Multistate Tax insights archive

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​This archive features published articles that have been authored by Deloitte’s Multistate Tax professionals and cover a wide range of state tax topics.

​Recent thoughtware

Credits and Incentives talk with Deloitte: The future of the 421-a property tax exemption in New York City

The October edition summarizes those aspects of the 421-a exemption program--as amended in AB 8323--that would be applicable through June 15, 2019, pending execution of the memorandum of understanding.

Credits and Incentives talk with Deloitte: A roadmap of how one governor used economic development to create a new Virginia economy: Part two

September’s “Credits & Incentives talk with Deloitte” explores the indirect, big–picture incentives intended to provide staying power to Governor McAuliffe's New Virginia Economy strategic plan.

State Tax Spotlight on Valerie C. Dickerson

State Tax Notes featured Valerie Dickerson, managing partner of WNT–Multistate, in its monthly “State Tax Spotlight.” Read the full column, in which Valerie, as well as retired Deloitte partner Rick Richman, National Service Line Leader Carrie Falkenhayn, Deloitte partner Michael Bryan, and Deloitte principal Michael Porter, discuss Valerie’s passion for helping her clients solve problems, her role in transforming the WNT practice, and her work co-chairing the National Multistate Tax Symposium.

Credits and Incentives talk with Deloitte: A roadmap of how one governor used economic development to create a new Virginia economy

This August edition of "Credits & Incentives talk with Deloitte" discusses how one governor used economic development to create a new Virginia economy.

Inside Deloitte: State transfer pricing: Are you prepared for increased security?

This edition of “Inside Deloitte” provides an overview of intercompany transfer pricing arrangements and related state tax considerations, summarizes the latest developments involving the Multistate Tax Commission’s Arm's–Length Adjustment Service project, and suggests actions that taxpayers may wish to consider in developing exam–ready transfer pricing documentation.

Credits and Incentives talk with Deloitte: Credits and incentives provide green for going green

The July issue of "Credits and Incentives talk with Deloitte," discusses how businesses can use tax credits and other incentives to help lower their overall cost of going green, including the installation of solar panels. Solar energy is the focus of this article as it is generally the most feasible, affordable and accessible form of renewable energy for commercial-scale, distributed generation projects.

What changes have been made to the Integrated Tax System within the Department of Revenue?

The Pennsylvania Department of Revenue is in the midst of a multi-phased Modernization Project in which a new Integrated Tax System is replacing an antiquated system based on a decades-old programming language. At a recent meeting of the Modernization Project Professional Advisory Workgroup, of which the author is a member, the Department shared a status update and announced several changes. In this column, Kenneth Stoops of Deloitte Tax LLP discusses these changes.

Credits and Incentives talk with Deloitte: Tax credit carryforwards, less may be more

When a business cannot utilize all of its income tax credits in the current year, in some cases the excess credits may be carried forward or utilized in an alternative fashion, such as against other taxes, or by assignment, transfer or sale. The June issue of "Credits & Incentives talk with Deloitte" discusses possible options for carrying forward excess tax credits.

Inside Deloitte: The tax implications of the DC budget

In this edition of "Inside Deloitte," authors Scott Frishman, Jennifer Alban-Bond, Kathleen Rudis, and David Vistica discuss how the District of Columbia Fiscal Year 2015 Budget Support Act of 2014 became law, as well as the resulting tax implications.

Credits and Incentives talk with Deloitte: States use credits & incentives to attract startups and technology companies

The May issue of “Credits & Incentives talk with Deloitte” highlights some of the states with noteworthy programs focused on attracting and retaining technology companies and startups.

Inside Deloitte: Navigating state taxation in a global business environment

In the first issue of “Inside Deloitte,” authors Michael Paxton and J. Snowden Rives use a recent Deloitte tax symposium as a platform to discuss how state tax policy mirrors international tax reform and how it is implicated by federal income tax proposals, state tax developments directed at multinational companies, and some developing areas of state nonconformity.

Discussion of common tax audit issues affecting corporate taxpayers

​In this article, authors E. Scott Ewing, Benjamin Elliott, and Natasha Ng restate the common audit issues identified by the California Franchise Tax Board ("FTB"), summarize the technical aspects of each issue, and provide general insight regarding the potential prevalence of such issues in future FTB audits.

Credits and Incentives talk with Deloitte: The home field advantage of credits and incentives

This issue's column discusses state and local credits and incentives for major league sports franchises, with examples of how states have used tax credits and incentives to attract or retain sport franchises.

