Through its content-sharing partnership with Thomson Reuters Checkpoint, SC&H Group’s State and Local Tax practice has compiled the following round up of actionable state tax news.
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California — Corporate Income Tax — California FTB properly denied abatement of penalties.
The Franchise Tax Board (FTB) properly denied the abatement of a late filing penalty, an S corporation late filing penalty, and an underpayment of estimated tax penalty. The taxpayer’s 2010 return was not filed until February 27, 2012. The taxpayer’s return was originally due March 15, 2011, the automatic extension under Cal. Rev. & Tax. Cd. § 18604 extended the due date to October 15, 2011, and IRC § 7508A and IR News Release 2011-87 extended the due date to October 31, 2011, for taxpayers (such as the appellant) whose records necessary to meet a filing or payment deadline are in the covered disaster area. The taxpayer failed to show that by using ordinary business care and prudence, it could not file a return by October 31, 2011: (1) it did not explain why it could not timely determine whether it was required to file a 2010 California return after the FTB notified it in August 2011 that it was required to file a 2009 California return; and (2) the taxpayer claimed that the Schedule K-1 (received in October 2011) was necessary for filing a complete and accurate return, but failed to explain why it could not have estimated income and loss amounts based on the information it had for the 2009 tax year. The FTB properly imposed an underpayment of estimated tax penalty. Imposition of the penalty is mandatory and cannot be abated for reasonable cause, so the taxpayer’s reasonable cause arguments do not provide a sufficient basis to abate the penalty and the taxpayer did not provide any other basis for abating the underpayment penalty. (Appeal of Diamond B Capital, Inc., SBE, Case No. 623488, 04/22/2014; released 08/22/2014 (not to be cited as precedent).)
California — Corporate Income Tax — California—No reasonable cause found to excuse penalties.
The State Board of Equalization (SBE) has affirmed a late filing penalty imposed by the Franchise Tax Board (FTB) against the taxpayer, a Pennsylvania S corporation, for its failure to timely file a 2009 corporate franchise tax return. The SBE found that the taxpayer had not demonstrated that the failure was due to reasonable cause. The taxpayer claimed that it only discovered that it had an employee who was a California resident, requiring it to file a California return, after the due date for filing the 2009 return had passed. The SBE noted that ignorance of a filing requirement or a misunderstanding of law generally does not excuse a late filing. On similar grounds, the SBE also affirmed a penalty assessed against the taxpayer under Cal. Rev. & Tax. Cd. § 19135 for failing to file a return within 60 days after the FTB sent its demand. (Appeal of Woodward Camp, Inc., SBE, Case No. 620760, 04/22/2014; released 08/22/2014 (not to be cited as precedent).)
California — Limited Liability Companies — LLC fee—income from out–of-state sources.
A limited liability company (LLC) that filed a protective claim for refund based on the decision in Ventas Finance I, LLC v. Franchise Tax Board , 165 Cal App 4th 1207 (2009), was not entitled to a refund because the taxpayer failed to provide information showing that the fee was overpaid. The court in Ventas did not find that the LLC was unconstitutional in its entirety, but only that the fee was unconstitutional to the extent that it was calculated on non-California based income. The burden was therefore on the taxpayer to show the amount of income attributable to non-California sources, and prove that the amount of income attributable to California sources was less than $5 million, which would qualify the taxpayer for a lower LLC fee. The Franchise Tax Board requested a complete Schedule R, showing the apportionment of income between California and non-California sources, which the taxpayer failed to provide. At trial, a partially completed Schedule R was submitted, which again contained no apportionment information; which meant that there was no proof to support the taxpayer’s claim that the LLC had been overpaid. (Appeal of Seventy Seven, LLC, SBE, Case No. 657975, 04/22/2014; released 08/22/2014 (not to be cited as precedent).)
California — Limited Liability Companies — Abatement of interest.
