had been improperly classified as open space land under RSA chapter 79-A. As such, the Town requested that the BTLA revoke the current use status of the three parcels, reclassify them, and issue an order requiring the assessing officials to reassess taxes for tax years 2007 through 2012. TransCanada, on the other hand, asserted that the three parcels were not improperly classified as open space land. The BTLA dismissed the Town’s petition, ruling that RSA chapter 79-A placed direct responsibility on the Town, not the BTLA, to remove land from current use when the Town discovered that the land, for which it had already granted current use status, no longer qualified. The Supreme Court addressed the issue of whether or not the BTLA erred by interpreting RSA chapter 79-A as allowing the Town to reclassify the parcels unilaterally and agreed with the BTLA. The court noted that RSA chapter 79-A did not prohibit the Town from reclassifying land improperly placed in current use status in the first instance. Accordingly, the Court concluded that the BTLA did not err in dismissing the Town’s petition for reclassification on the ground that the Town could unilaterally reclassify the land. (Appeal of Town of Charlestown, N.H. S. Ct., Dkt. No. 2013-317, 07/11/2014.)

New JerseyCorporate Income Tax — No credit on income allocated to New Jersey.
The New Jersey Tax Court (Court) has ruled that a New Jersey resident S corporation shareholder’s gross income tax credit for taxes paid to New York on her S corporation income was limited to the New York tax paid on the income that would have been allocated to New York under New Jersey’s allocation rules. For the tax year in question, 80% of the S corporation’s income was allocated to and taxed by New York based on New York’s single factor gross receipts formula while only 60.8% of the S corporation’s income would have been allocated to New York under New Jersey’s 3-factor formula. The Court ruled that the credit for taxes paid to another state that is provided by N.J. Rev. Stat. § 54A:4-1(c) does not apply to the extent that tax is paid to New York on income that would have been allocated to New Jersey under New Jersey’s tax rules. The Court also rejected the taxpayer’s request to eliminate the payroll and property factors from the allocation formula. (Criticare, Inc. and Marina Haber v. Director, Division of Taxation, N.J. Tax Ct., Dkt. No. 008253-2013, 07/08/2014 (not for publication).

New JerseyPersonal Income Tax — No credit on income allocated to New Jersey.
The New Jersey Tax Court (Court) has ruled that a New Jersey resident S corporation shareholder’s gross income tax credit for taxes paid to New York on her S corporation income was limited to the New York tax paid on the income that would have been allocated to New York under New Jersey’s allocation rules. For the tax year in question, 80% of the S corporation’s income was allocated to and taxed by New York based on New York’s single factor gross receipts formula while only 60.8% of the S corporation’s income would have been allocated to New York under New Jersey’s 3-factor formula. The Court ruled that the credit for taxes paid to another state that is provided by N.J. Rev. Stat. § 54A:4-1(c) does not apply to the extent that tax is paid to New York on income that would have been allocated to New Jersey under New Jersey’s tax rules. The Court also rejected the taxpayer’s request to eliminate the payroll and property factors from the allocation formula. (Criticare, Inc. and Marina Haber v. Director, Division of Taxation, N.J. Tax Ct., Dkt. No. 008253-2013, 07/08/2014 (not for publication).

New JerseyReal Property — Property valued as separate condominiums.
The New Jersey Tax Court (Court) has ruled that residential units in an apartment complex which were held in the condominium form of ownership by a partnership must each be valued as separate condominiums. The partnership contended that since it had failed for numerous years to sell any of the condominium units and had not complied with certain state reporting requirements for condominiums, the entire complex should be valued as an apartment complex and the income approach should be used to value that complex. The Court stated that the law specifies that each condominium must be valued separately and that the partnership must accept the tax consequences of its choice to own the complex as separate condominium units rather than as a single apartment complex. (Guttenberg Terrace II v. Township of Guttenberg, N.J. Tax Ct., Dkt. No. 011637-2009, 07/09/2014 (not for publication).)

