Transcript TFI SALT Conference - Kupiec & Martin, LLC

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
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Tax Trends Outline
State Budgets
State Audits
State Tax Trends
U. S. Supreme Court
Financial Reporting Trends
Other
Opportunities???
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Projected Budget Gaps: FY 2010
As a Percentage of General Fund Budget
WA
VT
MT
ME
ND
OR
MN
ID
NH
WI
SD
MI
MA
NY
WY
NV
NE
OH
IN
IL
UT
CA
WV
CO
KS
CT
PA
IA
VA
MO
KY
RI
NJ
DE
MD
DC
NC
TN
AZ
OK
NM
AR
SC
AL
MS
AK
TX
GA
LA
HI
FL
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
Source: National Conference of State Legislatures, “State Budget Update: July 2009”
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Budget Gap Numbers By Year
Past Recession
Year
Amount
(in billions)
2002
2003
2004
2005
2006
Total
Source: NCSL, 2009
$37.2
$79.0
$83.7
$37.0
$26.9
$263.8
Current Recession
Year
Amount
(in billions)
2008
2009
2010
2011
2012
Total
$12.8
$113.2
$142.6*
$58.5**
$21.1**
$348.2*
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State Audits
States Hiring More Auditors
Experience Level of State Auditors
Recordkeeping/Information Requests
Complex Tax Issues/Changing Laws
Settlement/Litigation
Textron Decision (August 2009)
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State Tax Trends
Nexus
Tax Base
Combined Reporting
Apportionment
Credits/Net Loss Deductions
Amnesties
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State Tax Nexus Trends
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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:
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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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Council On State Taxation
Tax Base
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)
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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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Council On State Taxation
Tax Base – Proposed IL Sales
Tax Expansion (Not Enacted)
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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
WA
MT
ME
ND
OR
VT
MN
ID
NH
WI
SD
MI
NY
WY
CT
NV
IL
UT
CA
NJ
OH
IN
WV
CO
KS
RI
PA
IA
NE
MA
VA
MO
KY
DE
MD
DC
NC
TN
AZ
OK
NM
AR
SC
MS
AK
TX
HI
AL
GA
LA
FL
Key
Adopted combined reporting in 2009
Pending combined reporting legislation
Rejected combined reporting legislation
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Apportionment Trends
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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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Credits/Net Losses
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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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Amnesties
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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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Council On State Taxation
Amnesties
Recently Concluded:
Alabama
Arizona
Connecticut
Hawaii
Massachusetts
New Jersey
Vermont
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
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U.S. Supreme Court
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?
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Financial Reporting
Expansion of FAS 5
FIN 48
Conversion to IFRS
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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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Council On State Taxation
Opportunities
• Restructurings
• Mergers/Acquisitions
• Jobs
• Improving Economy
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Council On State Taxation
Questions?
Beth Cooley
David Kupiec
[email protected]
(202) 484-5226
[email protected]
(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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