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State & Local Tax Update - 9/24/14

Posted 4:20 PM by

Trending Assessment for Indiana Real Property Taxes

Indiana counties are currently wrapping up their 2014 trending assessments. During trending years, assessors are required to review recent sales and verify that the assessments are accurate using mass appraisal techniques. This process can become difficult for commercial properties due to the lack of arms-length sale transactions. 

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.

Contact your KSM advisor, or KSM property tax leader Chad Milleras soon as you receive your Form-11. We would be happy to review the assessed value of your commercial property to help you consider whether an appeal should be filed.


Indiana Supreme Court Reverses Tax Court Decision on Calculation of Net Operating Losses:

The Indiana Supreme Court ruled that a multinational manufacturer may not deduct foreign source dividends when calculating Indiana net operating losses, and the disallowance of the deduction did not violate the Foreign Commerce Clause of the U.S. Constitution. For more information, see Indiana Department of State Revenue v. Caterpillar, Inc., Ind. S. Ct. Dkt. No. 49S10-1402-TA-79. 08/25/2014.

Illinois Issues Final Sourcing Rules for Local Sales Tax:

In response to the recent Hartney decision, the Illinois Department of Revenue has issued final regulations regarding sourcing for local tax purposes. The final regulations indicate the local tax liability is based on the location where the retailer is "engaged in the business of selling tangible personal property," and are effective June 25, 2014. See 86 Ill. Admin. Code §§ 220.115, 270.115, 320.115, 370.115, 395.115, 630.120, 670.115, 690.115, 693.115 and 695.115 for additional information.

Illinois Appellate Court Finds Non-Titled Personal Property Use Tax Ordinance Invalid:

The Cook County Use Tax of Non-Titled Personal Property Tax Ordinance was found invalid for violating the Counties Code. Home rule counties are prohibited from imposing a use tax based on the selling or purchase price of tangible personal property per ILCS Chapter 55 § 5/5-1009. The court concluded that the use tax is actually a sales tax on the purchase of the property, and accordingly, the ordinance is an improper use tax on the selling or purchase price of personal property that is prohibited. For details see Reed Smith v. Ali et al., Ill. App. Ct. (1st Dist.), Dkt. No. 1-13-2646, 08/04/2014.

Louisiana Amnesty Program Details Released:

The Louisiana Department of Revenue has announced that its 2014 Amnesty Program will run from October 15, 2014, through November 14, 2014. The Tax Amnesty Fact Sheet provides details on eligible taxpayers, eligible taxes, and benefits of the program.

Massachusetts Amnesty Program Details Released:

The Massachusetts Department of Revenue has announced that its 2014 Amnesty Program will run from September 1, 2014, through October 31, 2014. The amnesty FAQs provide details on eligible taxpayers, eligible taxes, and benefits of the program.

Michigan to Exempt Business Property from Personal Property Tax:

Ballot Proposal 14-1 was approved by voters August 5, 2014. The proposal will allocate a portion of the state use tax to fund the elimination of the personal property tax on eligible industrial and commercial personal property. The ballot proposal reduces the state portion of the use tax and replaces it with a local community stabilization share of the tax to fund the exemption of eligible industrial and commercial personal property from the personal property tax. The ballot measure takes effect January 1, 2015.

New Jersey Tax Court Disallows Credit for New York Tax Paid:

A New Jersey resident S corporation shareholder was allowed a tax credit for taxes paid to New York on her S corporation income only to the extent that the New York tax was paid on income that would have been allocated to New York under New Jersey's allocation rules. For the tax year in question, 80% of the S corporation's income was allocated to and taxed by New York based on New York's single factor gross receipts formula while only 60.8% of the S corporation's income would have been allocated to New York under New Jersey's three- factor formula. The court ruled that the credit for taxes paid to another state does not apply to the extent that tax is paid to New York on income that would have been allocated to New Jersey under New Jersey's tax rules. See Criticare, Inc. and Marina Haber v. Director, Division of Taxation, N.J. Tax Ct., Dkt. No. 008253-2013, 07/08/2014  for details.

About the Author
Donna Niesen is a partner in Katz, Sapper & Miller’s State and Local Tax Group. 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. Connect with her on LinkedIn.

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