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State & Local Tax Update - 5/27/14

Posted 4:48 PM by

2014 Trending for Indiana Real Property Taxes

Indiana has achieved on-time property tax billing with all 92 counties having printed and mailed their tax bills for 2014. The spring 2014 tax bill was due Monday, May 12. The 2014 tax bill was calculated based upon the March 1, 2013, assessed value.

This is a perfect opportunity for property owners to review their assessed value and tax bill for accuracy. The assessed value should be representative of market value. One way to determine if your assessed value is accurate is to ask yourself, “Could I sell my property for the assessed amount?” If the answer is no, then there is still an opportunity to appeal your assessed value in many counties.

We would be happy to review the assessed value of your commercial property to help you consider whether an appeal should be filed. For assistance, contact your KSM advisor or KSM property tax leader Chad Miller as soon as possible. Or, use KSM's property tax savings calculator to calculate your potential savings.

 

Idaho - Clarifies Taxability of Software:  Recently passed legislation provides and clarifies that the definition of taxable tangible personal property does not include custom computer programs, computer software that is delivered electronically, remotely accessed computer software, and computer software that is delivered by the load and leave method where the vendor or its agent loads the software at the user's location but does not transfer any tangible personal property containing the software to the user.  In this context, the term "remotely accessed computer software" means computer software that a user accesses over the Internet, over private or public networks, or through wireless media, where the user has only the right use or access the software by means of a license, lease, subscription, service or other agreement.  This law also provides and clarifies that taxable tangible personal property includes computer software that constitutes digital music, digital books, digital videos and digital games, regardless of the method by which the title, possession, or right to use such software is transferred to the user.  (For more information, see H598, effective 07/01/2014.)

Illinois - New Class of Motor Vehicles Subject to Rental Tax:  The Automobile Renting Occupation and Use Tax Act now includes rentals of any second division motor vehicle with a gross vehicle weight rating of 8,000 lbs.or less.  Effective January 1, 2014, Illinois automobile rental companies must collect automobile renting occupation and use tax on this class of vehicle, which includes pickup trucks and sport utility vehicles.  The Department clarifies that if taxpayers paid sales and use tax on a second division vehicle, no credit will be received because the tax paid was lawfully owed at the time of purchase.  (For more information, see Informational Bulletin FY 2014-09.)

Kentucky - Unclaimed Property Dormancy Period Changes:  Effective April 10, 2014, KRS 393.068 has been updated to provide that all tangible personal property, including choses in action in amounts certain, and all debts owed or entrusted funds or other property held by the federal government is presumed abandoned if after three years (previously five years) from its acquisition, it remains unclaimed.  (For more information, see KY HB445.)

Minnesota - Guidance Provided on Sales Tax Exemption for Isolated/Occasional Sales: The Minnesota Department of Revenue has revised a release that explains the exemption from sales and use tax for certain isolated and occasional sales.  This exemption applies only in specified circumstances and does not apply to: sales of inventory; sales that happen in the normal course of a taxpayer's business; sales of goods and equipment that are primarily used in the taxpayer's trade or business; and leases of tangible personal property. Sales of substantially all of the assets of a trade or business qualify if certain conditions are met.  (For more information, see Minnesota Sales Tax Fact Sheet 132, 04/01/2014.)

Ohio - Annual CAT Filing Deadline Reminder:  The first quarter 2014 CAT return is due May 12, 2014.  For all annual CAT taxpayers, the 2013 annual is also due on May 12, 2014. Taxpayers may file and pay electronically through the Ohio Business Gateway; annual filers may also use TeleFile.  As a reminder, for tax periods beginning on January 1, 2014 and thereafter, the annual minimum tax (AMT) will become a tiered structure and taxpayers will pay an amount that corresponds with their overall commercial activity.  Taxpayers should use the prior calendar year's taxable gross receipts to determine the current year's AMT.

Texas - Claification of COGS Deduction in Combined Group:  A taxpayer filing a combined return was granted a franchise tax refund based on a correctly calculated cost-of-goods-sold (COGS) deduction for the combined groups.  Based on several statutory provisions relating to the determination of taxable margin, on combined reporting, and COGS calculation, it was apparent that the franchise tax is intended to apply to all members of a combined group as if they were a single taxpayer.  Therefore, in determining the COGS, each member of a combined group's business is considered as a whole so that a member that does not sell any goods itself may nevertheless deduct as COGS those expenses it incurs to sell goods owned by another member of the combined groups.  (For more information, see Combs et al. v. Newpark Resources, Inc., Tex. Ct. App., 3d Dist., Dkt No. 03-12-00515-CV, 12/31/2013.)

Utah - Misinformation Provided by State: Tax Upheld:  The State Tax Commission denied a taxpayer's request for a waiver of the tax assessed that resulted from the disallowance of a health benefit plan credit.  The taxpayer relied on information provided by the Commission to prepare the originally filed return, but was denied credit upon audit. Prior to preparing her return, the taxpayer's paid preparer attended two Utah State Tax Commission training sessions, consulted the Commission's website, and reviewed the 2009 TC-40 instructions, all of which showed that the taxpayer qualified for the credit.  The Commission explained that it noticed the misinformation, but it was not corrected until the end of the 2009 filing season.  Therefore, the misinformation caused the taxpayer to incorrectly file for the credit for 2009.  Thus, the taxpayer showed reasonable cause, and a waiver of interest was granted.  However, the taxpayer could not receive a waiver of the correctly assessed audit tax based on misinformation, as there is no section in the Utah Code authorizing a waiver based on misinformation from the Tax Commission.  (For more information, see Appeal No. 12-1866, 05/28/2013 (released April 2014).) 

 

About the Author
Donna Niesen is a partner in Katz, Sapper & Miller’s State and Local Tax Practice. Donna provides a wide variety of tax consulting services in the areas of multistate sales and income taxes, business incentives, controversy services, and other state taxes.

 

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