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Louisiana will offer a tax amnesty from November 16, 2015 to December 15, 2015. Taxpayers that agree to pay delinquent taxes will receive a waiver of 33% of penalties and 17% of interest. The 2015 program applies to taxes due prior to January 1, 2015, for which the Louisiana Department of Revenue has issued an…

In direct contradiction to the recent MetLife case, a different division of the Illinois Appellate Court held that a taxpayer was subject to the double interest amnesty penalty on its increased state tax liability resulting from federal audit changes. Marriott Intern. Inc. v. Hamer, 2012 IL App (1st) 111406 (Ill. App. Ct., 1st Dist., 3rd Div. Aug. 22, 2012). The MetLife case held that such penalties did not apply under nearly identical facts. Met. Life Ins. Co. v. Illinois Dep’t of Revenue, 2012 IL App (1st) 110400, at *1 (Ill. App. Ct. 1st Dist., 1st Div. Mar. 5, 2012).

A 2003 Illinois amnesty program provided amnesty to taxpayers who paid “all taxes due” for eligible tax years by November 2003. A double interest penalty applied for those taxpayers that had a tax liability eligible for amnesty but failed to pay it. Two months after the amnesty period ended, the Internal Revenue Service began an audit of Marriott that ultimately resulted in a 2007 revenue agent report (RAR), increasing Marriott’s federal taxable income. Marriott timely reported the federal RAR changes to Illinois and paid the resulting tax liability.Continue Reading Illinois Double Whammy on Double Interest Penalty

This morning, the North Carolina Court of Appeals released its decision in Delhaize America, Inc. v. Lay, No. COA11-868 (N.C. Ct. App. 2012). Delhaize, formerly known as Food Lion, formed an intangible holding company as part of a restructuring in the late 1990s. The Secretary of the North Carolina Department of Revenue sought to combine Delhaize with its intangible holding company on the ground that combination was necessary to reflect Delhaize’s “true earnings,” which is a North Carolina statutory standard used to justify the application of forced combination. The Department assessed Delhaize approximately $20.6 million in tax, interest, and penalty, which Delhaize challenged primarily on procedural due process grounds.

The definition and application of “true earnings” has been a controversial issue. In Wal-Mart Stores East, Inc. v. Hinton, 676 S.E.2d 634 (N.C. Ct. App. 2009), the North Carolina Court of Appeals held that the Secretary of Revenue has discretionary authority to apply forced combination, and the court will not disturb the Secretary’s findings absent an abuse of discretion. Moreover, the Wal-Mart court defined “true earnings” to include income up to the limit found in the U.S. Constitution.Continue Reading Delhaized and Confused: North Carolina Court of Appeals Finds Forced Combination, Penalty

The California Franchise Tax Board recently released Legal Division Guidance 2012-03-02, concluding that taxpayers may not simultaneously report tax under a single sales factor election and the standard three-factor formula to avoid application of the Large Corporate Understatement Penalty. For full details, read our legal alert, “Single Sales Factor Election May Create Exposure…

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

On September 1, the Superior Court of New Jersey, Appellate Division, issued its opinion in Praxair Technology, Inc. v. Dir., Div. of Taxation, Case No. A-6262-06T3 (N.J. Super. Ct. App. Div. 2010), which upheld the Director’s imposition of a penalty on Praxair for failing to file a tax return for the 1994, 1995, and 1996 tax years. Praxair took the position that it was not subject to tax under New Jersey tax law because it did not have physical presence in New Jersey. Although the statute remained unchanged, the New Jersey Division of Taxation made a regulatory change in 1996 to add an example that explained that it was the Division’s position that Praxair was subject to the corporate business tax. In addition, the Appellate Division upheld a post-amnesty penalty against Praxair because it failed to take advantage of the 2002 tax amnesty, even though the New Jersey Supreme Court, in 2006, held that economic presence was put into effect in 1996 with the regulatory change.  Lanco, Inc. v. Dir., Div. of Taxation, 908 A.2d 176 (N.J. 2006).Continue Reading New Jersey Appellate Division Says Praxair Should Have Read the Tea Leaves on Tax Liabilities