News Blog

State & Local Tax Update - 8/21/12

Posted 12:00 PM by

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. Some counties began mailing their assessment notices this month.

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 Supreme Court Rules on Sales Factor Sourcing: The Indiana Supreme Court has held that a brewery and malt beverage distribution company's sales to Indiana customers, who used common carriers to pick up merchandise in the company's Ohio facility for delivery to Indiana, are in fact Indiana sales; accordingly, these sales are subject to the state's adjusted gross income tax. The Court further held the Tax Court's determination that an example included in Ind. Admin. Code § 3.1-1-53 operated to exempt the company from Indiana tax on income from sales of goods delivered by common carrier to Indiana customers was erroneous since the example was not a rule and did not have the force of law. See Indiana Department of Revenue v. Miller Brewing Company for details of the decision.

Alabama Issues Sales Tax Nexus Regulation: The Alabama Department of Revenue has adopted new rule 810-6-2-.90.01 , Seller's Responsibility to Collect and Pay State Sales Tax and Seller's Use Tax, effective July 31, 2012. The new rule makes clear that, under certain conditions, an out-of-state seller is engaged in-state in the business of selling tangible personal property at retail and is required to register with the Department for a sales tax license and collect /remit sales tax on all sales made within Alabama. The new rule tracks the language of Ala. Code § 40-23-190, which indicates that actions/activities of related parties can create substantial nexus for an out-of-state seller.

California Gillette Decision Vacated: On Aug. 9, 2012, the California Court of Appeal has, "on its own motion and for good cause," vacated its previous decision in the Gillette case and ordered a rehearing to decide whether California can require multistate taxpayers to use the double-weighted sales factor formula to apportion their net business income for corporation income tax purposes only if California repeals its Multistate Tax Compact provision, which allows taxpayers an option to use the equally weighted UDITPA apportionment formula.

Michigan Tax Tribunal Rules on Rolling Stock Exemption: The taxpayer was not entitled to a "rolling stock" exemption for parts that were affixed to its trucks or trailers after the date that the trucks or trailers were purchased. The taxpayer is an interstate motor carrier who purchased certain parts - auxiliary power units, bunk heaters, and GPS systems - that were not affixed to the trucks or trailers at the time the taxpayer purchased the trucks and trailers. The sales and use tax exemptions for rolling stock used in interstate commerce only exempt "parts" that are affixed to a truck or trailer. Under the sales tax exemption, a part that is affixed to a truck at the time of purchase is exempt; however, if a person purchases a part that is not affixed to a truck or trailer, it is taxable. Since the taxpayer affixed the parts after acquiring the trucks and trailers, the parts were not "affixed to" a truck or trailer at the time they were used or consumed in Michigan. Thus, the parts were taxable. See MLT, Inc. v. Michigan Department of Treasury for details of the decision.

Utah Income Tax Nexus Regulation Amended: Utah Admin. R. R865-6F-6 has been amended to reflect current policy, as a result of case law and amendments to the Multistate Tax Commission rule, to indicate that delivery of goods in a seller's vehicle no longer creates nexus for corporation income or franchise tax purposes.