SALT Choose developments – July 2021 | Baker Donelson

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State and local taxes affect almost every taxpayer, and developments in a single jurisdiction can be common and sometimes confusing. In this issue of the newsletter, we will briefly summarize some SALT developments in several countries that could be important to you.

Alabama updates reported

Sales tax on aircraft parts: On June 16, 2021, the Alabama Department of Revenue (Department) issued a notice to all sellers who retail aircraft parts, essentially stating that the 2012 exemption should expire on May 30, 2022 , was extended as a result of the 2021 legislature repealing this Sunset provision. This sales and use tax exemption applies to aircraft parts, components and systems for overhauling certain aircraft under Alabama law. The Ministry advises in this notice that questions regarding the notification or sale of aircraft parts should be directed to the Sales and Use Tax Department at the address given in the notice. More information can be found here.

District of Columbia – Updates reported

Frequently asked questions about marketplace sellers: The Office of Tax and Revenue (OTR) has posted Frequently Asked Questions (FAQs) on its website about the responsibilities of marketplace sellers for collecting and transferring VAT. These FAQs cover the definition of a remote seller; the responsibilities a remote seller has under applicable district sales tax laws; the Nexus Economic Standard, under which the county requires the distance seller to acquire a retail license and begin collecting and paying taxes; the start date for a distance seller's obligations; and many other such FAQs. More information can be found here.

Florida – updates reported

Sales tax holiday 2021: On July 7, 2021, the Florida Department of Revenue (Department) issued Tax Information Publication # 21A01-08 announcing a sales tax vacation for the period Saturday, July 31, 2021 through Monday, August 9, 2021. According to this publication, and during this sales tax vacation, Florida law requires that no sales tax or local option tax be collected on purchases of clothing, shoes, and certain accessories for $ 60 or less per item; Purchases of certain school supplies that sell for $ 15 or less per item; and the first $ 1,000 of the retail price of personal computers and certain computer-related accessories when purchased for non-commercial home or personal use. In addition, specific examples of exempt clothing and accessories, school supplies, and computers and computer-related accessories are included with the division's publication. Examples of taxable items are also included. More information can be found here.

Emergency regime requiring electronic filing / payment of sales tax: The department has issued an emergency rule effective July 1, 2021 that requires a marketplace vendor who is a merchant under Chapter 212 of the Florida Bylaws, as amended, and a person to collect and pay sales tax on distance sales, must file sales and use tax returns in Florida in good time and electronically transfer sales tax and the freely available sales surcharge to the ministry. This Emergency Rule, referred to as Rule No. 12ER21-6, can be found here.

Georgia – updates reported

Proposed change in sales tax regime for manufacturing: On June 11, 2021, the Georgia Department of Revenue (Department) issued SUT 2021-002 that proposed an amendment to Rule 560-12-2-.62, "Manufacturing Machinery and Equipment, Industrial Materials, and Packaging Supplies." becomes. The ministry states in this announcement that the proposed change will be considered at a remote regulatory hearing on July 27, 2021. In the summary following the notice, the Ministry states that it is proposing to change this rule by making changes as in. makes the copy attached to the notification. The copy of the rule attached to the notice has the word “PROPOSAL” on each page of the proposed amendment to rule 560-12-2-.62. The Department also states in the executive summary that the purpose of the proposed amended rule is to forward the rule to O.C.G.A. adapt. Section 48-8-3.2, as amended by 2021. The notice states that comments may be made to the Ministry prior to the hearing. More information can be found here.