US sales and use tax: A survival guide for international business

The task of identifying states in which sales and use tax compliance is required and how to apply each state’s tax may seem daunting, but it’s not impossible. This article discusses approaches and tools that businesses can use to proactively understand and take command of their US sales and use tax obligations.

Credits and Incentives talk with Deloitte: Lights, Camera, Action...Incentives

February’s issue of “Credits & Incentives talk with Deloitte,” provides some examples of available tax credits and incentives for film and television production in a number of state and local jurisdictions. While the incentive type (tax credits, exemptions, cash grants, locations at no cost, etc.) and size vary from jurisdiction to jurisdiction, they all share a similar goal, namely, to lure film or television production and drive economic growth.

California's new partial tax exemmption for manufacturing and research & development

Starting July 1, 2014, a significant new partial sales and use tax exemption for certain manufacturing or research and development equipment purchases became available in California. This article gives an overview of AB 93 and SB 90, addresses each of the several key definitions in the new statute and final regulation, and provide observations regarding application of the exemption.

State tax implications of accounting method changes

The purpose of this article is to summarize various state compliance requirements and highlight certain situations where an accounting method change that produces different federal and state tax effects may potentially present an opportunity for tax savings.

Current trends in state taxation: Consumption tax versus income tax

Generally, increased revenue from consumption taxes comes from an increase in the state’s sales and use tax rate or an expansion of the sales/use tax base. This article, by Joe Eleniewski, Doug Nagode, and James P. Trebby, examines the drivers of this trend by identifying possible reasons for it and analyzing the costs and benefits of switching to a tax system primarily based on taxing consumption rather than income.

Credits and Incenives talk with Deloitte: The many rewards of hiring veterans

In this article, we summarize the federal programs and some of the programs offered by the larger states. These incentives, along with the skills that veterans bring to the workforce from their military training and service, present a strong business case for hiring veterans.

State corporate tax and bankruptcy: is IRC conformity easier?

This article by Brian Sullivan of Deloitte Tax LLP discusses some of the common income tax issues encountered by corporate taxpayers in bankruptcy and out-of-court restructuring transactions, where the blanket adoption of the IRC at the state level creates additional complexity and uncertainty within state income tax regimes.

US Multistate Tax Commission continues to explore transfer pricing

This article provides background regarding the Multistate Tax Commission's Arm's Length Adjustment Service ("ALAS") Advisory Group project, summarizes the July 28 meeting and the project timeline, and suggests additional considerations.

Risky business: The evolution of sales/use tax policy in the e-commerce era

This article discusses a few approaches that states are taking to address this issue. It then discusses the pending federal Marketplace Fairness Act of 2013, including our general assessment of the likelihood of adoption of this proposed federal law and recent developments in July 2014. Finally, it addresses the impact of potential federal and state legislation, as well as possible approaches that remote sellers may wish to consider to address related business risks and potential unanticipated infrastructure costs. 

States offering veteran tax credits to combat high unemployment rates 

A Bloomberg BNA Tax Management Weekly State Tax Report interview with Kevin Potter of Deloitte Tax LLP

Rising tide: Will investment managers be swept up in state income tax trends? 

Two recent state tax trends--economic nexus and market-based sourcing of the receipts factor--create challenges for investment funds and investment managers. In this article, the authors discuss both trends and highlight some of the related issues that have arisen for investment managers.

State tax considerations for foreign entities 

When considering state tax issues for a foreign entity, it is natural to focus initially on the potential corporate income tax considerations, particularly as an extension of analyzing whether that entity might be subject to any federal income tax filing requirements. This article provides an overview of the state income tax considerations for foreign entities.

Helping put America back to work

With the push to hire veterans, it is no surprise that the government at both the federal and state level participates in the effort. Although numerous government programs exist which seek to encourage employers to hire people from these groups, this paper will focus primarily on programs that provides tax incentives to encourage the hiring of veterans. 

New York State corporation tax reforms of 2014 

This spring, New York enacted sweeping tax legislation that changes many aspects of its state tax law. In this article, Russell Banigan, Kenneth Jewell, and Mary Jo Brady, of Deloitte Tax LLP, discuss New York’s current tax provisions and explain the major changes coming to the state’s corporate franchise tax in 2015.