New YorkInsurance — Taxation of life insurance corporation.
The Department modified New York Advisory Opinion TSB-A-08(3)C, 04/29/2008 regarding whether a life insurance corporation domiciled in the state of Texas that is not licensed to do an insurance business in the state of New York was subject to tax in New York State under Article 33 or Article 9-A of the Tax Law. This Advisory Opinion concluded that the taxpayer would be subject to tax under Article 33 of the Tax Law, provided that the partnership in which it was a limited partner was not a portfolio investment partnership; and also concluded that, because the taxpayer did not have a certificate of authority from the Superintendent of Insurance to conduct an insurance business in New York, it did not have taxable premiums under N.Y. Tax Law § 1510 and the limitation computed under N.Y. Tax Law § 1505 was zero. However, in 2012 the Department changed its interpretation of the limitations in N.Y. Tax Law § 1505 as they applied to unauthorized life insurance companies, concluding that since unauthorized life insurance corporations are not subject to the additional premiums tax imposed under N.Y. Tax Law § 1510(b)(1) , the tax on these corporations is not limited by N.Y. Tax Law § 1510(a)(2) . This change applies to taxable years beginning on or after January 1, 2012. Therefore, commencing with the taxable year beginning after this modified Advisory Opinion is issued, the taxpayer, as an unauthorized life insurance corporation subject to tax under Article 33 of the Tax Law, is required to pay the tax on the highest of the four Article 33 tax bases, plus any applicable tax on allocated subsidiary capital computed pursuant to N.Y. Tax Law § 1502 , and these taxes are not limited pursuant to N.Y. Tax Law § 1505 . ( New York Advisory Opinion TSB-A-08(3.1)C, 07/02/2014 .)

New YorkNYC Property Taxes—Rule on tax lien sale installment agreements amended.
RCNY § 40-03 has been amended to provide that, in addition to property owners, certain other eligible persons may enter into installment agreements to prevent the sale of tax liens on real property. The other eligible persons who can enter into an installment agreement, include: a fiduciary (1) administering the property of an estate of a decedent who owned the real property for which an installment agreement is sought; or (2) acting on behalf of a beneficiary of the real property from the estate as well as the estate’s beneficiary.

New YorkPersonal Income Tax — Applicability of Metropolitan Commuter Transportation Mobility tax.
The presence of the taxpayer’s business manager and accountant in the Metropolitan Commuter Transportation District (MCTD) does not render any of the taxpayer’s net earnings from self-employment subject to Metropolitan Commuter Transportation Mobility Tax (MCTMT). However, the taxpayer is subject to the MCTMT on the net earnings he derives from performances in the MCTD. The taxpayer is a non-resident musician who currently performs several times a year in the MCTD, but does not maintain his own office within the MCTD. The taxpayer’s accountant and business manager are located within the MCTD. N.Y. Tax Law § 801(a)(2) imposes a tax on earnings from self-employment on individuals who have earnings attributable to the MCTD if those earnings for the taxable year exceed $50,000. The accountant and business manager both have other clients in addition to the taxpayer, and neither is an employee of the taxpayer. Thus, the manager and accountant are not, for the purposes of the MCTMT, agents of the taxpayer and their performance of services for the taxpayer in the MCTD does not subject the taxpayer to the tax. However since the taxpayer engages in his trade or business in the MCTD when he performs, he will be liable for MCTMT on all his net earnings derived from his performances in the MCTD, assuming those earnings exceed $50,000 for the taxable year. ( New York Advisory Opinion TSB-A-14(1)MCTMT, 07/02/2014 .)

