On May 14, 2018, Indiana Governor Eric Holcomb signed into law H.B 1316 (the Bill). The Bill provides a number of changes to Indiana’s tax laws, including responding to provisions of the federal Tax Cuts and Jobs Act. Some notable provisions of the Bill include:

  • updating Indiana’s conformity to the Internal Revenue Code from January 1, 2016 to February 11, 2018, effective for taxable years beginning on or after January 1, 2018;
  • specifying that any IRC amendments made by an act passed by Congress prior to February 11, 2018, other than the 21st Century Cures Act or the Disaster Tax Relief and Airport and Airway Extension Act, that is effective for a taxable year that begins before February 11, 2018 and affects corporate taxable income, is also effective for the same taxable year for purposes of determining Indiana adjusted gross income.
  • specifying that amounts under IRC 951A (GILTI) are treated as foreign source dividends for Indiana purposes, which means that Indiana’s Dividends Received Deduction for foreign source income under Ind. Code § 6-3-2-12 will apply to GILTI;
  • providing for similar treatment of amounts under IRC 965 Repatriation Transition Tax;
  • specifying that to the extent any amounts from the Repatriation Transition Tax or GILTI are included in Indiana income, these receipts will be included in the Indiana apportionment factor and sourced based on the rules for dividends from investments;
  • decoupling from the limitation on interest expenses under IRC 163(j); and
  • decoupling from the federal unlimited NOL carryforward period under IRC §172 and instead providing for a carryforward period of 20 years.
Eversheds Sutherland Observation: Indiana’s treatment of GILTI as a “foreign source dividend” puts GILTI on equal footing with Subpart F income (including the Repatriation Transition Tax) for Indiana corporate tax purposes. Under Indiana Code § 6-3-2-12, a 100% DRD is allowed for foreign source dividends from 80% owned corporations. The DRD is reduced to 85% for dividends from corporations in which the US shareholder owns a 50-80% interest, and further reduced to 50% for dividends from corporations in which the ownership percentage is 50% or less. Indiana’s treatment of GILTI under the Bill is similar to certain other states’ treatment of GILTI including Georgia, which exempts both GILTI and Subpart F income from state taxation, and Illinois, which has a foreign dividend subtraction that applies to both GILTI as well as Subpart F income.

Read more here: Indiana H.B. 1316

The Eversheds Sutherland SALT Team is always excited to see what kind of pets our clients and friends have. Our team features a different pet at the end of every month, and we want to feature YOURS! Featured pets will receive a fun prize from the SALT Team. The deadline for May submissions is Friday, May 25.

To submit your pet to be featured, visit the Eversheds Sutherland SALT Shaker App, click “Pet of the Month” in the drop-down, then click “Submit A Pet.”

Don’t have the app? It is available for download in the Apple App StoreGoogle Play and the Amazon Appstore.

View previously-featured furry friends.

The Eversheds Sutherland SALT team presents at the Tax Executives Institute (TEI) Denver Chapter State and Local Tax Day on May 15, 2018, in Lakewood, Colorado. Details of their presentations are below.

The Future of Sales Tax Collection – Update on Wayfair and Sales Tax Preparedness
Speakers: Michele Borens

Oh So GILTI – Update on State Tax Implications of Federal Tax Reform
Speakers: Robb Chase and Maria Todorova

Not A Class Act – The Recent Aggressiveness of Local Taxing Authorities and Class Action Lawsuits
Speakers: Michele Borens

Legislative Roundup – Update on State Tax Legislative Developments
Speaker: Michele Borens and Alla Raykin

Slicing the Pie – Update on State Tax Apportionment Litigation
Speakers: Maria Todorova and Ted Friedman

The Tax Cuts and Jobs Act, P.L. 115-97,[1] made sweeping changes to the Internal Revenue Code, and will have far-reaching implications for state tax systems that broadly conform to the IRC.

In this article for Law360, Eversheds Sutherland attorneys Jeffrey Friedman, Eric Tresh, Todd Lard and Todd Betor focus on the major state income tax implications of the TCJA’s international tax provisions, including:

  • The transition tax imposed by revised IRC § 965;
  • The foreign-source dividends received deduction, or DRD, allowed by new IRC § 245A;
  • The tax on global intangible low-taxed income, or GILTI, in new IRC § 951A and related deduction in IRC § 250;
  • The deduction allowed for foreign-derived intangible income, or FDII, in new IRC § 250; and
  • The base erosion anti-abuse tax, or BEAT, imposed under new IRC § 59A.

View the full article.

The New York City Department of Finance recently announced the availability of penalty abatements for certain taxpayers that have underpaid business taxes due to the inclusion of Section 965 income.

NYC Finance Memorandum No. 18-4 (PDF) describes tax considerations and late payment penalty relief for NYC taxpayers affected by Section 965 and subject to the General Corporation Tax (GCT), the Banking Corporation Tax (BTX), and the Unincorporated Business Tax (UBT).