​Perspectives from 2013

Federal tax reform doesn’t end with the 1120: State and local tax implications of potential federal tax reform 

As an overview, states with automatic or “rolling” conformity generally will adopt I.R.C. changes unless there is a specific state legislation that decouples from the federal law. Some states effectively adopt the I.R.C. by using federal taxable income as the state starting point, even though the I.R.C. itself has not been adopted in whole or in part. Other states, such as California and Texas, adopt the I.R.C. as of a specific date, do not adopt the I.R.C. provisions in totality, or provide modifications or exceptions to certain adopted I.R.C. provisions. For these states, further analysis is needed to determine how federal tax reform will affect the state tax regime.

Further discussion on I.R.C. §382: Should limitations be apportioned for state income tax purposes?

This article addresses how states have differed in their approach to the issue of apportioning I.R.C. §382 limitations, how apportioned limitations may differ among those states, and how the regulatory or administrative guidance provided by some states may not be precedential.

Unintended consequences of I.R.C. conformity: California rules taxpayer may disregard Treas. Reg. §1.337(d)-2

In this article, Brian J. Sullivan and Michael F. Paxton, of Deloitte Tax LLP, discuss one potential trap for the unwary related to a state’s general adoption of the I.R.C. and, as part of that adoption, the application of Treas. Reg. §1.337(d)-2.

Nevada Supreme Court upholds margin tax initiative 

In this article Fred Paladino and David Rennie, of Deloitte Tax LLP, describe the proposed Nevada margin tax, outline Nevada’s initiative process, review the lower court rulings, and summarize the Nevada Supreme Court’s decision. 

State income tax traps for owners of distressed debt

This article discusses some of the complexities surrounding the proper state income tax treatment of distressed debt. In it, Parrish Ivy of Deloitte Tax LLP addresses questions surrounding the sourcing of interest income, examining how the sourcing rules may be affected by whether the holder of the debt is considered a financial organization. (Note that the complexities in this area are not limited to revenue apportionment and may include, for example, how the various states apply their apportionment property factors. That and other related questions are beyond the scope of this article).


Insights from 2012

Case note: Direct Marketing Association v. Huber: Federal District Court finds Colorado use tax reporting requirements unconstitutional

In The Direct Marketing Association v. Huber, No. 10-cv-01546-REB-CBS, (D. Colo. 2012), the United States District Court for the District of Colorado struck down as unconstitutional under the Commerce Clause Colo. Rev. Stat. §39-21-112(3.5), which imposed the use tax reporting requirements on out-of-state retailers that made sales to Colorado customers but did not collect the Colorado sales or use tax. The district court found that the Colorado law both discriminated against interstate commerce and placed an undue burden on interstate commerce by imposing an obligation on out-of-state retailers with insufficient contacts with the state under Quill Corp. v. North Dakota, 504 U.S. 298 (1992). While it remains to be seen whether the case will be appealed, on the surface the court’s analysis appears to be a straight forward application of existing precedent and is likely to be sustained. However, a more detailed look indicates that the court may have overlooked some deeper issues and it is possible, but one cannot say likely, that a higher court might take a different view. (For purposes of this article, the term "out-of-state retailer" refers to a retailer that does not have sufficient nexus with a state to be subject to the requirement to collect and remit the state’s sales or use tax under Quill Corp. v. North Dakota, 504 U.S. 298 (1992)).

“Open for business”: Los Angeles pioneers local tax reform in a challenging economic environment

This article seeks to present both the history and current developments concerning the Los Angeles Business Tax, including the past and present tax reform efforts of the City Council, the Mayor’s office, BTAC I, and BTAC II, as a framework for considering future tax reform efforts.

​Past insights perspectives

A challenge to New Jersey’s throw-out rule: Impacting New Jersey and beyond

This discussion summarizes the Whirlpool decision by providing a background on the throw-out rule, explaining the New Jersey Supreme Court's approach to facial constitutional challenges, and discussing the court's application of the external consistency test to render the throw-out rule unconstitutional with regard to certain sales receipts but constitutional with respect to other sales receipts.

Nevada Supreme Court rebukes Tax Commission in Masco: Equitable tolling suspends statute of limitations for refunds

In this article Fred Paladino, Dave Rennie, and Trevor Kwan summarize the Supreme Court’s decision in Nevada Dept. of Taxn. V. Masco Builder Cabinet Group and discuss its ramifications.