A taxpayer that failed to pay LLC fees due to an error on the LLC Notice of Balance Due issued by the Franchise Tax Board (FTB) was not entitled to abatement over and above the abatement already agreed to by the FTB. The taxpayer filed a return showing $5,300 in tax and fees due, but submitted no payment with the return. The FTB issued an LLC Notice of Balance due that erroneously reflected a $4,500 payment or credit. The error was realized in March of 2000 and a corrected notice sent indicating tax due, plus interest and penalties. There was no additional billing until September of 2004 due to a change in the computer system used to process LLC accounts. The FTB agreed to abate the interest for the period between March of 2000 and September of 2004, during which the FTB was converting to a new computer system. However, since the taxpayer did not allege, and the record did not reflect, an unreasonable error or delay in the performance of a ministerial or managerial act on the part of the FTB for the remaining period, there was no basis for further abatement. (Appeal of Paroda, LLC, SBE, Case No. 338978, 04/22/2014: released 08/22/2014 (not to be cited as precedent).)
California — Personal Income Tax — Duty of consistency doctrine bars refund claim.
The State Board of Equalization (SBE) has held that the duty of consistency doctrine bars a taxpayer’s claim for refund for the 2006 tax year, since the claim was based on an amended return that would re-characterize real estate activity losses from prior tax years, beyond the statute of limitations for additional assessment, from nonpassive to passive in order to generate the refund. The SBE noted that the doctrine bars a taxpayer from taking a certain position in one year, which is relied upon by the taxing agency, and then changing that position in a later year when the statute of limitations is closed on the first year. The SBE noted that the taxpayer’s claim for refund would adjust the reporting of losses, with dubious calculations, to create a carryforward net operating loss (NOL) and a substantial refund for the 2006 tax year at issue, resulting in financial harm to the Franchise Tax Board which could not adjust the prior tax years due to the statute of limitations. (Appeal of Boyd, SBE, Case No. 575575, 04/22/2014; released 08/22/2014 (not to be cited as precedent).)
California — Personal Income Tax — Innocent spouse relief granted.
The State Board of Equalization (SBE) reversed the Franchise Tax Board’s (FTB’s) denial of innocent spouse relief. The taxpayer and her husband were divorced in 2002; she applied for innocent spouse relief for the unpaid tax liabilities for 1993 and 1994. The FTB granted her relief for 1993 and partial relief for 1994, which her former husband later appealed, stating that during the divorce they had agreed to share the tax liability. As a result, the FTB reversed its position, finding it had erred in granting the taxpayer the relief. The taxpayer claimed that during the 22-year marriage she had never been in charge of taxes or finances and had been the victim of domestic violence and that during the divorce proceeding, the court ordered the taxpayer to sign the tax returns; the taxpayer argued that due to fears of both her ex-husband and the authority of the judge that her decisions were both coerced and made under duress. The SBE found that the taxpayer satisfied the conditions of § 4.01 of IRS Revenue Procedure 2013-34, and was entitled to equitable relief for both years under § 4.03 of Revenue Procedure 2013-34. The SBE found that the facts and circumstances indicate that the taxpayer did not know or have reason to know in June 2007 that her spouse would not or could not pay the tax liabilities. In addition to the knowledge factor, the marital status, compliance with income tax laws and mental or physical health factors also weighed in favor of relief, and thus reversed the decision of the FTB. (Appeal of McShea, SBE, Case No. 657975, 04/22/2014; released 08/22/2014 (not to be cited as precedent).)
California — Personal Income Tax — Imposition of late payment and estimated tax penalties upheld.
The California State Board of Equalization (SBE) has agreed with the Franchise Tax Board that the taxpayers (Taxpayers) are not entitled to a refund of either the late payment penalty or the underpayment of estimated tax penalty they paid for the 2010 tax year. The Taxpayers claimed that most of the tax underpayment reported on their 2010 California tax return (they filed a joint nonresident or part-year resident return) was attributable to the gain on a sale by an S corporation whose stock one of the Taxpayers owned through a trust and that they did not learn the amount of that gain until they received the Schedule K-1 approximately one week before their 2010 return was filed in October of 2011. With regard to the late filing penalty, California imposes a late payment penalty when a taxpayer fails to pay the amount shown on the return by the date prescribed for the payment of that tax, but the penalty does not apply when the failure to pay is due to reasonable cause. In previous appeals, the SBE has held that a taxpayer’s difficulty in obtaining necessary information, and the complexity and problems in accumulating the information necessary to complete a return, is not reasonable cause for the failure to pay tax that is due. The Taxpayers have not provided any information regarding their efforts to obtain the Schedule K-1 prior to the payment due date, or shown that they were unable, despite the exercise of ordinary and prudent businesslike efforts, to obtain the Schedule K-1 information earlier. That the Internal Revenue Service (IRS) abated the corresponding federal late payment penalty is not dispositive for the California late payment penalty because it appears that the IRS abated the penalty for a reason other than reasonable cause. With regard to the underpayment of estimated tax penalty, there are limited exceptions to it (but no reasonable cause exception for it), but the Taxpayers did not raise them and the burden to raise them was on them. (Appeal of Baker, SBE, Case No. 626188, 04/22/2014; released 08/22/2014 (not to be cited as precedent).)