Louisiana updates reported

Tax return and payment deadlines extended due to bad weather: The Louisiana Department of Revenue (Department) recently issued Revenue Information Bulletin No. 21-015 (the Bulletin), which states that taxpayers, whose place of residence, principal place of business, important tax records, or paid have been granted automatic filing and deferral of payments Accountants are located in communities that were declared federal disaster areas following the severe storms and floods of May 17, 2021. According to the bulletin, the ministry is granting automatic renewal through August 16, 2021 for individual income, corporate income, and franchise. Compound tax returns and payments for trust income, partnerships and partnerships with original or extended due dates on or after May 17, 2021. This extension applies to tax returns and payments for the 2020 income tax year and the 2021 franchise tax year. If a taxpayer is on August 16, 2021 In addition, if additional time is required to file the 2020 income tax return or the 2021 franchise tax return, an application for renewal can be submitted on the relevant renewal form, which must be submitted by August 16, 2021; and, if submitted, the renewal period runs from August 16, 2021 through the general renewal date of November 15, 2021 for sole proprietorships, trusts and partnerships and until December 15, 2021 for corporations. The bulletin states that interest and default interest will be due on the outstanding tax balance from August 16, 2021. For more information on the extension, see the bulletin here.

Revised regulatory authority for installment payment agreements: The department recently amended Section 61.I.4919 of Louisiana Administrative Act, entitled "Tax Payment Installment Agreement". Pursuant to the Ministry's letter of intent, this amendment is intended to clarify that installment contracts applied for by limited companies, partnerships and limited partnerships may require an ongoing guarantee agreement, provided the payment period covered by an informal installment agreement is authorized and technical Make changes. Additionally, it appears that this regulatory change will add an additional 12 months that may be available to taxpayers seeking an installment payment arrangement. More information can be found here.

Maryland – updates reported

Filing and Payment Extension for PTEs: On June 30, 2021, the Comptroller of Maryland issued a press release extending the filing and payment deadlines for Pass-Through Companies (PTEs) for 2020 income tax returns to September 15, 2021 as a result of new laws (see our edition of SALT Select dated June 2021, here) that require extensive changes to tax forms available to PTEs accessible on the Comptroller's website. It is expected that these forms will be available "soon" from software vendors, but the release states that the National Audit Office cannot guarantee the date. The press release went on to say that taxpayers who file PTE returns and settle all outstanding debts by September 15 will not be charged interest or penalties and no further action is required for PTEs to receive this waiver – “it is granted automatically ". The notice also states that the waiver of late payment interest and late payment penalties is limited and does not apply to interest or penalties for underpaying estimated taxes. More information can be found here.

Certain registration fees are no longer charged: In a notice dated July 1, 2021, the Maryland Secretary of State Office announced that the State Department of Assessments and Taxation no longer charges a basic fee for the cancellation, dissolution or termination of a registered company. This notice also states that no cancellations, cancellations, or cancellations filed prior to July 1, 2021, or re-filing of those filings through a transaction originally completed prior to July 1, 2021 will not be eligible for a refund are. More information can be found here.

Mississippi updates reported

Revised regulations for the control of alcoholic beverages: The Mississippi Department of Revenue (Department) has published several proposed regulations to control alcoholic beverages that will go into effect July 23, 2021. Some of these revised regulations, as proposed by the ministry, can be found here, here, here and here.

South Carolina – Updates reported

Zero percent interest rate for refunds through September 30, 2021: On June 28, 2021, the South Carolina Department of Revenue (Department) issued Information Letter No. 21-19, which essentially provides that no interest is paid on refunds for the first quarter of the state's fiscal year ending September 30, 2021-2022 become. 2021. The information letter states that an interest rate of three percent would be paid on reimbursements in the period from July 1, 2021 to September 30, 2021, but that the state budget rules require the ministry to reduce the interest rate to eligible reimbursements by the total three percentage points above the rates listed, resulting in a reimbursement rate of zero percent. Interest will still be charged for underpayments. More information can be found here.

Sales tax holiday dates: On June 22nd, 2021, the ministry issued SC Notice # 21-17 setting out the VAT holidays for that year. According to this information letter, the 2021 sales tax vacation begins Friday, August 6, 2021 through Sunday, August 8, 2021. This holiday applies to eligible new or used items in any dollar amount purchased online or in-store for use at any age. The VAT leave includes clothing, school supplies, computers and certain bed and bath accessories. Items that are used in a trade or business, clothing or shoe rental and watches are excluded from vacation. Specific examples of exempt and taxable items are attached to the information letter. More information can be found here.