Selected issues concerning the state income taxation of nonresident trusts and estates

This article attempts to identify, although may not necessarily resolve, selected state income tax issues for nonresident trusts that are a direct result of recent challenges impacting state income taxation.

Washington’s business tax primary purpose text after Qualcomm Inc. v. Washington Dept. of Rev.

At issue in Qualcomm was whether the service component was taxable as a "network telephone service," subject to the "retailing" business and occupation tax and the retail sales tax; or as an "information service" subject only to the "service and other" business and occupation classification.

Controlling-interest real estate transfer taxes: The potential state tax trap in mergers and acquisitions

This article provides an overview of the various state taxing regimes that impose controlling-interest transfer taxes, highlights some of the nuances of each state’s rules, provides some common pitfalls associated with such taxes, and describes emerging trends.

California Voluntary Compliance Initiative II for "abusive tax avoidance transactions” and “offshore financial arrangements”

This article summarizes the requirements of VCI II, and discusses some of the possible pros and cons of participation.

New York’s False Claims Act: Good or bad tax administration?

This article explores the implications of the new law for tax administration in New York and potentially in other jurisdictions that are considering New York’s approach.

Arizona Supreme Court continues support of state’s unique approach to defining a ‘unitary business’

This article, written by Barb Dickerson and Krista Howard of Deloitte Tax LLP, explores the evolution of Arizona’s unitary analysis.

D.C’s qualified high technology program: An often-missed opportunity deserving a second look

In this article, authors Don Teichen, Scott Frishman, and Catherine Ford, of Deloitte Tax LLP, analyze the program’s eligibility requirements and discuss its potential tax benefits, including corporate franchise tax rate reductions and exemptions, unincorporated business tax exemptions, job-related credits, and sales and use tax exemptions.

Top five state and local tax issues to consider when buying the assets of a business

This discussion examines the top five state and local tax issues to consider when acquiring the assets of a business. These issues are: the seller’s unpaid taxes, taxes triggers by the transaction, credits and incentives, income and franchise taxes, and sales and use tax processes.

How RARs, federal waivers, and Competent Authority Agreements trigger and complicate state tax compliance

Corporate taxpayers are often faced with the daunting task of amending hundreds of state tax returns, many of which are due within a short time frame. This process is rarely straightforward and is often fraught with complicated issues stemming from variations in state notification rules. Additionally, it is important that taxpayers are aware of other circumstances, such as Competent Authority Agreements and federal statute of limitations waivers, which can impact state return filings. This article seeks to identify and discuss several of these issues with the hope of raising taxpayer awareness and knowledge of this complex subject.

Recent legislations ensures New York State can tax gain from I.R.C. section 338(h)(10) transactions involving S corporations

In this discussion, Russell W. Banigan and Mary Jo Brady of Deloitte Tax LLP review the relevant I.R.C. section 338(h)(10) provisions. Then, they discuss how those provisions interest with the provisions of the New York state franchise tax (Article 9-A) and how that, in turn, impacted the result for nonresidents under the New York State personal income tax (Article 22), both before and after legislation passed in 2010. Lastly, they comment on the validity of the retroactive application of the recently adopted law.


Alternative apportionment: Seeking a fairly apportioned tax base in a world of increasing reliance on the sales force 

In this article, the authors examine the standards that courts have used to determine whether a multistate corporate taxpayer is entitled to deviate from the standard apportionment formula either under the US Constitution or under state statute. The goal is to identify some of the factors that courts have considered and found persuasive in concluding that relief is warranted. In a final section, the authors consider how alternative apportionment might be applied in the context of a single-sales factor apportionment formula.

California Court of Appeals upholds FTB’ disallowance of dividends received deduction, imposition of amnesty penalty

This article provides an overview of related cases involving the dividends received deduction (DRD) under Cal. Rev. & Tax. Code §24402 that led up to River Garden, summarizes the appeals court opinion in River Garden with respect to the DRD and amnesty penalty issues, and briefly discusses cases in which the amnesty penalty under Cal. Rev. & Tax. Code §19777.5 was recently or is currently being litigated.

A look at state income tax issues and consequences of the Administration’s proposed international tax revisions

This whitepaper describes state income tax issues and consequences that would result from enactment of three of the proposed international tax provisions. 

Exploring the “market” in California’s new sales factor apportionment rules

Among the many apportionment factor modifications contained in budget legislation, this article focuses on California's switch to market-based sourcing for sales that result from transactions other than the sale of tangible personal property.

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