Like many states and localities, New York City does not provide for the deferred payment of NYC tax attributable to net Section 965 income. Therefore, S corporations and unincorporated businesses taxed under the GCT, BTX and UBT may see substantial increases in their NYC tax liability. Memorandum No. 18-4 indicates that penalty abatements are available to certain taxpayers that receive bills from the NYC Department of Finance that include an underpayment penalty attributed to net Section 965 income.

For information regarding submitting a penalty abatement, see the instructions on Memorandum No. 18-4 and the NYC Department of Finance website.

Section 965 Background

NYC Finance Memorandum No. 18-4 addresses changes caused by Federal Public Law 115-97, known as the Tax Cuts and Jobs Act (TCJA), which was signed into law on December 22, 2017. The TCJA introduced a new Internal Revenue Code provision, Section 965, which imposes a one-time transition tax on the untaxed foreign earnings of certain specified foreign corporations as if those earnings had been repatriated to the United States.

The TCJA allows certain taxpayers to make an election under Section 965(h) to pay the transition tax in installments over an eight-year period. This election does not, however, defer recognition of Section 965 income, which must be included on a taxpayer’s federal return for the last taxable year beginning before January 1, 2018.

New York State Notice on Section 965 Income

Many states and localities do not provide for the deferral of Section 965 income or repayment. In April, the New York State Department of Taxation and Finance issued Notice N-18-4 (PDF) indicating that in the case of S corporation shareholders, individual taxpayers are required to pay the additional New York tax generated by Section 965 income in the tax year it is recognized and included in federal adjusted gross income. Rhode Island and several other states have issued similar guidance.

Related Content

New York State budget adopts substantial changes in response to federal TCJA” (April 2, 2018)

Transition tax—enough about how it works; here is what doesn’t work” (April 9, 2018)

Party Like It’s 1986: Business Impacts of the Bill Formerly Known as the Tax Cuts and Jobs Act” (December 22, 2017)

In another of the so-called “Compact” cases, the Oregon Supreme Court affirmed the decision of the Oregon Tax Court and held that: (1) the 1967 Oregon Legislature, in enacting Oregon Statute Section 305.655, did not clearly and unmistakably intend for Oregon to enter into a binding contract that would bind the states under the Oregon and federal contract clauses, and (2) the 1993 Legislature’s repeal of part of Oregon Statute Section 305.655 did not violate the Oregon Constitution by not setting out the text of that statute. In reaching the first part of its holding, the court considered the text, context and legislative history of Section 305.655. The court found that functionally, the terms of the statute did not resemble a contract, because the Multistate Tax Commission did not permit member states to do anything collectively that each state could not do unilaterally. The context of the statute was consistent with the adoption of a uniform law instead of an interstate compact. While the legislative history supports the position that the Oregon legislature understood that it was entering into an interstate compact, the history also supports that the compact would require congressional approval before the compact could go into operation. In reaching its second holding, and relying on one of its prior decisions, the court found that the amendment of Section 305.655 by the 1993 Legislature reflected a complete and perfect legislative choice to replace one set of apportionment formulas with another. In a concurring opinion, three judges reached a different conclusion, finding that the 1967 Oregon Legislature, in enacting Section 305.655, intended to enter into a binding contract, although it ultimately agreed with the majority that the taxpayer did not have a contractual right to enforce Section 305.655. Health Net, Inc. v. Department of Revenue, 362 Or. 700 (2018).

Eversheds Sutherland was delighted to sponsor and lead the two days of TEI’s Audit and Appeals seminar focused on State and Local Tax Controversy (May 2 – 3, 2018). Over the past two days, the conference featured unique and practical content including:

Industry Perspective on SALT Tax Controversy

Moderated by Jeff Friedman, this discussion demonstrated the perspectives and strategies of in-house state tax controversy practitioners.

Speakers included:

  • Linda Kim, The Wonderful Company
  • Denise Helmken, General Mills
  • Ken Wright, Smithfield Foods
  • Chris Lee, Koch Companies Service

Perspectives from the Other Side – State Tax Attorney Panel

Moderated by Pilar Mata from Tax Executives Institute, state tax attorneys from Maryland, Ohio and Texas revealed their department organization, decision drivers and advice for taxpayers.

  • Ray Langenberg, Texas Comptroller of Public Accounts
  • Christine Mesirow, Taxation Section, Ohio Attorney General’s Office
  • Brian Oliner, State of Maryland

All Rise – A View from the Bench

Moderated by Richard Pomp from the University of Connecticut School of Law, this discussion offered valuable insight into the inner workings of three state adjudicative bodies, best practices for taxpayers and counsel alike, and the jurists’ thoughts on the state of state tax.

