April 26, 2016
In fiscal year 2013-14, corporate income taxes contributed about 8 percent to California’s General Fund, or $8.5 billion, and were the third largest source of revenue. The first and second largest revenue sources were personal income taxes, at about 65 percent, or $66.2 billion, and sales and use taxes, at about 22 percent, or $22.2 billion, respectively.
The California State Auditor released its findings last week, in response to a request by the Joint Legislative Audit Committee (Committee) to assess the benefits and cost-effectiveness of certain corporate tax breaks. In its April 2016 Corporate Income Tax Expenditures (Report), the Auditor found that regular evaluation of corporate income tax expenditures would improve their efficiency and effectiveness. These tax expenditures, which are defined as tax benefits for qualifying corporations, consist of tax exemptions, deductions, credits, and exclusions, and cost the state more than $5 billion in forgone revenues for fiscal year 2012-13.
April 20, 2016
Texas: Two sales tax holidays coming up
Emergency preparation items
Beginning at 12:01 a.m. on Saturday, April 23, and ending at midnight on Monday, April 25, the Lone Star State is holding its Emergency Preparation Supplies Sales Tax Holiday. During this time, purchases of many emergency preparation supplies are tax free, without a limit on quantity. Retailers will not require exemption certificates.
April 6, 2016
May 26, 2016, marks the 24-year anniversary of the United States Supreme Court’s decision in Quill v. North Dakota that precluded states from requiring out-of-state retailers to collect and remit sales taxes on in-state sales. Quill does not prevent states from lodging a sales tax. But, it makes collecting such taxes difficult in the absence of a retailer’s meaningful physical presence in a state, known as nexus, because it forces jurisdictions to rely on consumers themselves to calculate and remit the necessary payments. With the relatively recent phenomenon of internet-based commerce and its explosive growth, millions of dollars of tax revenues have simply evaporated for lack of a collection mechanism. In addition, out-of-state sellers enjoy a significant competitive advantage over in-state sellers that are required to collect and remit sales taxes.
March 30, 2016
Last March, the California Franchise Tax Board authorized its staff to hold interested party meetings to discuss the regulation of apportionment and allocation of income derived from space transportation activities. This includes the transportation of people or cargo into and from space.
Industry initiated the effort with a document titled Request to Proceed to Interested Parties Meeting for a Proposed Regulation under California Code of Regulations, Title 18, Section 25137, Relating to the Apportionment of Income Arising from Space Transportation Activities. Acknowledging that the current tax code does not address space transportation, the authors explained that “in the near future,” the private companies that now launch satellites into orbit and transport supplies to and from the International Space Station anticipate transporting people to and from space as well.
March 23, 2016
Three joint resolutions addressing ad valorem tax exemptions, put forward by three different committees, have made their way through Florida’s legislature and were filed with the secretary of state this month.
The bill analyses for all three resolutions explain Florida’s annual ad valorem tax as one levied by counties, cities, school districts, and some special districts based on the value of real and tangible personal property as of January 1 of each year. The Florida Constitution reserves ad valorem taxation to local governments, and prohibits the state from levying ad valorem taxes on real and tangible personal property.
January 27, 2016
State of the State speeches continue
Last week, we provided details of several governors’ State of the State speeches. Other governors have since delivered their addresses, which we summarize here.
In his sixth State of the State speech, Gov. Rick Snyder underscored actions he plans to take to fix the Flint water crisis, along with the condition of Detroit Public Schools and Michigan’s economic future.
The governor emphasized that he has already taken steps to solve the water problem, like delivering water, water filters, and water testing kits to residents.
December 16, 2015
On Dec. 10, 2015, Airbnb, the self-described “trusted community marketplace for people to list, discover, and book unique accommodations around the world,” was excited to announce that starting on Jan. 15, 2016, it will be paying its fair share of taxes in Illinois. The state imposes a Hotel Operators’ Occupation tax at the rate of 5 percent of 94 percent of the gross rental receipts.
Airbnb’s announcement follows its mid-November pledge to “work with cities to help ensure the efficient collection of tourist and hotel taxes.” We addressed this community compact in our Nov. 19, 2015, Multistate Tax Update.
December 2, 2015
States extend historic preservation tax credits
An article in The News & Observer this past summer opined on the state of historic tax credits in the Tar Heel State. The article cited a legislator who lamented the fact that in the economic development arena, “South Carolina is eating our lunch,” and the president of Preservation North Carolina, Myrick Howard, agreed that North Carolina is losing its advantage in the preservation of architectural and historic resources.
Myrick attributed this to the December 2014 sunset of tax credits that made it easier to rehabilitate historic structures. Indeed, he declared, the effects of the tax credit were tangible: The private sector spent nearly $2 billion to revive key areas throughout the state, like downtown Durham, Raleigh, Winston-Salem, Asheville, Salisbury, Mount Airy, New Bern, and Edenton during the existence of the tax credit.
October 28, 2015
The New York Department of Taxation and Finance (New York Department of Tax) issued draft amendments to the Business Corporation Franchise Tax Regulations which incorporate changes made by tax reform legislation contained in the 2014-15 and 2015-16 New York state budgets.
October 21, 2015
In an effort to help Floridians considering business opportunities in the Sunshine State, the Florida Department of Revenue (FDOR) recently issued a publication that explains five of the more than 30 taxes and fees that it imposes on many companies. The taxes highlighted are the corporate income tax, sales and use tax, discretionary sales surtax, communications services tax, and reemployment tax.