California — Personal Income Tax — Proposed assessment based on IRS adjustments sustained.
The California State Board of Equalization (SBE) has sustained the Franchise Tax Board’s (FTB’s) proposed assessment for 2007 against the taxpayers that was based on adjustments the Internal Revenue Service (IRS) made in connection with the taxpayer-husband’s film production business. On their 2007 federal return, the taxpayers reported a Schedule C net loss of $32,197 for that business (gross income of $5,108 and total expenses of $37,305). They also reported that loss on their 2007 return. The IRS adjusted the taxpayers’ 2007 federal return by increasing their taxable income by $37,305 after adding other income of $5,108 and disallowing the Schedule C gross receipts of $5,108 and the expenses deductions of $37,305. Based on the IRS’s adjustment, which the taxpayers agreed to, the FTB increased the taxpayers’ taxable income by $37,305. A taxpayer must concede the accuracy of a federal determination or state wherein it is erroneous. The taxpayers have not met their burden of showing that the proposed assessment based on the final federal audit is erroneous The SBE concluded that the film production business claimed on the Schedule C constituted a not-for-profit activity. The taxpayers are not entitled to claim a miscellaneous deduction for the film production expenses up to the amount of the related income of $5,108 because they claimed a standard deduction of $7,032 on their 2007 California return, which exceeds the $5,108 of reported income from the film production activities. (Appeal of Davies, SBE, Case No. 604030, 04/22/2014; released 08/22/2014 (not to be cited as precedent).)
California — Personal Income Tax — Other state tax credit not available.
The California State Board of Equalization (SBE) has sustained the Franchise Tax Board’s (FTB’s) determination that the taxpayer was not entitled to an Other State Tax Credit (OSTC) for the 2008 tax year with respect to the $1,763 of Maryland withholding she had for that year. The taxpayer had relocated to California from Maryland in 2007 and received in 2008 wage income of $35,193 that was attributable to services she had rendered for the University of the District of Columbia in pre-2008 years. There was Maryland withholding of $1,763 on those wages. Subject to certain exceptions, residents of California generally are allowed a credit for net income taxes imposed by and paid to another state on income taxable by California. After determining that the taxpayer’s wage income was subject to California tax because she was a California resident when she received it, the SBE further determined that she was not eligible for the OSTC credit because she did not owe taxes to Maryland in 2008. It is well settled that the amount of tax withheld from wages is not equal to the tax imposed on the taxpayer but merely representative of the amount of tax anticipated to be due to the taxing agency. The taxpayer’s contention that she can claim the credit because she could not receive a refund of the Maryland taxes (the statute of limitations had lapsed) is unhelpful because only doubly taxed income qualifies for the credit, and the taxpayer’s tax liability to Maryland in 2008 was zero. (Appeal of Keys, SBE, Case No. 729709, 04/22/2014; released 08/22/2014 (not to be cited as precedent).)
California — Personal Income Tax — Refund claim not timely filed.
