» Tax Headlines

Texas ~ Sales and Use Tax: Refund Claim Regulation Provisions Invalid

Cch — Mon, 20 May 2013 06:57:47 +0000

Certain provisions of the Texas regulation on sales tax refunds have been declared invalid and illegal by a Texas District Court because they impose additional burdens, conditions, and restrictions on tax refund claims in excess of specific provisions of the Texas sales tax refund statute (§111.104). In particular, the prior version of 34 Tex. Admin. Code §3.325(a)(4) (refund request requirements) in effect from July 19, 2011, through January 6, 2013, as well as the current version of subsection (a)(4) in effect since January 7, 2013, were declared invalid. Subsection (b)(10) (requirements to toll the statute of limitations) and subsection (e) (denial of refund claims) in effect beginning January 7, 2013, and currently in effect, were also declared invalid.

Ryan, LLC v. Combs, Texas Comptroller of Public Accounts, District Court, 200th District (Texas), No. D-1-GN-12-002388, May 10, 2013 , ¶403-903

New York ~ Multiple Taxes: Tax Collection Agreement Reached Between State and Oneida Nation

Cch — Mon, 20 May 2013 06:57:08 +0000

New York Gov. Andrew M. Cuomo announced a comprehensive agreement between the state of New York and the Oneida Nation of Indians that would require the Nation to adhere to minimum pricing standards for cigarettes and impose a Nation sales tax that equals or exceeds the state’s and counties’ sales, use, and occupancy taxes on cigarette sales to non-Indian customers.

The agreement also would grant the Oneida Nation exclusive rights to casino gaming in Central New York in exchange for sharing a portion of gaming revenues with the state and local governments. In addition, the agreement would end legal disputes over land claims by setting a cap of approximately 25,000 acres on land that could be under the Nation’s sovereignty.

Portions of the settlement will require New York state legislative approval, approvals by Madison County and Oneida County, the Department of the Interior, the New York State Attorney General, as well as judicial approval. The agreement is not effective until these approvals are secured.

The press release may be found on the governor’s website (http://www.governor.ny.gov ).

Release, Office of New York Gov. Cuomo, May 16, 2013

Maryland ~ Motor Fuel Tax: Tax Rates Indexed, Equivalent Imposed

Cch — Mon, 20 May 2013 06:56:33 +0000

Effective June 1, 2013, Maryland motor fuel tax laws have been amended to provide that on or before June 1 of each year the comptroller must announce the motor fuel tax rates (except aviation and turbine fuel) for the fiscal year beginning the following July 1. The rates will be increased by the amount, rounded to the nearest one-tenth of a cent, that equals the product of the motor fuels tax rate in effect multiplied by the percentage growth in the consumer price index for all urban consumers. If there is decline or no growth in the consumer price index, the tax rate will not change. However, any increase in the rates may not be greater than 8% of the rate in effect the previous year.

In addition, a sales and use tax equivalent rate will be imposed on motor fuels (except aviation and turbine fuel) and will be collected in the same manner as the motor fuel tax. The sales and use tax equivalent rate will be determined on or before June 1, 2013, December 1, 2014, June 1, 2015, and June 1 of each subsequent year by multiplying the average annual retail price of a gallon of motor fuel by a specified percentage as follows: 1% on June 1, 2013, 2% on December 1, 2014, and 3% beginning on June 1, 2015. The specified percentage increases from 3% to 4% on December 1, 2015, and to 5% on June 1, 2016, and each subsequent June unless federal legislation authorizing the state to require remote sellers to collect sales and use tax is enacted by December 1, 2015. If federal legislation on sales tax collection is enacted and takes effect by December 1, 2015, the percentage remains at 3% in subsequent years.

H.B. 1515 , Laws 2013, effective as noted above

Delaware ~ Multiple Taxes: Bill Would Protect Out-of-State Businesses Providing Emergency-Related Services

Cch — Mon, 20 May 2013 06:56:00 +0000

Legislation has been introduced in the Delaware House of Representatives that would protect out-of-state businesses that enter the state solely to provide infrastructure-related services during a state declared emergency from most state and local tax filing requirements, including corporate income taxes, sales and use taxes, and ad valorem taxes on equipment. Such businesses would not be considered to have established nexus, a legal presence, or any other criteria for purposes of state and local taxes. Likewise, nonresident employees would not be considered to have established residency or a presence for purposes of personal income and withholding tax liability.

H.B. 145, as introduced in the Delaware House of Representatives on May 14, 2013

CCH Weekly Report from Washington, D.C.

Cch — Mon, 20 May 2013 06:55:16 +0000

The House Ways and Means Committee held the first hearing examining the IRS’s conduct in dealing with the applications of certain conservative groups seeking tax-exempt status in the wake of the Treasury Inspector General for Tax Administration’s (TIGTA) report that Service personnel specifically targeting for review applications for tax-exempt status from organizations with the words ”Tea Party” and ”Patriots” in their names. IRS Acting Commissioner Steven T. Miller resigned and is being replaced by Office of Management and Budget Controller Daniel Werfel, who agreed to serve through the end of the fiscal year.

Congress

Small Business Tax Reform. The Small Business and Pass-Through Entity Tax Reform Discussion Draft proposed by House Ways and Means Committee Chairman Dave Camp, R-Mich., won approval from tax experts testifying before the House Subcommittee on Select Revenue Measures on May 15 (TAXDAY, 2013/05/16, C.1 ). Witness suggested changes to the draft, including expanding cash accounting to more small businesses and allowing a safe harbor for inventory tracking. Lawmakers heard opposing views of the proposal to shift to a unified regime for pass-through entities.

