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State & Local Tax Update - 5/25/12

Posted 12:00 PM by

Indiana Issues Guidance on Taxation of Government Obligations: The Indiana Department of Revenue has revised its information bulletin regarding government obligations to provide an updated listing of exempt and taxable federal obligations. The revised bulletin also addresses the taxation of state and local bond interest issued by a state or political subdivision other than Indiana. Interest earned from a direct obligation of a state or political subdivision other than Indiana is subject to the adjusted gross income tax if the obligation is acquired after Dec. 31, 2011; an obligation will be considered to be acquired if the trade date is after Dec. 31, 2011. Interest earned from obligations held or acquired prior to Dec. 31, 2011, is not subject to Indiana income tax. Interest earned from obligations of Puerto Rico, Guam, Virgin Islands, American Samoa, or Northern Mariana is not included in federal gross income and is exempt under federal law, thus there is no add-back for interest earned on these obligations. See Information Bulletin 19 for details.

Arizona Repeals Use Tax Declaration for Consumers: Effective for taxable years beginning from and after Dec. 31, 2011, a person who stores, uses or consumes tangible personal property subject to tax for a nonbusiness purpose and the tax was not collected by a registered retailer, the person is no longer required to declare the annual amount of tax due on his or her individual income tax form. See SB 1214 for more information.

Illinois Circuit Court Declares Click-Through Nexus Rule Unconstitutional: A Cook County circuit court judge ruled that Illinois' 2011 "Amazon tax" legislation is unconstitutional, citing violations of the Commerce Clause and Supremacy Clause. Click here to view the decision.

Ohio to Offer Amnesty Program: From May 1, 2012, through June 15, 2012, Ohio will offer a general tax amnesty program to qualifying taxpayers with certain unreported or underreported taxes that were due and payable as of May 1, 2011. In exchange for coming forward, penalties will be abated and 50 percent of interest will be forgiven. Most taxes administered by the Department of Taxation are eligible; however, consumer's use tax is not eligible for the general amnesty program. A separate Consumer's Use Tax Amnesty Program is available. See http://ohiotaxamnesty.gov/ for details on eligibility and the application process.

Oklahoma Court Rules No Nexus for IP Company: The Oklahoma Supreme Court has reversed a determination of the Court of Appeals and ruled that the Tax Commission improperly assessed corporate income taxes against a Vermont corporation on payments it received from a restaurant chain for use of the taxpayer's intellectual property in Oklahoma where the licensing contract was not entered into in Oklahoma and where no part of the contract was to be performed in Oklahoma. See Scioto Insurance Company v. Oklahoma Tax Commission for details of the case and the Court's analysis.

Wisconsin Updates Sales Tax Publication on Digital Goods: The Wisconsin Department of Revenue has updated its publication concerning the application of sales and use taxes to digital goods. The revised publication reflects the Department of Revenue's determination that certain construction plans and construction project information are subject to sales and use taxes as additional digital goods that are news or other information products. This tax treatment applies for sales occurring on and after July 1, 2012. In addition, examples of products that constitute "additional digital goods" have been added to the publication, as well as examples of products that are transferred electronically but are not subject to the sales and use taxes imposed on sales of specified digital goods and additional digital goods. Finally, information on "bundled transactions" has been added to the publication. See Publication 240 for details.

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