The New York Legislature passed its 2018-2019 Fiscal Year budget on March 30, 2018, which is expected to be signed into law by Governor Cuomo. The Legislature responded to the Tax Cuts and Jobs Act (TCJA) passed by the United States Congress late last year by excluding IRC § 965 repatriated income from New York taxable income. However, the final budget failed to address other TCJA provisions, such as the tax on global intangible low-taxed income (GILTI) and the interest expense limitation under IRC § 163(j). Thus, New York will conform to these federal tax changes.
Eversheds Sutherland SALT Shaker: March 2018 Digest
Read our March 2018 posts on stateandlocaltax.com or read each article by clicking on the title. For the latest coverage and commentary on state and local tax developments delivered directly to your phone, download the latest version of the Eversheds Sutherland SALT Shaker app.
- SALT Pets of the Month: Milo and Otis
Meet Milo and Otis, the five-month-old tabby cat brothers belonging to Eversheds Sutherland SALT Associate Jessica Allen and her husband Erik. - Georgia passes legislation to provide deduction of GILTI from the state tax base
On March 21, 2018, the Georgia Legislature passed SB 328 (the Bill) to exclude IRC § 951A (GILTI) from Georgia taxable income. The Bill treats GILTI as Subpart F income for purposes of the deduction under OCGA § 48-7-21(b)(8). - Idaho Enacts Corporate Income Tax Changes to Take Advantage of the Federal Tax Reform Legislation
On March 12, 2018, Idaho’s governor signed into law H.B. 463 (the Bill), which provides a series of changes to Idaho’s income tax law in response to H.R. 1, popularly referred to as the Federal Tax Cuts and Jobs Act (the Act). - Texas Rules Sales for Resale of Mobile Voice and Data Services are Not Sales of Intangible Assets for Apportionment Purposes
The Texas Comptroller ruled that, for Texas apportionment purposes, the sale for resale of mobile voice and data services, purchased from third-party mobile telecommunications carriers and sold to an out-of-state third-party retailer using the carrier’s network infrastructure, is characterized as the sale of telecommunications services and internet access services, respectively, not the sale of an intangible right to access a service.
FEATURED PUBLICATIONS
- Videocast: State Tax Implications of Federal Tax Reform
The state and local tax (SALT) implications of federal tax reform are numerous, yet still often unclear. With states releasing new law and guidance about federal tax reform, taxpayers must stay abreast of this very dynamic area of law. In this videocast, Todd Lard and Todd Betor discuss the gating question to the SALT implications of federal tax reform—state conformity to the IRC—along with other SALT considerations pertaining to major general, domestic and international tax provisions included in the new tax law. - California Seeks Input on Clean Energy Equipment Tax Exemption
During the second half of 2017, California expanded its partial sales and use tax manufacturing and research and development exemption to include electric generation and distribution equipment. The legislative changes are particularly favorable to businesses engaged in electric generation through the use of renewable energy sources. The California Department of Tax and Fee Administration (CDTFA) has issued a notice inviting stakeholders to participate in an interested parties meeting (IPM) scheduled for April 11, 2018, to discuss whether the CDTFA should undertake a regulatory project to amend its corresponding regulation to implement and apply the statutory changes and, if so, to what extent. In their article for Law360, Eversheds Sutherland attorneys Carley Roberts, Robert Merten and Jessica Allen summarize the sales and use tax exemption’s scope and qualifying requirements, the 2017 legislative changes to the exemption, the CDTFA’s proposed amendments and why stakeholders may want to participate in the IPM process. - Moving into Worldwide Waters? States Reaching Beyond the Water’s-Edge
Many states require or permit affiliated businesses to report their income to the state in a combined group return. In their article for Bloomberg Tax, Eversheds Sutherland attorneys Maria Todorova, Justin Brown and Samantha Trencs discuss some of the complexities of combined reporting related to the inclusion of foreign entities in a combined group, including trends among states intended to expand the combined group to include additional foreign affiliates. - Waiting for the Other Shoe to Drop: State and Local Tax Implications of Federal Tax Reform – International Tax Provisions
The state and local tax (SALT) impact of the recently enacted federal tax reform is still being assessed. Because of states’ broad conformity to the federal income tax laws, many of these changes will have an impact on taxpayers’ SALT liabilities. In their article for Bloomberg Tax, Eversheds Sutherland attorneys Jeff Friedman, Todd Betor and Michael Spencer focus on the SALT consequences stemming from international provisions of the Tax Cuts and Jobs Act.
FEATURED EVENTS
- TEI’s Audits and Appeals Seminar
Eversheds Sutherland is delighted to sponsor and lead the two days of the seminar focused on State and Local Tax Controversy (May 2-3, 2018) during TEI’s 2018 Audits & Appeals Seminar. We hope to see you there! - TEI’s 2018 Region II Forum
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. Register today and join us!
SALT Pets of the Month: Milo and Otis
Meet Milo and Otis, the five-month-old tabby cat brothers belonging to Eversheds Sutherland SALT Associate Jessica Allen and her husband Erik. Rescued from the pound in Auburn, California, these two lucky kitties remained nameless for the first few weeks in their new home. “Frank” and “Hank” as well as “Bert” and “Ernie” were potential names for the pair until Erik decided “Milo” and “Otis” suited these sweet boys the best.