IRS Tax-Exempt Controversy. On May 17, Treasury Inspector General for Tax Administration (TIGTA) J. Russell George testified before the Ways and Means Committee regarding the TIGTA report concerning oversight by the IRS of groups that apply for tax-exempt status (TAXDAY, 2013/05/20, C.1 ). The report found that the IRS used inappropriate criteria, based on names and policy positions, to identify specific groups applying for tax-exempt status (Reference No. 2013-10-053 ; TAXDAY, 2013/05/16, T.1 ).

IRS

Oversight Board. The IRS Oversight Board issued a statement in response to the TIGTA report (TAXDAY, 2013/05/17, I.3 ). ”The use of inappropriate criteria to identify organizations applying for tax-exempt status indicates, in the Board’s opinion, a breakdown in the business processing system of the IRS,” the Oversight Board said. In related news, President Obama also called for accountability in the IRS (TAXDAY, 2013/05/14, I.1 ).

New Acting IRS Commissioner. President Obama announced on May 16 the appointment of Werfel as IRS acting commissioner, effective Wednesday, May 22 (TAXDAY, 2013/05/17, W.1 ). The appointment follows Miller’s resignation in the wake of intense pressure focused on the Service’s improper targeting of conservative political groups that were seeking nonprofit status (TAXDAY, 2013/05/15, I.5 ).

IRS Furlough Days. The IRS will be closed on May 24, June 14, July 5, July 22 and August 30, 2013. On those days, no IRS offices will be operating, IRS employees will be furloughed without pay, no tax returns will be processed and no compliance-related activities will take place (IR-2013-51 ; TAXDAY, 2013/05/16, I.4 ). However, taxpayers should continue to file their returns and pay any taxes due, and the Electronic Federal Tax Payment System (EFTPS) will operate as usual.

June 2013 AFRs. The IRS has provided various prescribed applicable federal rates (AFRs) for federal income tax purposes for June 2013 (Rev. Rul. 2013-12 ; TAXDAY, 2013/05/20, I.1).

RTRP Test Fees. Fee amounts collected for scheduled registered tax return preparer (RTRP) test appointments that were canceled due to the court-ordered injunction are being refunded (TAXDAY, 2013/05/17, I.4 ). Also being refunded are fees collected from return preparers who tested on or after January 18, 2013, the date the test was enjoined.

RTRP Regulations. Karen Hawkins, director of the IRS Office of Professional Responsibility (OPR), spoke in favor of the IRS’s authority to regulate unenrolled tax return preparers, which the IRS has designated as RTRPs (TAXDAY, 2013/05/15, I.5 ). Hawkins believes that the U.S. district court’s decision in S. Loving, DC D.C., 2013-1 ustc ¶50,156 (TAXDAY, 2013/01/22, J.3 ) is incorrect.

Illinois Disaster Relief. Victims of severe storms, straight-line winds and flooding that began on April 16 , in parts of Illinois may qualify for filing relief from the IRS (IL-2013-28 ; TAXDAY, 2013/05/16, I.3 ). The president has declared the counties of Cook, DeKalb, DuPage, Fulton, Grundy, Kane, Kendall, Lake, LaSalle, McHenry and Will as federal disaster areas.

Carbon Dioxide Capture Credit. The IRS has released the 2013 inflation adjustment factor for the carbon dioxide (CO2) capture credit (Notice 2013-34 ; TAXDAY, 2013/05/15, I.1 ). The 2013 inflation-adjusted credit applies to the amount of qualified CO2 captured by a taxpayer at a qualified facility and disposed of in secure geological storage.

Medical Loss Ratio Rules. The IRS has issued proposed regulations that provide guidance to Blue Cross and Blue Shield organizations, and certain other health care organizations, on computing and applying the medical loss ratio added to tax code by the Patient Protection and Affordable Care Act (P.L. 111-148 ) (NPRM REG-126633-12 ; TAXDAY, 2013/05/13, I.1). The regulations are proposed to apply to tax years beginning after December 31, 2013.

Criminal Investigations 2012 Report. IRS Criminal Investigations (CI) has released its annual report for fiscal year 2012, highlighting gains in enforcement actions and penalties imposed on convicted tax criminals (IR-2013-50 ; TAXDAY, 2013/05/13, I.4 ). The 28-page report summarizes a wide variety of CI activity on a range of tax related issues during the year ending September 30, 2012.

Schedules M-1 and M-3. The IRS has announced on its website that corporations and partnerships with $10 million to $50 million in total assets at the end of the tax year will be permitted to file Schedule M-1 for tax years ending after December 31, 2014, rather than Schedule M-3, Parts II and III. Part I, lines 1-12 will continue to be required of these taxpayers (TAXDAY, 2013/05/13, I.5 ).

Code Sec. 336(e) Regulations. The IRS released final regulations allowing an election to treat the sale, exchange or distribution of at least 80 percent of the voting power and value of the stock of a target corporation as a sale of all of the target’s underlying assets (T.D. 9619 ;TAXDAY, 2013/05/13, I.6 ). The regulations provide the terms and conditions for making such an election and the consequences of the election.

By Stephen K. Cooper and Jennifer J. Rodibaugh, CCH News Staff