Tennessee updates reported

Interest rate changes: In early July, the Tennessee Department of Revenue (Department) announced that for the period July 1, 2021 to June 30, 2022, the interest rate on investments and refunds would remain at 7.25 percent, which remains the same interest rate as the The same period of the previous year was valid. However, the interest rate for installment payment agreements was raised to 9.25 percent for the period July 1, 2021 to June 30, 2022, compared to 8.25 percent in the same period of the previous year. More information can be found here.

Proposed repeal of the VAT regime: In early July, the Department filed a settlement hearing with the Tennessee Secretary of State announcing a hearing on August 17, 2021 at the Andrew Jackson Building, Nashville, Tennessee, to discuss matters related to the proposed suspension of sales and Use tax rule 1320-05-01-.96 (rule 96). Originally certified in 1974, Rule 96 essentially provides that, unless otherwise agreed by the Ministry, the sale of tangible personal effects or taxable services by a trader to a foreign seller who instructs the trader to act as the agent of the overseas seller who supplies tangible personal property or taxable services to the seller's overseas customer who is a user or consumer is subject to sales tax. Rule 96 goes on to state that the trader acting on behalf of the overseas seller must collect the tax associated with the transaction unless the transaction falls under the conditions set out in rule 96. The Department appears to admit that with the Recent Legislation passed Merchants outside of the state now have responsibility for collecting and remitting sales tax either under the new filing threshold (see Notice No. 20-14 of July 2020 here) or as marketplace intermediary (see Notice No. 20-15 dated July 2020 here), and therefore rule 96 would no longer be required. More information about the hearing on this proposed repeal can be found here.

Effects of IRC Sections 754 and 743 (b) for Franchise and Excise Purposes: On July 14, 2021, the Department issued Letter No. 21-06 dated June 10, 2021. This judgment addresses the implications of an Internal Revenue Code Section 754 election and subsequent decision to tax franchise tax in Tennessee, and the subsequent decision to de-tax the adjustment of partnership ownership to the "taxpayer"; including whether, for Tennessee excise duty, the taxpayer's net profit or loss is determined with or without any addition or deduction in relation to an adjustment under Section 743 (b) under that Section 754 choice. The facts in this judgment show that the taxpayer is a single-person limited liability company owned by a multi-person limited liability company through a tiered ownership structure composed of other single-person limited liability companies that is classified as a partnership for federal tax purposes ("Partnership" ). Partnership members sold controlling interests in the partnership to "buyers," and then the partnership made a Section 754 election such that the adjusted base of buyers owned by the partnership under Section 743 (b) was increased to fair market value. The partnership intends to use pushdown accounting in its books and records, as well as in its consolidated financial statements, which are prepared using generally accepted accounting principles (GAAP).

Against this background, the department has determined in this resolution that pushdown accounting makes it possible to use the higher purchase price of the buyer when preparing the taxpayer's individual financial statements as well as the consolidated financial statements; Therefore, if the taxpayer opts for pushdown accounting, the taxpayer must calculate their net worth for franchise tax purposes in accordance with their GAAP balance sheet. With regard to excise duty, the Department noted in that decision that a Section 754 choice followed by a base adjustment in respect of an Receiving Partner is applicable to that Receiving Partner only in accordance with the Treasury Regulations under Section 743 on the basis of the foregoing, and based on references to Section 743 Treasury Regulations that adjustments to the partnership ownership basis under Section 743 (b) will not affect the partnership ownership common ground, the Department has determined that for Tennessee, excise duty becomes purposes the taxpayer's net profit or loss determined with no addition or deduction in relation to the base adjustment under Section 743 (b) in accordance with an option under Section 754. More information can be found here.

Texas updates reported

Improved sales tax reporting function: The Comptroller's Office recently announced that a new feature will provide sellers with more information about their tax obligations when selling. According to the auditor's announcement, starting June 30, 2021, sellers will be able to download files that can be integrated with their tax reporting and point-of-sale software. These files contain a comprehensive record of Texas addresses and associated state and local sales and use tax obligations, as well as a tax rate file for the local jurisdiction. The Comptroller's Office stated that these files will be updated quarterly to reflect new tax jurisdictions and tax rate changes within jurisdictions, and that these tax responsibilities and rates will apply for that quarter. More information can be found here.