OhioRecordation Taxes, Realty — Fannie Mae/Freddie Mac exempt from real property transfer taxes.
The Sixth Circuit Court of Appeals affirmed the district court’s judgment dismissing the suit on behalf of a class of all Ohio counties against the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), as well as the Federal Housing Finance Agency (“FHFA”), as conservator for both Fannie Mae and Freddie Mac, which sought unpaid real property transfer taxes. The court determined that the state real property transfer taxes at issue are encompassed in these agencies’ statutory exemptions from all taxation. Specifically, Fannie Mae’s charter prohibits state and local taxation of Fannie Mae “except that any real property of the corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent as other real property is taxed.” Similarly, Freddie Mac’s charter prohibits state and local taxation of Freddie Mac except for any real property taxes. Although the Ohio counties contended that state and local real property transfer taxes fall into the statutory exceptions for taxation of real property, the court noted that Ohio courts have held that real property transfer taxes are excise taxes rather than taxes on real property. Because the transfer tax is imposed upon the grantor of real property for the privilege of transferring real property rather than a real property tax levied directly against the property, it is an excise tax rather than a property tax. Lastly, Congress had the power to enact the exemptions under the Commerce Clause, and the enactment does not run afoul of any constitutional provision. Therefore, because constitutionally sound federal statutes exempt Fannie Mae and Freddie Mac from real property transfer taxes, the class action was properly dismissed. (Board of Commissioners of Montgomery County, Ohio, et al. v. Federal Housing Finance Agency, et al., U.S. App. Ct. (6th Cir.), Dkt. No. 13-4429, 07/10/2014.)

PennsylvaniaGeneral Administrative Provisions — Budget bill.
Governor Tom Corbett has signed the Pennsylvania 2014/2015 state budget bill (L. 2014, H2328, Act 1A). The bill contains no new taxes, however, the governor used his line-item veto authority to eliminate $65 million in General Assembly spending and an additional $7.2 million in legislative-designated spending. Note that the governor’s line-item veto may be overridden by a two-thirds vote of each house of the General Assembly. (Press Release: Governor Corbett Signs 2014-15 Budget and Fiscal Code, Vetoes Specific Legislative Appropriations and Places Legislative Spending Initiatives into Budgetary Reserves, 07/10/2014.)

PennsylvaniaReal Property — Abandoned property.
L. 2014, H278 (Act 126), effective 01/07/2015, implements the state budget, and amends provisions related to abandoned property, including adding definitions and providing that a “holder” for purposes of abandoned property includes a person obligated to hold for the account of or deliver or pay to the owner of the property, an agent or legal representative of the person obligated, the person in possession, the trustee, or the debtor. In addition, the period after which property will be considered abandoned is shortened from five years to three years for the following types of property held by financial institutions: (1) demand saving or matured time deposits; (2) checks and written instruments (including, but not limited to, drafts, money orders and traveler’s checks); (3) funds and personal property (tangible or intangible) removed from a safe deposit box or safekeeping repository; (4) funds held or owing by an insurer; (5) a life insurance policy that is not matured by actual proof of the insured’s death; (6) money held or owing by an insurer as established by its records under any contract of insurance other than annuity or life insurance, including premiums or deposits returnable or dividends payable to policy or contract holders or other persons; (7) gift certificates or gift cards for which no redemption period is specified; (8) any sum due as a dividend, profit, distribution, payment or distributive share of principal held or owing by a business association; (9) sums due as principal or interest on the business association’s bonds or debentures, or coupons attached thereto; (10) any sum or certificate or participating right due by a cooperative to a participating patron; and (11) property held by fiduciaries. The period is also shortened from five years to three years for property held for the owner by any court, public corporation, public authority or instrumentality of the United States, the Commonwealth of Pennsylvania, any other state, or by a public officer or political subdivision; and all other property that is not otherwise subject to a specific abandonment period under Art. XIII.1 of the Fiscal Code. An individual retirement account, a retirement plan for self-employed individuals or a similar account or plan created under state or federal lase that is not subject to a mandatory distribution requirement, will be considered abandoned three years after the owner has reached age 70 1/2, or if the owner has not indicated an interest in the account or plan or in other property of the owner in the possession, custody or control of the holder for at least three years. Provisions are also generally amended to preclude abandonment where the owner of the property has indicated an interest in the property through any contact, communication or transaction related to property, or involving some affirmative action by the owner, provided such interest is documented in a contemporaneous record prepared by or on behalf of the holder or in the possession of the holder.

