SALT Blog - SALT Blawg

Introduced March 31, 2011, the Alabama House of Representatives is now considering HB 427 titled the Alabama Taxpayers' Bill of Rights. One of the many highlights of HB 427 would be the abolition of the Department of Revenue's Administrative Law Division and replacement with a new, independent state agency, the Alabama Tax Appeals Commission ("ATAC"). ATAC's jurisdiction would include hearing appeals of tax and other matters administered by the Alabama Department of Revenue and, subject to an opt out provision, appeals related to certain local taxes levied by or on behalf of self-administered counties or municipalities.

Recently the New Jersey Division of Taxation ("Division") proposed amendments to a corporate business tax rule relating to foreign businesses' responsibilities to file and pay New Jersey's Corporation Business Tax ("CBT"). The proposed amendments are an attempt to clarify changes wrought by the Business Tax Reform Act ("Act"). Enacted July 2, 2002, the Act made numerous amendments to the CBT. Those amendments explicitly established that foreign corporations must pay CBT "for the privilege of deriving receipts from sources within this State, or for the privilege of engaging in contacts within this State."

During January, the Securities & Exchange Commission ("SEC") fined Hudson Highland Group, Inc. ("Hudson") – a staffing company – for failing to implement the requisite internal controls to correctly collect and remit approximately $3.9 million in sales taxes.

A California Court of Appeals recently tackled the question of whether sales tax should be imposed upon a telecommunication company's license for software used to operate its telephone switch hardware.  The court held that the software license was exempt from sales and use tax because the license constituted the transfer of patent and copyright interests.

The Washington legislature recently authorized the state’s first ever tax amnesty program.  As with many states that have enacted amnesty programs, Washington is facing significant budget challenges.  The amnesty program is anticipated to help combat those fiscal difficulties by generating approximately $24.4 million in revenue for the state and $3.9 million for local governments, while giving businesses a break from penalties and interest associated with back taxes.

Washington’s temporary amnesty program waives the penalties and interest associated with certain taxes and is slated to begin February 1, 2011 and end April 18, 2011.  The program applies to the following taxes: state business-and-occupation tax, public utility tax, state and local sales and use taxes – including general retail sales and use taxes, rental car taxes, King County food and beverage tax, sales and use tax on motor vehicle sales/leases, lodging taxes and brokered natural gas use tax.  Additionally, taxpayers can apply for amnesty for any unpaid invoice from the Washington Department of Revenue (“Department”) that lists penalties and interest due for tax periods before February 1, 2011 for any of the aforementioned taxes included in the program, including Department audit assessment invoices.  Notably, application under the program waives a taxpayer’s right to seek a refund or challenge the amount of taxes paid under the program.

Pennsylvania Governor Ed Rendell recently signed the Construction Workplace Misclassification Act (Act 72 of 2010, previously House Bill 400).  The new law holds employers in the construction industry criminally liable for the misclassification of employees as independent contractors.  The legislation goes into effect on February 11, 2011.  On that date, Pennsylvania will join sixteen (16) other states that have enacted similar legislation seeking to eliminate the misclassification of employees, including its neighboring states of Delaware, New Jersey, New York and Maryland.

Pennsylvania estimated that approximately nine (9) percent of the state’s workforce is misclassified as independent contractors.  Of that percentage, a quarter of the misclassified workers are in the construction industry.  By classifying workers as independent contractors instead of employees, employers can avoid paying unemployment compensation and workers’ compensation taxes, and may gain an unfair advantage in contract bids.

On December 17, 2009, Philadelphia City Council voted 15-2 in favor of Bill No. 090706 which, upon approval of the voters, would abolish the Board of Revision of Taxes (“BRT”) and establish, in its place, two separate agencies to perform Philadelphia’s property tax assessment and appeal functions.  On May 18, 2010, Philadelphia voters approved a ballot referendum abolishing the BRT and replacing it with the Office of Property Assessment and the Board of Property Assessment Appeals.

The reform of the current property tax assessment system was spawned by claims of political patronage and inaccurate assessments.  To combat a reoccurrence of those issues under the new system, the BRT’s duties will be split amongst the two new agencies.

On July 1, 2010, Florida and Nevada launched two separate tax amnesty programs, both are slated to expire September 30, 2010.  These tax amnesty programs are the latest of many state programs intended to raise large amounts of tax dollars to assist with the delicate budget balancing tasks facing the states.  The Florida and Nevada programs represent another opportunity for delinquent taxpayers to voluntarily pay overdue taxes with no penalty and no, or reduced, interest.

During April, both the Commonwealth of Pennsylvania and the City of Philadelphia implemented separate tax amnesty programs with the hope of generating revenue for the cash-strapped state and local coffers.  Both programs were slated to run for 54 days, with Pennsylvania’s from April 26, 2010 through June 18, 2010, and Philadelphia’s from May 3, 2010 through June 25, 2010.  The Pennsylvania amnesty program was modeled after the highly successful New Jersey 2009 amnesty program, which generated $725 million within six weeks.  At the close of the Pennsylvania and Philadelphia 54 ...

In general, Pennsylvania does not follow the Internal Revenue Code for Pennsylvania Personal Income Tax (“PIT”) purposes. During the late 1990s, the Pennsylvania Department of Revenue (“Department”) reversed its long standing position and diverged from federal income tax rules, becoming the only state to determine that elective nonqualified deferred compensation was taxable during the year it was earned, not when it was actually received. During 2005, the Pennsylvania legislature amended the PIT statute, thereby reversing the Department’s position. In ...