beth cooley, cost david kupiec, kupiec & martin, llc
DESCRIPTION
Council On State Taxation. A National Overview: Are States Looking To You To Stimulate Their Economies? Taxpayers’ Federation of Illinois 2009 Tax Conference September 17, 2009. Beth Cooley, COST David Kupiec, Kupiec & Martin, LLC. Council On State Taxation. Tax Trends Outline. - PowerPoint PPT PresentationTRANSCRIPT
A National Overview:Are States Looking To You To Stimulate Their Economies?
Taxpayers’ Federation of Illinois 2009 Tax ConferenceSeptember 17, 2009
Council On State Taxation
Beth Cooley, COST
David Kupiec, Kupiec & Martin, LLC
•
• State Budgets
• State Audits
• State Tax Trends
• U. S. Supreme Court
• Financial Reporting Trends
• Other
• Opportunities???
Council On State Taxation
Tax Trends Outline
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Projected Budget Gaps: FY 2010As a Percentage of General Fund Budget
AK
HI
ME
RI
VT
NH
NY
CT
PA
NJ
MDDC
DE
VAWV
NC
SC
GA
FL
ILOH
IN
MIWI
KY
TN
ALMS
AR
LATX
OK
MOKS
IA
MN
ND
SD
NE
NMAZ
COUT
WY
MT
WA
OR
ID
NV
CA
Key:
More than 15% of the state’s general fund
10% to 15% of the state’s general fund
Less than 10% of the state’s general fund
Not applicable or not reporting
MA
Council On State TaxationSource: National Conference of State Legislatures, “State Budget Update: July 2009” 3
Budget Gap Numbers By Year
Council On State Taxation
Past Recession Current RecessionYear Amount
(in billions)
Year Amount
(in billions)
2002 $37.2 2008 $12.8
2003 $79.0 2009 $113.2
2004 $83.7 2010 $142.6*
2005 $37.0 2011 $58.5**
2006 $26.9 2012 $21.1**
Total $263.8 Total $348.2*Source: NCSL, 2009
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•
• States Hiring More Auditors
• Experience Level of State Auditors
• Recordkeeping/Information Requests
• Complex Tax Issues/Changing Laws
• Settlement/Litigation
• Textron Decision (August 2009)
Council On State Taxation
State Audits
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•
• Nexus• Tax Base • Combined Reporting• Apportionment• Credits/Net Loss Deductions• Amnesties
Council On State Taxation
State Tax Trends
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State Tax Nexus Trends
• Physical Presence (Flash Title, PL 86-272)• Attributional (Independent Contractors/Affiliates)• Economic (Numerous Decisions)• Statutes/Regulations (NY, WI, CA, OR, IL, …)• Business Activity Tax Simplification (HR 1083)• Related Issues – “Know Your Business”
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Internet Nexus: New York “Starts Spreading The News”
• New York: 2008 Budget• Proposals To-Date:
– California (Gov. vetoed)– Hawaii (Gov. vetoed: HB 1405)– Illinois (by regulation)– Maryland (dead for 2009, will resurface 2010)– Minnesota (in omnibus tax bill; Gov. vetoed)– North Carolina (enacted)– Rhode Island (enacted)– Tennessee (dead for 2009; may resurface)
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Tax Base
Council On State Taxation
Income Tax:
Addback Statutes (DC, Oregon, West Virginia)
Decoupling From Federal Provisions (Depreciation, Stimulus, IRC Conformity, C-Corp Election, …)
Section 482 Adjustments (IL Section 404)
Sales Tax:
Inclusion of Previously Tax Exempt Items
Base Expansion to Services
Streamlined Sales Tax
Gross Receipts/Franchise
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Tax Base – Proposed IL Sales Tax Expansion (Not Enacted)
• Other warehousing and storage• Travel agent services• Carpet and upholstery cleaning services• Dating services• Dry cleaning and laundry (except coin operated)• Consumer goods rental• Health clubs, tanning parlors, reducing salons• Linen supply• Interior design services• Other business services, including copy shops• Bowling Centers• Coin operated video games and pinball machines• Membership fees in private clubs• Admission to spectator sports (excluding horse tracks)• Admission to cultural events• Billiard Parlors• Scenic and sightseeing transportation• Taxi and Limousine services• Unscheduled chartered passenger air transportation• Motion pictures theaters, except drive-in theaters