The California State Board of Equalization has agreed with the Franchise Tax Board (FTB) that the taxpayer refund claim for the 2005 tax year is barred by the statute of limitations. The taxpayer did not file a return for 2005 California return. Based on information that showed that the taxpayer had sold real property in California in 2005, the FTB made a proposed assessment that became final and received pursuant to a withholding order a payment of $17,129 on May 28, 2009, which fully satisfied the taxpayer’s outstanding 2005 liability. The taxpayer filed for a refund on February 25, 2012. Taxpayers must file a claim for refund or credit within four years from a tax return’s deadline, or one year from the overpayment’s date, whichever is later. The taxpayer’s 2005 return was due on April 15, 2006, and the 4-year statute of limitations period expired on April 15, 2010. The taxpayer’s sole payment was on May 28, 2009. Thus, her February 25, 2012 refund claim is barred under the 4-year and the 1-year statutes of limitation. The FTB properly denied the taxpayer’s refund claim, even though the taxpayer did not owe any tax. (Appeal of Musgun, SBE, Case No. 610340, 04/22/2014; released 08/22/2014 (not to be cited as precedent).)
California — Sales And Use Tax — Place of sale—cross references in regulation updated.
The California State Board of Equalization has amended its regulation, Place of Sale and Use for Purposes of Bradley-Burns Local Sales and Use Taxes (Cal. Code Regs. § 1802(d), Tit. 18), to update cross-references to make the regulation consistent with 2012 amendments to Regulation 1684 (Collection of Use Tax by Retailers). The amendments, which were approved by the Office of Administrative Law and filed with the Secretary of State on July 31, 2014, are Rule 100 changes without regulatory effect.
California — Sales And Use Tax — Guide to online filing for EFT accounts.
The California State Board of Equalization (SBE) has revised its Publication 159EFT, Guide to Online Filing for Sales and Use Tax EFT Accounts, which was formerly called eFile Guide for EFT Accounts. The revisions are nonsubstantive. The publication continues to describe the SBE’s online filing program (previously called its efiling program) that allows eligible sales and use taxpayers to file returns and prepayments and pay amounts due over the internet. Like the previous publication, the revised publication has sections entitled Getting Started, Filing Your Return or Prepayment, Making Your EFT Payment, Filing Confirmation and includes helpful reminders, helpful hints, and answers to frequently asked questions. ( California SBE Information Publication 159EFT, 08/01/2014 .)
Illinois — Sales And Use Tax — Fuel used by air common carriers.
The Illinois Department of Revenue amended a regulation (86 Ill. Admin. Code § 130.321, effective August 6, 2014), which changes the regulation title to “Fuel Used by Air Common Carriers in Flights Engaged in Foreign Trade or Engaged in Trade Between the United States and any of its Possessions.” Additionally, beginning on July 1, 2013, tax does not apply to fuel and petroleum products sold to or used by an air carrier, certified by the carrier to be used for consumption, shipment, or storage in the conduct of its business as an air common carrier, for a flight that is engaged in foreign trade or is engaged in trade between the United States and any of its possessions; and transports at least one individual or package for hire from the city of origination to the city of final destination on the same aircraft, without regard to a change in the flight number of that aircraft. This exemption terminates by operation of the sunset provisions on August 16, 2018.
Indiana — Real Property — Land assessment—market value-in-use.
The Indiana Tax Court ruled that the Indiana Board of Tax Review did not err when it determined that a taxpayer did not establish a prima facie case that its land was over-valued or that its land assessments were not “uniform and equal.” In Indiana, real property is assessed on the basis of its market value-in-use: the value of a property for its current use, as reflected by the utility received by the owner or a similar user, from the property. Assessing officials determine the market value-in-use of non-agricultural land by examining the sales data of similar properties in the area; more specifically, assessing officials develop land orders that establish a range of base rates to be applied to land in each of the townships throughout a county. In this instance, the taxpayer argued that the rates used in assessing its land were improper because its property differed significantly from the other commercial properties in its neighborhood and with which it had been grouped under the land order; further, the Indiana Board’s final determination upholding the assessments ignored the evidence demonstrating that each parcel’s assessed value exceeded its market value-in-use. The court disagreed, concluding that the taxpayer failed to demonstrate that its assessed values did not bear the same relationship to its market values as other properties within the jurisdiction, and that the Indiana Board did not ignore the taxpayer’s evidence; instead, the Indiana Board weighed that evidence and concluded that it was not probative in demonstrating that the taxpayer’s land was over-valued or that its land assessments were not uniform and equal with other properties. (Indianapolis Racquet Club, Inc. v. Marion County Assessor, Ind. Tax Ct., Dkt. No. 49T10-1201-TA-1, 08/21/2014.)