Milo and Otis are both fond of their big French bulldog sister, Petunia (see September 2016’s Pet of the Month), and she is a very patient pup who loves her brothers! Milo is the more assertive and affectionate of the two kittens and likes to wrestle and snuggle with Petunia. He keeps her face and ears well-groomed with his frequent kisses/licking. Otis is a sneaky fella who prefers to hide behind corners and jump out to startle Petunia whenever he hears her approaching. When Petunia is sound asleep, Otis will sniff her lovingly, raise his paw as if to pet her, and then smack her in the face.
We are so excited to feature Milo and Otis as our March Pets of the Month!
To submit YOUR pet to be featured, visit the Eversheds Sutherland SALT Shaker App, click the Pet of the Month in the drop-down, then click “Submit A Pet.”
Register today for TEI’s 2018 Region II Tax Forum (June 4-5)
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: Partner Marc Simonetti - 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 Karl Zeswitz - SALT controversy and related business decisions
ES Speaker: Partner Andrew Appleby - 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!
Notes:
- 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.
Videocast: State Tax Implications of Federal Tax Reform
The state and local tax (SALT) implications of federal tax reform are numerous, yet still often unclear. With states releasing new law and guidance about federal tax reform, taxpayers must stay abreast of this very dynamic area of law. In this videocast, Todd Lard and Todd Betor discuss the gating question to the SALT implications of federal tax reform—state conformity to the IRC—along with other SALT considerations pertaining to major general, domestic and international tax provisions included in the new tax law.
View the videocast.
Texas Rules Sales for Resale of Mobile Voice and Data Services are Not Sales of Intangible Assets for Apportionment Purposes
The Texas Comptroller ruled that, for Texas apportionment purposes, the sale for resale of mobile voice and data services, purchased from third-party mobile telecommunications carriers and sold to an out-of-state third-party retailer using the carrier’s network infrastructure, is characterized as the sale of telecommunications services and internet access services, respectively, not the sale of an intangible right to access a service. Accordingly, unlike receipts from the sale of an intangible asset which are sourced to the purchaser’s location, the taxpayer’s service receipts were sourced to the state to the extent that the Internet was accessed in Texas or the mobile voice services were provided in Texas. Private Letter Ruling No. 201711016L (Nov. 27, 2017).
California Seeks Input on Clean Energy Equipment Tax Exemption
During the second half of 2017, California expanded its partial sales and use tax manufacturing and research and development exemption to include electric generation and distribution equipment. The legislative changes are particularly favorable to businesses engaged in electric generation through the use of renewable energy sources.
The California Department of Tax and Fee Administration (CDTFA) has issued a notice inviting stakeholders to participate in an interested parties meeting (IPM) scheduled for April 11, 2018, to discuss whether the CDTFA should undertake a regulatory project to amend its corresponding regulation to implement and apply the statutory changes and, if so, to what extent.
In their article for Law360, Eversheds Sutherland attorneys Carley Roberts, Robert Merten and Jessica Allen summarize the sales and use tax exemption’s scope and qualifying requirements, the 2017 legislative changes to the exemption, the CDTFA’s proposed amendments and why stakeholders may want to participate in the IPM process.
View the full article.
Georgia passes legislation to provide deduction of GILTI from the state tax base
On March 21, 2018, the Georgia Legislature passed SB 328 (the Bill) to exclude IRC § 951A (GILTI ) from Georgia taxable income. The Bill treats GILTI as Subpart F income for purposes of the deduction under OCGA § 48-7-21(b)(8).
View the full Legal Alert.
Moving into Worldwide Waters? States Reaching Beyond the Water’s-Edge
Many states require or permit affiliated businesses to report their income to the state in a combined group return. In their article for Bloomberg Tax, Eversheds Sutherland attorneys Maria Todorova, Justin Brown and Samantha Trencs discuss some of the complexities of combined reporting related to the inclusion of foreign entities in a combined group, including trends among states intended to expand the combined group to include additional foreign affiliates.
View the full article.
Idaho Enacts Corporate Income Tax Changes to Take Advantage of the Federal Tax Reform Legislation
On March 12, 2018, Idaho’s governor signed into law H.B. 463 (the Bill), which provides a series of changes to Idaho’s income tax law in response to H.R. 1, popularly referred to as the Federal Tax Cuts and Jobs Act (the Act). The main changes to Idaho tax law include: (i) conformity, for tax years beginning after January 1, 2018, to the IRC as of January 1, 2018; and (ii) the add-back to federal taxable income of all amounts previously deducted on the corporation’s federal tax return under: (a) IRC § 245A (the 100% DRD for certain foreign-source dividend) and (b) IRC § 250 (containing the deductions for GILTI, IRC § 78 gross-up amounts related to GILTI, and FDII). The Bill also preserves the pick-up of the Act’s one time transition tax or repatriation tax under IRC § 965 for tax years beginning in 2017 and the add-back to federal taxable income the corresponding deduction in IRC § 965, which were enacted by H.B. 355 on February 9, 2018.
However, Idaho H.B. 659, currently pending, proposes to limit the add-back of amounts deducted under IRC § 250 to the deduction for GILTI and related IRC § 78 gross-up amounts, and H.B. 684, also pending, proposes to remove the add-back of amounts deducted under IRC § 965.