  • Martha Blood Wentworth, Indiana Tax Court
  • Douglas Bramhall, California Office of Tax Appeals
  • Cade Cole, Louisiana Board of Tax Appeals

On Wednesday, May 2, Eversheds Sutherland hosted a reception at House of Blues New Orleans. A good time was had by all!



It is more complicated to determine an in-state sale regarding the provision of multistate services or licenses of intangibles. Historically, states looked to a taxpayer’s costs of performing the service or licensing the intangible. Some states have become critical of this cost-of performance method and replaced it with a market-based method of computing in-state sales.

In this edition of A Pinch of SALT, Eversheds Sutherland attorneys Jeffrey Friedman, Nicholas Kump and Robert Merten III discuss the recent amendments to the Multistate Tax Commission’s (MTC) Model General Allocation and Apportionment Regulations; how the model regulations can be further improved; how states are responding to the model regulations; and what is next for the MTC.

View the full article.

Eversheds Sutherland is a proud co-sponsor of the 2018 TEI Region II Tax Forum taking place June 4-5, 2018, at the Borgata Hotel in Atlantic City, New Jersey. The Tax Forum will include four plenary and ten breakout sessions offering a wide selection of federal, international, and state and local topics.

The Eversheds Sutherland Tax Team presentations are listed below. Eversheds Sutherland will also sponsor the hospitality reception from 5:00 p.m. – 6:30 p.m. on June 4.

  • US federal tax reform
    ES Speaker: Partner Robb Chase
  • International implications of US tax reform
    ES Speaker: Partner Aaron Payne
  • Tax considerations in restructuring and mergers and acquisitions  
    ES Speaker: Partner Taylor Kiessig
  • SALT implications of US tax reform
    ES Speaker: Attorney Todd Betor
  • IRS audit update
    ES Speaker: Partner Jim Mastracchio
  • SALT considerations in restructuring and mergers and acquisitions
    ES Speaker: Partner Maria Todorova
  • Partnership and joint venture update
    ES Speaker: Partner David Roby
  • SALT controversy and related business decisions
    ES Speaker: Partner Jonathan Feldman
  • Ethics
    ES Speaker: Partner Vanessa Scott
  • International implications of US tax reform
    ES Speaker: Partner Daniel Nicholas
  • Managing tax controversies – A global perspective
    ES Speaker: Partner Susan Seabrook
  • State tax policy under the new US order
    ES Speaker: Partner Todd Lard
  • Accounting methods and significant issues and tax-planning opportunities
    ES Speaker: Partner Ellen McElroy
  • Financial reporting considerations post reform: The interplay of Section 451(b) and ASC 606
    ES Speaker: Attorney Mike Resnick

View details and register now!


  • The $225 registration fee covers all of the technical sessions, breakfast, lunch and refreshments on both days, as well as our Monday evening reception.
  • Breakfast, luncheons and the reception are open to spouses, guests and vendor-sponsors as well.
  • To reserve your hotel room, use the Tax Executives On-Line Booking Link or call (609) 317-1000 and mention the TEI Conference Code GBTAX18
  • Golf, casinos, transportation to the Boardwalk, spa and other activities are available at all times; arrangements can be made. Attendees will be responsible for fees/costs.

The Rhode Island Department of Revenue recently released Advisory #2018-21 (PDF), which deals with “Section 965” income. The advisory states that the repatriation transition tax is not deferrable for Rhode Island state tax purposes.

Section 965 Background

On December 22, 2017, President Donald Trump signed into a law a bill popularly known as the Tax Cuts and Jobs Act (TCJA). A new Internal Revenue Code (IRC) provision introduced by the TCJA is Section 965, which provides for a transition tax on untaxed foreign earnings of certain specified foreign corporations as if those earnings had been repatriated to the US.

Certain taxpayers may make an election under Section 965(h) to pay the transition tax in installments over an eight-year period. This election does not, however, defer recognition of Section 965 income, which must be included on a taxpayer’s federal return for the last taxable year beginning before January 1, 2018.

Note that not all states allow transition tax installment payments.

Rhode Island Implications

Like many states, Rhode Island uses federal taxable income, as determined under the current IRC (but without special deductions allowed under federal law), as the starting point for determining taxable income for purposes of the business corporation tax. State law then further modifies the federal taxable amount. See: R.I. Gen. Laws § 44-11-11.

For Rhode Island’s treatment of Section 965 income, the Rhode Island Department of Revenue issued the following chart to clarify current state law:

The Department advised taxpayers to file amended returns if they filed a return that does not reflect this guidance.


For an overview on the SALT consequences of federal tax reform, see: “Waiting for the Other Shoe to Drop: State and Local Tax Implications of Federal Tax Reform – International Tax Provisions.” Bloomberg Tax – Daily Tax Report. (March 12, 2018)

For an in-depth look at the mechanics of Section 965, see the Eversheds Sutherland legal alert: “Transition tax—enough about how it works; here is what doesn’t work.” (April 9, 2018)