Reassessment for Indiana Real Property Taxes
Indiana counties are currently wrapping up their 2012 statewide reassessments. During a reassessment year, county and township assessors are required to inspect all properties and adjust all assessed values to properly reflect market value in use. Counties were last required to reassess property in 2002; therefore, some property owners should expect significant changes as a result of the 2012 reassessment.
Property owners are encouraged to review their assessment notices (Form-11) as soon as they receive them to make sure the assessed value looks appropriate. The property owner has 45 days to file an appeal after the mailing of the first notice of assessment. When a property owner receives their tax bill, it is often too late to appeal the assessed value for that year. Many counties have already mailed their assessments, and the 45-day appeal period is well underway. In fact, Lake County mailed Form-11s Jan. 5, which means the deadline to appeal the Lake County assessment is Feb. 19, 2013. Additionally, Madison County mailed Form-11s Jan. 11, which means the deadline to appeal the Madison County assessment is Feb. 25, 2013.
Contact your KSM advisor, or KSM property tax leader Chad Miller, as soon as you receive your Form-11. We would be happy to review the reassessed value of your commercial property to help you consider whether an appeal should be filed.
Indiana Issues Sales Tax Ruling on Vehicle Leasing
An automobile dealership engaged in vehicle leasing was subject to sales tax on the satisfaction of unpaid lease obligations received from unrelated third-party dealers. The taxpayer leased automobiles to customers ("lessees") and held title to the vehicles during the lease period. Although the taxpayer collected and remitted sales tax as lease payments were received from the lessees, it failed to collect sales tax or pay use tax on early termination payments received from third-party dealers. An "early termination" occurs when a lessee enters into a new purchase or lease agreement with a third-party car dealer before the end of the current lease agreement with the taxpayer. The third-party dealer pays off the lessee's remaining obligation, in addition to purchasing the vehicle from the taxpayer. An audit concluded that the portion of the payoff amounts received from the third-party dealers was subject to sales tax because the payments were part of the lease consideration as indicated in the lease agreement executed between the taxpayer and the lessee; the payments by the dealers relieve the lessees from liability to the extent that the lease obligation is satisfied. Pursuant to Ind. Admin. Code 45 § 2.2-4-27(d)(1), all consideration received and provided for in the lease contract for the rental of property is subject to tax. The Department disagreed with the taxpayer's contention that the transactions were resale sales because it directly sold the leased vehicles to third-party car dealers who purchased those vehicles for resale purposes. (See LOF 04-20110564 for details.)
Louisiana Requires E-filed Extensions
Effective Jan. 20, 2013, the Louisiana Department of Revenue adopted an amendment to an administrative rule that governs the procedure for obtaining corporation income and franchise tax return filing extensions. The amended rule provides that, beginning with returns due on April 15, 2013, taxpayers seeking to obtain a corporation income and franchise tax return filing extension must submit the extension request electronically on or before the return due date. An electronic extension request can be submitted via the department's website, tax preparation software, or any other electronic method authorized by the secretary of revenue.
Rhode Island Impose $500 fee on Partnerships/LLCs
The Rhode Island Division of Taxation has issued a special edition newsletter focusing on the 2013 filing season. Recently enacted legislation requires limited partnerships and limited liability partnerships to pay an annual charge or filing fee of $500 starting with tax year 2012. In addition, new for this season, Form RI-1065, Rhode Island Partnership Income Returns, will be filed by limited partnerships, LLPs, general partnerships, and LLCs (including SMLLCs). (Rhode Island Tax News 01/01/2013)
Utah Issues Notice on Successor Liability
The Utah State Tax Commission has issued a notice informing taxpayers who are selling a business that they must file final tax returns within 30 days of the sale, close all open tax accounts with the commission, and provide the purchaser with a receipt or letter from the commission showing no sales taxes are owed. Taxpayers purchasing a business are required to apply for new tax licenses since tax licenses are not transferable, obtain a receipt from the seller showing that all sales taxes have been paid, or that no sales taxes are due, and withhold any amount of unpaid tax from the purchase price to pay to the commission within 30 days of the final sale of the business. Purchasers may be held liable for previous sales taxes the business may owe if they do not meet the foregoing requirements. Note that if business ownership changes, but the federal employer identification number is allowed to stay the same by the IRS, the new owner is not required to obtain new tax account numbers with the commission; however, the new owner must notify the commission with the new owner and officer information. See the Successor Liability Notice for details.
Wisconsin Updates Sales Tax Guidance on Software
The Wisconsin Department of Revenue has updated its guidance on the sales and use tax treatment of computer hardware, software and services. The release discusses sourcing rules for the following: (1) determining the location where a sale takes place; (2) prewritten computer software; (3) computer-related repair services and repair parts; (4) computer software maintenance contracts; and (5) software term licenses and software subscriptions. The release provides a discussion of bundled transactions, the definition of "prewritten computer software," and taxable and nontaxable sales of computer hardware, software and services. The release also discusses whether sales tax must be paid on software that is obtained over the Internet and Wisconsin's treatment of cloud computing components. See sales tax FAQs for details.