Louisiana — General Administrative Provisions — Louisiana Tax Amnesty Program for 2014.
The Louisiana Department of Revenue issued a release reminding individuals and businesses that the Louisiana Tax Amnesty Program for 2014 will be conducted during the period beginning October 15, 2014 and ending November 14, 2014. Amnesty will be granted only for eligible taxes to eligible taxpayers who apply during the amnesty period and pay the entire amount of the eligible tax due in a lump sum or enter into an installment payment agreement. Qualified individuals or businesses whose amnesty application forms are accepted and comply with program requirements have the opportunity to pay certain delinquent taxes and costs, if applicable, and one-half of the outstanding balance of the accrued interest charges for the periods designated on the taxpayer’s amnesty application. The Department generally will waive and forgive the penalties associated with the applicant’s tax periods for which amnesty is granted and 50% of the balance of the applicable accrued interest charges. The release reiterates which taxpayers and taxes are eligible or ineligible for the amnesty, payment options and related matters, and installment agreement payment options (see State & Local Taxes Weekly, Vol. 25, No. 33, 08/18/2014). ( Louisiana Revenue Bulletin Louisiana Revenue Information Bulletin 14-017, 08/21/2014 .)
Louisiana — Sales And Use Tax — Updated exemption and exclusion table.
The Louisiana Department of Revenue issued an updated multi-column table that charts the statutory Louisiana sales tax rates, exemptions, or exclusions applicable to numerous transactions. The table includes changes enacted during the state Legislature’s 2014 regular session, which ended on June 2, 2014. (Sales Tax Exemption Table, R-1002, Dept. Rev., 08/01/2014.)
Maryland — Corporate Income Tax — Maryland neighborhood and community assistance program credits.
The Maryland Department of Housing and Community Development has adopted amendments to the Neighborhood and Community Assistance Program tax credits regulations (Md. Regs. Code §§ 05.14.01.03, .05, and .06, effective 09/01/2014). The amendments authorize the Department to give priority to designated neighborhood conservation areas (replacing “designated revitalization areas”) and defines a “sustainable community” as part of a priority funding area that has been designated as a sustainable community, a BRAC revitalization and incentive zone, or a transit-oriented development. The sum of the contributions eligible for tax credits for all projects approved for each state fiscal year cannot exceed $3.5 million (previously, $2 million).
Maryland — Credits and Incentives — Neighborhood and community assistance program credits.
The Maryland Department of Housing and Community Development has adopted amendments to the Neighborhood and Community Assistance Program tax credits regulations (Md. Regs. Code §§ 05.14.01.03, .05, and .06, effective 09/01/2014). The amendments authorize the Department to give priority to designated neighborhood conservation areas (replacing “designated revitalization areas”) and defines a “sustainable community” as part of a priority funding area that has been designated as a sustainable community, a BRAC revitalization and incentive zone, or a transit-oriented development. The sum of the contributions eligible for tax credits for all projects approved for each state fiscal year cannot exceed $3.5 million (previously, $2 million).
Maryland — Insurance — Neighborhood and community assistance program credits.
The Maryland Department of Housing and Community Development has adopted amendments to the Neighborhood and Community Assistance Program tax credits regulations (Md. Regs. Code §§ 05.14.01.03, .05, and .06, effective 09/01/2014). The amendments authorize the Department to give priority to designated neighborhood conservation areas (replacing “designated revitalization areas”) and defines a “sustainable community” as part of a priority funding area that has been designated as a sustainable community, a BRAC revitalization and incentive zone, or a transit-oriented development. The sum of the contributions eligible for tax credits for all projects approved for each state fiscal year cannot exceed $3.5 million (previously, $2 million).
Maryland — Personal Income Tax — Neighborhood and community assistance program credits.