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Tax Base – Proposed IL SalesTax Expansion (Not Enacted)
• Pet grooming• Landscaping services (including lawn care)• Income from intrastate transportation of persons• Mini-storage• Household goods storage• Cold storage• Marina Service (docking, storage, cleaning, repair)• Marina towing service (including tugboats)• Gift and package wrapping service• Laundry and dry cleaning services, coin operated• Other services to buildings and dwellings• Water softening and conditioning• Internet Service Providers• Short term auto rental• Information Service• Amusement park admission and rides• Circuses and fairs – admission and games• Cable and other program distribution• Rental of video tapes for home viewing
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Combined Reporting: Status 2009 Legislation
AK
HI
ME
RI
VTNH
NYCT
PA
NJ
MDDC
DE
VAWV
NC
SC
GA
FL
ILOH
IN
MIWI
KY
TN
ALMS
AR
LATX
OK
MOKS
IA
MN
ND
SD
NE
NMAZ
COUT
WY
MT
WA
OR
ID
NV
CA
Key
Adopted combined reporting in 2009
Pending combined reporting legislation
Rejected combined reporting legislation
MA
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Apportionment Trends
• Single Sales Factor• Market Based Sourcing• Joyce/Finnigan• Gross vs. Net Proceeds (General Mills/CA
Law Change)• Throwback/Throwout (Pfizer v. NJ)• Distortion/Nowhere Sales• Alternative Apportionment
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• Limitations on Amounts• Limitations on Carrybacks/Carryforwards• Limitations on Transferability• Survival of Tax Attributes During
Dissolutions, Mergers, Bankruptcies • Uniformity Issues
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Credits/Net Losses
Amnesties
• Opportunity to Resolve Issues• Potential to Reduce Open Years• Abatement of Penalties • Potential Abatement of Interest• Potential for Additional Penalties/Interest
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AmnestiesRecently Concluded:
Alabama
Arizona
Connecticut
Hawaii
Massachusetts
New Jersey
Vermont
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Ongoing/Potential Amnesty Programs:Delaware (9/1-10/30)DC (Pending legislation)Louisiana (9/1 – 10/31)Maryland (9/1-10/30)Penn. (Pending legislation)Maine (9/1 – 11/30)Oregon (10/1–11/19)Virginia (TBD)Wisconsin (7/1-9/30)
Note: COST is maintaining an active spreadsheet of administrative & statutory amnesties on COST’s website at: http://www.cost.org/WorkArea/DownloadAsset.aspx?id=73518
•
• Recent (Cuno, Mead, Davis, Polar Tankers)• Cert. Denied (Geoffrey/Mass, Capital
One/Mass, VFJ Ventures/AL, Ventas Finance/CA, MBNA/WV, Lanco/NJ …)
• Petition Pending (MO Gas Energy/OK) • Next?
Council On State Taxation
U.S. Supreme Court
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•
• Expansion of FAS 5
• FIN 48
• Conversion to IFRS
Council On State Taxation
Financial Reporting
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Other
• Tax Commissions– CA, CO, MD, MN, SC, VA
• Vendor Compensation– CO, IL, TX, VA
• Alternative Base Taxes
• Uniform Law Commission’s UDITPA Revision – Not This Time
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• Restructurings
• Mergers/Acquisitions
• Jobs
• Improving Economy
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Opportunities
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Questions?
Beth Cooley David [email protected] [email protected]
(202) 484-5226 (312) 632-1022
CIRCULAR 230 DISCLOSURE - To comply with Treasury Department regulations, we inform you that, unless otherwise expressly indicated, any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties that may be imposed under the Internal Revenue Code or any other applicable tax law, or (2) promoting, marketing or recommending to another party any transaction, arrangement or other matter.
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