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State & Local Tax Update: 12/30/15

Posted 5:00 AM by

State & Local Tax Update

Personal Property Changes for the 2016 Filing Season

With the 2016 filing season right around the corner, please be aware that substantial changes have occurred to Indiana personal property tax filings. For example:

  • Assessment date changing to Jan. 1, 2016
  • Exemption for companies that have less than $20,000 of asset costs in a county
  • Removal of the duplicate filing requirement for assessments greater than $150,000
  • Exemption application Form 136 date change to April 1

For more information on these and other personal property tax filing changes, contact your KSM advisor or our property tax leader, Chad Miller, as soon as possible.

 
 

Chicago Issues Guidance for Construction Contractors

The Chicago Department of Finance has issued an Information Bulletin providing construction contractors with guidance about the Chicago use tax on nontitled personal property. The tax is imposed on nontitled tangible personal property in Chicago that is purchased from a retailer located outside of Chicago. The obligation to pay the tax is on the end user of the property.

The guidance provides information on the following: general information, permanently affixing tangible personal property to real property, annual tax credit, other credits, depreciation for out‐of‐city use, exempt uses, calculating the tax, registering for the tax, payments, return due dates, and examples.

Connecticut Issues Ruling on Streaming Digital Content

The Connecticut Department of Revenue Services issued Ruling 2015-5 indicating a company's recurring subscription fee (monthly or annual) to access digital content over the Internet is subject to sales and use tax because sales of access to digital content are taxable as computer and data processing services. Computer and data processing services include “retrieving or providing access to information.” Consequently, the subscription fee is subject to Connecticut sales and use tax when the service is sold to a customer located in Connecticut.

Indiana Issues Bulletin on Required Product Labels

The Indiana Department of Revenue has issued Information Bulletin 87 addressing the exemption from the state gross retail tax for certain labels required by state or federal statute or regulation. Labels are exempt from the state gross retail tax if the labels will be affixed to other tangible personal property being sold by a retail merchant, and the person acquiring the labels is required to affix the labels to the other tangible personal property for the purpose of complying with any state or federal statute or regulation.

Examples of labels that may be purchased exempt include, but are not limited to: stickers on electrical appliances warning consumers the appliances are not to be used in or near water; food labels containing FDA-required information such as nutritional content and ingredient lists; window stickers (Monroney stickers) reporting fuel economy and crash test ratings on new vehicles for sale, as required by EPA and NHTSA; and other labels required by state or federal statute or regulation.

Indiana Issues Ruling on Electronic Summary Reports

A taxpayer's sales of employment and residential screening services, which includes providing customized summary reports to its customers that are delivered electronically, are not subject to sales and use tax. The taxpayer's customers submit specific information to the taxpayer, the taxpayer produces a customized report, and customers pay a fee to the taxpayer for each summary report. Items transferred electronically are not subject to sales or use tax unless the products meet the definition of specified digital products, prewritten computer software or telecommunication services.

Since the summary reports would not be considered specified digital products, prewritten computer software or telecommunication services, and since the taxpayer's employment and residential screening services are not provided in conjunction with the transfer of tangible personal property delivered in a tangible medium, the taxpayer's fee for the summary reports is not subject to Indiana sales or use tax. See Revenue Ruling 13-07ST for additional information.

Michigan Issues Guidance on Benefit of Purchaser Sourcing

The Michigan Department of Treasury has issued RAB 2015-20 that addresses how a taxpayer determines where the recipient of services receives the benefit of those services, for purposes of calculating the Michigan corporate income tax apportionment sales factor.

Michigan Issues Sales and Use Bulletin on Nexus

The Michigan Department of Treasury has issued RAB 2015-22 providing Michigan sales and use tax nexus standards for out-of-state sellers, effective Oct. 1, 2015. This bulletin addresses when an out-of-state seller is presumed to have nexus for purposes of the Michigan General Sales Tax Act or the Use Tax Act. The new bulletin discusses the following matters:

  1. When an out-of-state seller is presumed to be engaged in the business of making sales at retail of tangible personal property in Michigan for purposes of the Michigan General Sales Tax Act or the Use Tax Act;
  2. When an out-of-state seller who has agreements with one or more residents of Michigan is presumed to be engaged in the business of making sales at retail of tangible personal property in Michigan;
  3. When nexus is established, how long an out-of-state seller is presumed to be engaged in the business of making sales at retail in Michigan; and
  4. The Michigan filing requirements for out-of-state sellers who have nexus with Michigan.

About the Author
Donna Niesen is a partner in Katz, Sapper & Miller’s State and Local Tax Group. Donna helps keep clients up-to-date on the multitude of tax rules and requirements in all 50 states. She guides them in the right direction as they address the complex issues that emerge on both the state and local levels. Connect with her on LinkedIn.

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