The Maryland Department of Housing and Community Development has adopted amendments to the Neighborhood and Community Assistance Program tax credits regulations (Md. Regs. Code §§ 05.14.01.03, .05, and .06, effective 09/01/2014). The amendments authorize the Department to give priority to designated neighborhood conservation areas (replacing “designated revitalization areas”) and defines a “sustainable community” as part of a priority funding area that has been designated as a sustainable community, a BRAC revitalization and incentive zone, or a transit-oriented development. The sum of the contributions eligible for tax credits for all projects approved for each state fiscal year cannot exceed $3.5 million (previously, $2 million).
Maryland — Partnership — Neighborhood and community assistance program credits.
The Maryland Department of Housing and Community Development has adopted amendments to the Neighborhood and Community Assistance Program tax credits regulations (Md. Regs. Code §§ 05.14.01.03, .05, and .06, effective 09/01/2014). The amendments authorize the Department to give priority to designated neighborhood conservation areas (replacing “designated revitalization areas”) and defines a “sustainable community” as part of a priority funding area that has been designated as a sustainable community, a BRAC revitalization and incentive zone, or a transit-oriented development. The sum of the contributions eligible for tax credits for all projects approved for each state fiscal year cannot exceed $3.5 million (previously, $2 million).
Maryland — Public Utilities — Neighborhood and community assistance program credits.
The Maryland Department of Housing and Community Development has adopted amendments to the Neighborhood and Community Assistance Program tax credits regulations (Md. Regs. Code §§ 05.14.01.03, .05, and .06, effective 09/01/2014). The amendments authorize the Department to give priority to designated neighborhood conservation areas (replacing “designated revitalization areas”) and defines a “sustainable community” as part of a priority funding area that has been designated as a sustainable community, a BRAC revitalization and incentive zone, or a transit-oriented development. The sum of the contributions eligible for tax credits for all projects approved for each state fiscal year cannot exceed $3.5 million (previously, $2 million).
Michigan — General Administrative Provisions — Successor liability.
The Michigan Court of Appeals has approved for publication a decision that affirmed the imposition of the taxpayer’s successor liability under Mich. Comp. Laws Ann. § 205.27a(1) because the purchaser of the restaurant did not escrow any funds in conjunction with the business purchase. While normally the purchaser’s liability would have been limited to the fair market value of the business acquired, the purchaser in this case offered no evidence of the market value. The purchaser agreed at the hearing that the sale of the business was not an arm’s-length transaction, so the $50,000 sale price had no bearing on any market value determination. Also, the purchaser offered nothing to establish what the fair market value may be except for his unsupported lay opinion regarding the value. The referee and Tax Tribunal decided that the purchaser’s opinion on the value of the assets was not credible, and such credibility determinations are not reviewed by the appeals court. The purchaser admitted that he never got an appraisal of the assets and did not provide a list of the specific assets to the Department of Treasury. Finally, the existence of any superior federal tax liens is of no consequence because the statute only allows for any offset of successor liability when proceeds from the sale are applied to such superior liens, and there is no evidence that any part of the proceeds were applied in this manner. (P.J. Hospitality, Inc. v. Department of Treasury, Mich. Ct. App., Dkt. No. 314302, 06/26/2014 , approved for publication 08/2/2014.)
Michigan — Real Property — Action to challenge foreclosure.
In an action to challenge a tax foreclosure, a city was entitled to summary disposition in its favor because the city was entitled to governmental immunity for all of the property owner’s non-constitutional claims and the plaintiff was not denied due process. The owner’s claim that the city negligently failed to revert the assessment on the property back to its “capped” value was rejected. Because the owner’s negligence claim is based on the city’s alleged failure to properly assess the property and because the assessing of properties is a “governmental function” that is authorized by statute, the city is immune from tort liability for this aspect of the owner’s claims. With regards to the owner’s claim of a due process violation, the court held that the city was not the foreclosing entity, and since it was established that the foreclosing authority was the Wayne County Treasurer, the city was not involved with the foreclosure and had no duty to provide notice of another government entity’s proceedings. Secondly, it was clear from the evidence that since the property owner filed an objection to the tax foreclosure, he necessarily was aware of it. Finally, even accepting as true the owner’s assertion that he lacked notice of the August 2011 sale, and not the April 2011 foreclosure that vested title with the Wayne County Treasurer, this fact does not implicate due process because at the time of the August sale, the property owner did not have an interest in the property because any property interest he had extinguished after the judgment of foreclosure was entered in April. (Kevin Sorrell v. Wayne County Treasurer et al., Mich. Ct. App., Dkt. No. 315850, 08/21/2014 (unpublished).)
