This podcast is hosted by Open Weaver Banks and features excerpts from the webcast of a casual conversation with Duncan Riley, Director of the Conciliation Bureau at the NYC Department of Finance.
Open and Eric Tresh ask Duncan about his perspective on the New York City Conciliation Bureau’s role in heading off litigation and resolving tax disputes, as well as the impact of COVID-19 on his Department’s work.
Listen now:
Listen to the hour-long version of the webcast here.
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On May 28, 2020, the Louisiana Legislature passed S.B. 138, which, if signed by the Governor, will require marketplace facilitators to collect and remit state and local sales and use taxes if they exceed an economic nexus threshold of $100,000 in sales or 200 transactions in the state in the current or previous calendar year.
Beginning July 1, 2020, the bill directs marketplace facilitators to register with the Louisiana Sales and Use Tax Commission for Remote Sellers (Commission) within 30 days of meeting either threshold and begin collecting the tax within 60 days. Following the Senate’s concurrence to a House floor amendment, the bill will now be sent to Governor John Bel Edwards, who is expected to sign it into law. If enacted, only four states with a sales tax remain that have not enacted a marketplace collection law: Florida, Kansas, Mississippi, and Missouri.
Read our full legal alert here.
The North Carolina legislature has introduced a pair of bills, H.B. 1080 and S.B. 727, which would require marketplace facilitators of prepared food delivery to collect local meals taxes on top of the existing obligation to collect state sales tax. The pending bills also clarify that the state’s marketplace collection threshold of $100,000 or 200 transactions per year applies only to remote businesses. The bills are an example of the recent trend among states to eliminate bifurcation of tax remittance of state and local sales and non-sales taxes. If enacted, the legislation would become effective July 1, 2020.
Kansas Legislators adjourned their legislative sessions without passing key state tax legislation: S.B. 266 would have established legislative thresholds for its remote seller rules and would have enacted remittance requirements for marketplace facilitators, but the initiative failed. Without S.B. 266, Kansas also won’t apply a legislative threshold to the remote-seller collection rules.
Calling all trivia fans! Don’t miss out on a chance to show off your SALT knowledge!
We will award prizes for the smartest (and fastest) participants.
This Week’s Question
Which state imposes an 18% interest rate on underpayments of taxes—the highest in the nation?
E-mail your response to SALTonline@eversheds-sutherland.com.
The prize for the first response to today’s question is a $20 UBER Eats gift card.
Answers will be posted on Monday. Be sure to check back then!
On May 14th, California Governor Gavin Newsom issued his proposed May revision to the state budget for fiscal year 2020-21. The budget proposal included two revenue-raising income tax measures, applicable for tax years 2020 through 2022: (1) limiting the amount of business tax credits a taxpayer can use to $5 million annually, and (2) suspending the net operating loss deduction. These tax proposals are estimated to raise $9.2 billion over the next three years.
On May 24th, the California Department of Finance released a proposed trailer bill, which, if enacted, would implement the Governor’s budget proposal to limit annual usage of business tax credits. The proposed bill provides that for taxpayers not required to be included in a combined report, the total of all allowable tax credits may not reduce tax by more than $5 million annually for each taxable year from 2020 through 2022. Similarly, for taxpayers required to be included in a combined report, the total of all allowable tax credits for all members of the combined report may not reduce the aggregate tax of all members by more than $5 million annually for the same period.
The proposed bill would limit usage of a number of business tax credits, including:
Tax credits which would otherwise be allowable during a taxable year but are limited by the $5 million cap will remain a credit carryover. The carryover period is extended by the number of tax years the credit is not allowed due to the $5 million cap.
New York S. 8386, introduced and referred to the Budget and Revenue Committee on May 21, 2020, provides that employers “may designate” remote work by employees who have been required to telework during the Covid-19 pandemic state of emergency “as having been performed at the location such work was performed prior to the declaration of such state disaster emergency for all state and local tax purposes, including but not limited to, apportionment.” The Bill is broad in scope, not limited by tax type, taxing jurisdiction, an employee’s residency status, or an employee’s “normal work location.” However, the primary intent of the Bill is to “remove unnecessary confusion and complexity” for “people [who] are working in a different jurisdiction from where they worked before” due to the pandemic. Thus, among other impacts, the Bill would allow employers to withhold state or local tax from wages based on an employee’s work location immediately before Governor Cuomo issued the state of emergency declaration in New York Executive Order 202. If signed into law, the Bill would take effect immediately but only apply during Executive Order 202, which currently runs from March 7, 2020 through September 7, 2020.
If adopted, S. 8386 may impact New York State’s application of the “convenience of the employer test” that applies to employer withholding and personal income tax obligations. Under that test, the Department of Taxation and Finance deems an employee who is teleworking from an out-of-state location to be working from their assigned office in New York unless the teleworking arrangement is entered into out of necessity, whether a specialized condition of the teleworker’s employment or a mandatory work-from-home policy. To-date, the Department has not issued guidance on whether teleworking out-of-state during the Covid-19 pandemic meets the “necessity” exception. Because the Bill creates an employer election to retain an employee’s normal work location for tax purposes during the pandemic, it may also create an inference that Executive Order 202 triggered the necessity exception if ultimately signed into law.
Finally, S. 8386 only applies to employer-mandated remote work during the duration of Executive Order 202. Therefore, if the Bill is enacted, employers and employees should re-evaluate their state and local tax obligations as a result of any teleworking arrangement within its scope.
On May 22, the Louisiana House Ways and Means Committee advanced S.B. 138, which would impose tax collection and remittance obligations on marketplace facilitators if they have either $100,000 of in-state sales or 200 separate transactions into the state. The proposal excepts telecommunication service providers from the definition of marketplace sellers and would allow telecom companies to opt out of handing over collection and remittance responsibilities to facilitators in order to keep collection of 911 and related fees simple. The legislature has until June 1, 2020 (its sine die) to pass the bill.
In addition, the Louisiana Sales and Use Tax Commission for Remote Sellers published an information bulletin announcing that remote sellers must begin registering with the Commission as of July 1, 2020. Remote sellers must submit an application with the Commission for approval to collect state and local sales and use tax within 30 days of meeting the economic nexus threshold. The bulletin indicates that all applications, tax returns, and remittances must be filed and paid electronically. The Commission will serve as the tax collecting entity for the benefit of state and local jurisdictions.
Thank you to everyone who participated in last week’s trivia question!
Last Week’s Question:
Which president once handled state tax cases, securing favorable rulings for taxpayers involving property taxes and local gross receipts taxes?
The Answer:
Abraham Lincoln represented taxpayers in various Illinois tax matters, including the Illinois Central Railroad Company in many of its property tax disputes. Most notably, Lincoln secured a favorable ruling from the Illinois Supreme Court, which upheld the legislature’s tax exemption to the Illinois Central Railroad Company for county property taxes. See Illinois Cent. R. Co. v. McLean Cty., 17 Ill. 291 (1855); see also State v. Illinois Cent. R. Co., 27 Ill. 64 (1861) (involving property tax valuation issue with Lincoln as counsel for railroad).
Lincoln later stated that he believed the county property tax case “was worth half a million dollars” to the railroad company. Abraham Lincoln, Speech at Carthage, Illinois (Oct. 22, 1858).
Keep an eye out for our next trivia question on Wednesday!
