Policy and Legislation

Subscribe to Policy and Legislation via RSS

As we reach the midway point in the multistate legislative calendar, we thought it appropriate to highlight the present and remaining schedules of state lawmakers. The following states are currently in session: Alabama, California, Connecticut, Delaware, District of Columbia, Illinois, Iowa, Louisiana, Maine, Massachusetts, Michigan, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, and Wisconsin. Significant state tax measures are alive and well in nearly all of these states. For example, California is considering several use tax nexus bills, several corporate income tax bills, and property tax “change-of-ownership” legislation. Nevada will consider recently introduced gross receipts tax legislation, loosely modeled after the Texas margins tax. The District of Columbia continues to advance a combined reporting proposal. The Texas legislature sent Governor Perry a sales tax affiliate nexus bill on May 13. Last but not least, year-long sessions in some of the more populous states like Illinois, Michigan, New York, and New Jersey will keep things interesting for months to come.Continue Reading Down to the Wire! State Legislative Schedules and Update

Georgia’s grand experiment to comprehensively rewrite its state tax code came to an anti-climactic halt on April 11, 2011, when the Georgia House of Representatives adjourned without taking up the tax reform bill. In its final form, the bill was unable to withstand a substantial political attack with uncertainty as to the net revenue impact of the bill and whether changes in the personal income tax calculation would create a tax increase on the middle class.

The 10-month tax reform saga began in June 2010, with legislation creating the Special Council on Tax Reform and Fairness for Georgians (the Council), which issued a comprehensive report on January 7, 2011, generally recommending a transition from income taxes to more broad-based consumption taxes. (See Sutherland’s January 10, 2011 Legal Alert for detailed coverage of the Council’s report). The original tax reform bill, H.B. 385, was originally introduced to the Special Joint Committee on Georgia Revenue Structure (the Joint Committee) mirroring the recommendations of the Council and intending to be revenue neutral.Continue Reading Peach State Politics: Georgia Tax Reform Effort Dies on the Vine

In an unusual twist of legislative procedure, the Alabama legislature passed a joint resolution (SJR 4) vetoing an Alabama Department of Revenue (Department) regulation that disallowed a Business Privilege Tax (BPT) deduction for equity investments in subsidiaries. 

The saga of SJR 4 relates to AT&T Corp. v. Surtees, 953 So. 2d 1240 (Ala. Civ. App. 2006). In AT&T, the Alabama Court of Appeals held that the BPT deduction for investments in subsidiaries found in Ala. Code § 40-14A-23(g)(1) was facially unconstitutional under the Commerce Clause, because the deduction was limited to only those subsidiaries doing business in Alabama. The court did not order the deduction to be stricken, but rather remanded the case to the trial court to afford the Department an opportunity to offer a permissible justification for the discrimination. The parties ultimately settled before the court entered judgment on the remedy issue.Continue Reading Just Say No: Alabama Legislature Vetoes Department of Revenue’s BPT Regulation

On March 24, Governor Jerry Brown signed into law SB 86 (Committee on Budget and Fiscal Review), a majority-vote bill, which includes a tax amnesty program for taxpayers with underreported income related to abusive tax avoidance transactions and offshore financial arrangements. The amnesty program—which is more stick than carrot—is part of a larger proposal to close the $26 billion gap between spending and revenue in the state budget, and is estimated to raise roughly $200 million due in large part to accelerated revenues. This revenue estimate is as likely to materialize as an Easter bunny carrying a copy of State Taxation (by Jerome and Walter Hellerstein) at your next family picnic.

The tax amnesty program—referred to as Voluntary Compliance Initiative Two (VCI II)—offers a 91-day amnesty period from August 1, 2011, through October 31, 2011, for personal and corporate income taxpayers with liabilities derived from abusive tax avoidance transactions and offshore financial arrangements related to taxable years prior to January 1, 2011, and tax deficiencies that are not final as of July 31, 2011.Continue Reading Hey Wabbit!: California’s Amnesty Puttycat Program

Indiana just launched a new unclaimed property compliance enforcement effort that is bringing unwelcome news to some holders. In early April, Indiana sent out formal notices to holders indicating that fines could apply for failure to timely report and remit unclaimed property. In some cases, not only did holders receive the warning notice, but also an actual assessment and invoice reflecting the threatened fines. The letters accompanying these assessments indicated that the holder has 60 days to pay the assessment, including the fine, or demonstrate to the Indiana unclaimed property authorities that the assessment was incorrect. Adding salt to the wound, the letters indicated that failure to comply may subject the company to an audit.

Idaho, on the other hand, recently passed a law that eases the compliance burden associated with reporting unclaimed corporate securities and related distributions. HB 174 (effective July 1, 2011). Idaho’s new law makes two major changes to corporate securities reporting: (1) a requirement that the owner is actually “lost” before the dormancy period commences, and (2) clarification of the requirements for reporting unclaimed dividends paid pursuant to dividend reinvestment program accounts (DRIP accounts).Continue Reading The “I’s” Have It: Indiana and Idaho Unclaimed Property Developments

On April 26, the Multistate Tax Commission (MTC) Income & Franchise Tax Uniformity Subcommittee (Subcommittee) held the first of three scheduled meetings to revise corporate income tax apportionment. Specifically, the MTC is seeking to limit the definition of “sales” under Article IV.1(g) of the Uniform Division of Income for Tax Purposes Act (UDITPA) for purposes…

On April 1 (fittingly), the District of Columbia’s new Mayor, Vincent G. Gray, unveiled his proposed budget, B19-0203 “Fiscal Year 2012 Budget Support Act of 2011” (Budget Bill), which includes the long-awaited/feared combined reporting provisions. If the Budget Bill passes as-is, the District will formally adopt a combined reporting regime effective retroactively to tax years…