North Carolina — Sales And Use Tax — Manufactured and modular homes.
The North Carolina Department of Revenue has issued an important notice regarding manufactured homes and modular homes. Applicable to sales made on or after September 1, 2014, a sales and use tax exemption is provided for 50% of the sales price of a modular home or a manufactured home, including all accessories attached when delivered to the purchaser. The sale of a manufactured home or modular home continues to not be subject to local and transit sales and use taxes. The date of transfer of title or possession, typically the delivery date, of a manufactured home determines the state rate of sales and use tax applicable to the retail sale or purchase. The date a retail sales invoice, bill of sale, or similar document is signed for the sale or purchase of a manufactured home does not determine the rate of state sales or use tax applicable to the sale or purchase where such date is different from the date of transfer of title or possession. For reporting purposes for sales of manufactured homes or modular homes on or after September 1, 2014, taxpayers are advised to enter 50% of the sales price on either Line 6, for Modular Homes, or Line 7, for Manufactured Homes, whichever is applicable, and calculate the tax due; and report the remaining 50% of the sales price of a manufactured home or modular home sold at retail on or after September 1, 2014 and exempt from sales and use tax on Line 3 (Receipts Exempt from State Tax). (Important Notice: Manufactured Homes and Modular Homes 50% Exemption, N.C. Dept. of Rev., 08/21/2014.)
New York — General Administrative Provisions — New York fourth quarter interest rates unchanged.
The New York Department of Taxation and Finance announced on August 22, 2014, that the interest rates on underpayments and overpayments of New York State taxes for the period from October 1, 2014, through December 31, 2014, are unchanged. The interest rate on underpayments remains at 7.5% for the following New York State taxes: personal income, withholding, corporation, alcoholic beverage, beverage container deposits, boxing and wrestling, cigarette, diesel motor fuel, estate, generation-skipping transfer, highway use, Metropolitan Commuter Transportation Medallion Taxicab Ride, Metropolitan Commuter Transportation Mobility Tax, mortgage recording, motor fuel, petroleum business, real estate transfer, tobacco products, and waste tire fee. The rate for underpayment of sales and use taxes remains at 14.5% (rate is at the corporation tax late payment and assessment rate, 7.5% this quarter, if the Commissioner determines that failure to pay or delay in payment is due to reasonable cause and not willful neglect). The rate for underpayments of hazardous waste taxes remains at 15%. The interest rate on overpayments remains at 2% for all New York State taxes other than fuel use taxes and cigarette and tobacco products taxes. No interest applies to overpayments of cigarette and tobacco products taxes. Finally, the Department notes that the rate for refunds and late payments and assessments of fuel use taxes are set pursuant to the International Fuel Tax Agreement (IFTA). The Department advises that information regarding the IFTA rates can be found at http//www.iftach.org, which lists the IFTA annual interest rate that is effective January 1, 2014, at 5%. (Current Interest Rates , NYS Dept. of Taxation and Finance, 08/22/2014.)
Oklahoma — Sales Tax Rates — Local rate update.
The Oklahoma Tax Commission has issued a press release noting that there are local rate changes effective for October 1, 2014 through December 1, 2014. The local rate changes effective October 1, 2014 are as follows: Chouteau increases its sales and use tax rate to 4.5%; Kaw City has a new use tax rate of 4.5%; Kiowa increases its sales and use tax rate to 5%; Comanche County increases its sales and use tax rate to 0.375%; Greer County increases its sales and use tax rate to 2%; Latimer County increases its sales and use tax rate to 1.75%; Logan County decreases its sales and use tax rate to 0.25%; Marshall County increases its sales and use tax rate to 1.75%; and Washita County increases its sales and use tax rate to 0.375%. ( Oklahoma Tax Commission Press Release, 08/20/2014. )
Oklahoma — Sales And Use Tax — Local rate update.