Rhode IslandReal Property — Tax classifications—Town of Scituate
L. 2014, S2920 (c. 458), effective 07/03/2014, authorizes the Town of Scituate to adopt tax rates for different tax classifications. The Town of Scituate may change its tax assessment from 50% of value to 100% of value on residential and commercial/ industrial/ mixed use property, while tangible property is assessed at 100% of cost, less depreciation. However, the tax rate for Class 3 (tangible) property cannot exceed the tax rate for Class 1 (residential) property by more than 213%. Such provision applies even if the fiscal year is also a revaluation year.

Rhode IslandReal Property — Partial abatement of taxes—North Smithfield.
L. 2014, S2999 (c. 463), effective 07/03/2014, authorizes the Town of North Smithfield to annually grant a partial abatement of taxes in the amount of $14,300 for a period of seven years for real property known as the “Rankin Estates.”

South CarolinaSales And Use Tax — Annual sales tax holiday announced.
The South Carolina Department of Revenue has announced that the annual 3-day sales tax holiday for 2014 will begin Friday, August 1, 2014 at 12:01 a.m. and end Sunday, August 3, 2014 at midnight. During this time, the 6% state sales and use tax, and any applicable local sales and use tax, will not be imposed on clothing, clothing accessories (e.g., hats, scarves, hosiery, and handbags), footwear, school supplies (e.g., pens, pencils, paper, binders, notebooks, books, bookbags, lunchboxes, and calculators), computers, printers and printer supplies, computer software, and bath wash clothes, blankets, bed spreads, bed linens, sheet sets, comforter sets, bath towels, shower curtains, bath rugs and mats, pillows, and pillow cases. The sales tax holiday, however, does not apply to sales of jewelry, cosmetics, eyewear, wallets, watches, furniture, rental of clothing or footwear, items for use in a business, or items placed on layaway or similar deferred payment and delivery plans. ( South Carolina Information Letter 14-10, 097/10/2014 .)

 

TexasSales And Use Tax — Multistate tax credits regulation amended.
The Texas Comptroller of Public Accounts has adopted amendments to Tex. Admin. Code § 3.338, concerning multistate tax credits and allowance of credit for tax paid to suppliers, to implement legislative changes and correct the description of how multistate credits are applied against state and local use tax. The rule is amended to provide guidance regarding the reporting of credits taken on a permitted purchaser’s sales and use tax return, including when the credit may be claimed, and to clarify existing policy that a credit is not allowed against the Texas Emissions Reduction Plan (TERP) Surcharge for tax paid to another state, governmental entity or political subdivision. Provisions in the rule have been deleted to reflect law providing that a contractor who is a permitted purchaser is subject to the same allowances and limitations for taking credit on a return for sales tax paid in error as other permitted purchasers, and a motor vehicle or airplane repair person who is a permitted purchaser and sells taxable items is subject to the same allowances and limitations for taking credit on a return for sales tax paid in error as other permitted purchasers. The amendments to the rule are effective July 17, 2014.

 

WashingtonSales And Use Tax — Exemption—aerospace facility construction.
The Washington Department of Revenue has issued a publication discussing the exemption for aerospace manufacturing facility construction created pursuant to recently enacted legislation. The exemption is available to manufacturers (or port districts, municipal corporations or political subdivisions leasing facilities to manufacturers) who construct new buildings that will be used primarily for the manufacture of commercial airplanes, commercial airplane fuselages and commercial airplane wings. The exemption may be applied to charges for the labor and service provided in the construction of new buildings, materials incorporated as a component during the course of construction, and labor and services provided in the installation of building fixtures that are not eligible for the manufacturer’s machinery and equipment sales and use tax exemption. The exemption applies to new buildings or parts of new buildings used for storage of raw materials or finished product. Buyer’s utilizing the exemption must provide sellers with a Buyer’s Retail Sales Tax Exemption Certificate at the time of purchase. The contingencies affecting the effective date of the exemption have been deemed satisfied and the exemption is effective July 9, 2014. ( Washington Special Notice 07/01/2014, 07/01/2014 .)

 

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