"With passage of Substitute Senate Bill 5089 (“Streamlined Sales Tax”), Washington changed from an origin-based system for local retail sales tax to a destination-based system effective July 1, 2008."
For more information on this, see here.
Nice summary of a proposed California ballot initiative on TaxProf Blog today. Text of the summary below.
Wealth Tax. Constitutional Amendment and Statute.
Summary Date: 08/04/08 Circulation Deadline: 01/02/09 Signatures Required: 694,354
Proponent: Paul McCauley
Imposes one-time tax of at least 55% on property exceeding $20 million of a California resident or held in California by nonresident. Imposes one-time tax (between 36.5% - 54.3%) on income exceeding $10 million when resident dies or leaves California. Imposes additional 17.5% tax on total incomes of taxpayers with income exceeding $150,000 if single, $250,000 if married; 35% if incomes exceed $350,000 if single, $500,000 if married. Creates tax credits. Requires State to acquire shares of specified corporations to influence environmental practices. May exempt new revenues from education funding requirements. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: One-time increase in state revenues potentially in the low hundreds of billions of dollars from imposition of a wealth tax, and ongoing increase in state revenues potentially in the billions of dollars from imposition of the tax on certain people dying or leaving the state. This revenue would be allocated to accomplish various goals related to environmental protection. Potential annual net increase in personal income tax revenues in the tens of billions of dollars annually. The first $7.5 billion annually would be allocated to the state General Fund with additional revenue allocated for environmental protection. Unknown state and local revenue reductions – potentially in the tens of billions of dollars annually – due to changes in taxpayer behavior. (Initiative 08-0012.) (Full Text)
You can view the report here.
The potential effects of Senator Obama's tax proposals are now starting to be discussed in the mainstream media. I thought this piece was especially interesting.
| June 26, 2008 |
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By Randy Gainer
The Washington Supreme Court ruled in a unanimous decision today that the City of Seattle may not tax Comcast's cable Internet service as a telephone business. The decision, Community Telecable of Seattle et al. v. City of Seattle, reverses a 2006 decision by the Washington Court of Appeals. The lower court had ruled that the City could tax Comcast's cable Internet service at the telephone business rate because cable Internet service includes a data transmission component and the definition of “telephone business” includes, among other things, data transmission over cable and telephone lines. The Supreme Court rejected the lower court's reasoning, observing that Comcast transforms and manipulates data rather then merely transmitting it and holding that the transmission component of Internet service cannot be separated from the other parts of the service. Continue reading...
The State of New Jersey is now actively imposing the New Jersey Corporation Business Tax on software licensors with customers in New Jersey, but who otherwise have no other contacts in New Jersey. The state's logic is that software licensors retain titles to the programs they license, including the copyright, and therefore employ or own capital or property in New Jersey.
The State of New Jersey has a long-standing regulation which subjects a foreign corporation to income tax in New Jersey if the corporation is doing business and employing property in New Jersey. The New Jersey tax division does not believe that this violates the Commerce Clause of the U.S. Constitution and is not in conflict with Quill v. North Dakota, 504 U.S. 298 (1992).
The New Jersey tax division is relying on the Appellate Division of the Superior Court of New Jersey's decisions reversing the judgment of the New Jersey Tax Court in Lanco, Inc. v. Director, Division. According to the New Jersey tax division, the physical presence requirement applicable to the sales and use tax is not applicable to the income tax and that the New Jersey Business Corporation Tax can be constitutionally applied to income derived from licensing fees attributable to New Jersey.
In conclusion, according to the New Jersey tax division, software publishers who knowingly license software to New Jersey situs customers have nexus and are therefore required to file New Jersey Corporation Business Tax returns and remit tax based on their in-state activity, in accordance with the apportionment rules in N.J.S.A. 54:10A-6(B)(5) and N.J.A.C. 18:7-8.11.
| January 17, 2008 |
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Starting this year, the California Earned Income Tax Credit Information Act requires employers to notify all California employees that they may be eligible for the federal Earned Income Tax Credit (EITC). The purpose of the Act is to facilitate the ability of the working poor to claim EITCs—and, correspondingly, to increase the share of the federal money that California receives under the program. Continue reading...
The IRS has issued Notice 2007-86, which provides additional transition relief under Section 409A. Notice 2007-86 will appear in IRB 2007-46 on November 13, 2007. In general, the additional relief extends until December 31, 2008, the previous transition relief that was scheduled to expire at the end of this year.
96 law firms have written another letter to the IRS asking for more time on 409A compliance, even after the IRS responded favorably (at least in some respects) to the first request.
Again, this demonstrates the complexity of this area. We are happy to assist you with compliance.
In newly issued Notice 2007-78 (see also the press release), the IRS sets Dec. 31, 2008 as the deadline for amending documents to comply with Section 409A; however, the extended deadline does not apply to a plan’s obligation to designate, in writing, the timing and form of payment of current benefits, which for existing deferred compensation amounts must be done no later than Dec. 31, 2007. Similarly, the Notice does not extend the requirement to operationally comply with the final 409A regulations beginning Jan. 1, 2008. Continue reading...
This week the IRS issued:
"The final regulations clarify that the separate entity is treated as a corporation for purposes of employment taxes and related reporting requirements. As provided in the proposed regulations, a disregarded entity continues to be disregarded for other Federal tax purposes. The final regulations clarify that an owner of a disregarded entity treated as a sole proprietorship is subject to taxes under the Self-Employment Contributions Act (SECA)...."
Revenue Ruling 2007-49 resolves long standing uncertainties over whether a Section 83(b) election is required to be filed when restrictions are imposed on substantially vested stock causing that stock to become substantially nonvested. This is not an uncommon situation in venture financing transactions in which the investors require that founders subject some of their founder shares to vesting.
The revenue ruling addresses 3 situations. In Situation 1, the restrictions are imposed in the absence of an exchange of stock. In Situations 2 and 3, the restrictions are imposed in connection with a stock exchange. In Situation 2, the exchange is a tax-free reorganization. In Situation 3, the exchange is a taxable transaction.
This revenue ruling holds that if the imposition of restrictions on substantially vested stock, which causes such stock to become substantially nonvested, occurs in the absence of an exchange of stock, the substantially nonvested stock is not subject to Section 83. However, if substantially vested stock is exchanged for substantially nonvested stock, the nonvested stock is subject to Section 83."
Effective July 1, 2007, persons engaged in business within the City of Seattle (the “City”) will have to start paying a new “employee hours tax” (also known as “The Business Transportation Tax”). The tax was imposed to “provide an equitable means of generating revenue to ensure that those who regularly utilize the City’s transportation system are supporting that system.” The proceeds of the tax are to be used strictly for transportation purposes.
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