The Oklahoma Tax Commission has issued a press release noting that there are local rate changes effective for October 1, 2014 through December 1, 2014. The local rate changes effective October 1, 2014 are as follows: Chouteau increases its sales and use tax rate to 4.5%; Kaw City has a new use tax rate of 4.5%; Kiowa increases its sales and use tax rate to 5%; Comanche County increases its sales and use tax rate to 0.375%; Greer County increases its sales and use tax rate to 2%; Latimer County increases its sales and use tax rate to 1.75%; Logan County decreases its sales and use tax rate to 0.25%; Marshall County increases its sales and use tax rate to 1.75%; and Washita County increases its sales and use tax rate to 0.375%. ( Oklahoma Tax Commission Press Release, 08/20/2014.)
South Carolina — Real Property — Rented property still qualifies for homestead exemption.
The administrative law judge (ALJ) held that a taxpayer who owned a home and rented it out more than 14 days in 2014 was still entitled to the homestead exemption with a 4% assessment ratio. In 2011, the county where the taxpayer’s property was located determined that the taxpayer was no longer entitled to the homestead exemption with a 4% assessment ratio because he had rented it out for more than 14 days, and thus the property no longer qualified as his primary residence. The taxpayer appealed and the revocation was upheld by the county board, and the taxpayer then appealed to the administrative law court. The county argued that the taxpayer must meet the primary residence statutory requirements as well as the homestead statutory provisions for the 4% ratio to apply , while the taxpayer argued that he only had to meet the homestead exemption provisions. The ALJ found that the homestead exemption, once approved, continues to apply if ownership of the residence has not changed. The taxpayer was granted the exemption in 2005 based on his age, and ownership had not changed. The ALJ also found that under S.C. Code Ann. § 12-37-252(A) that the 4% assessment applies “not withstanding any other provision of law,” thus the taxpayer still qualified for the homestead exemption. Finding the plain language of the statute was in favor of the taxpayer and that any other statutory ambiguity should be resolved in favor of the taxpayer, the ALJ held the taxpayer was entitled to the 4% assessment for 2011 and subsequent years, and the 6% assessment by the county had been unlawful. (Mead v. Beaufort Co. Assessor, S.C. Admin. Law Ct., 13-ALJ-17-0585, 08/19/2014.)
Utah — Business Tax Rates — Emery City imposes 3.5% telecommunications tax.
Effective October 1, 2014, Emery City (Emery County) will impose a municipal telecommunications license tax of 3.5%. Sellers must collect the 3.5% tax on all taxable telecommunication transactions in Emery City starting on that date. The tax can be reported and paid electronically on Form TC-62Z (Municipal Telecom License Tax Return) at taxexpress.utah.gov beginning: October 2014 (monthly filers); October – December 2014 (quarterly filers); and January – December 2014 (annual filers). ( Utah Tax Commission Bulletin 14-4, 08/22/2014 .)
Utah — Sales Tax Rates — Brigham City increases energy sales/use rate.
As previously reported, Brigham City (Box Elder County) will increase its municipal energy tax rate to 6% from 4%, effective October 1, 2014. Sellers must collect municipal energy sales tax on the 6% rate on all taxable sales of energy in Brigham City starting on that date. ( Utah Tax Commission Bulletin 14-4, 08/22/2014 .)
Utah — Public Utilities — Emery City imposes telecommunications tax.
Effective October 1, 2014, Emery City (Emery County) will impose a municipal telecommunications license tax of 3.5%. Sellers must collect the 3.5% tax on all taxable telecommunication transactions in Emery City starting on that date. The tax can be reported and paid electronically on Form TC-62Z (Municipal Telecom License Tax Return) at taxexpress.utah.gov beginning: October 2014 (monthly filers); October – December 2014 (quarterly filers); and January – December 2014 (annual filers). ( Utah Tax Commission Bulletin 14-4, 08/22/2014 .)
Utah — Sales And Use Tax — Brigham City increases energy sales/use rate.
As previously reported, Brigham City (Box Elder County) will increase its municipal energy tax rate to 6% from 4%, effective October 1, 2014. Sellers must collect municipal energy sales tax on the 6% rate on all taxable sales of energy in Brigham City starting on that date. ( Utah Tax Commission Bulletin 14-4, 08/22/2014 .)