Multistate Taxation: Developments in Multistate Taxation: September 2013

Illinois -

The Illinois Supreme Court held that a life insurance company was subject to a double interest penalty for additional income taxes that were assessed following federal adjustments made after an amnesty period had ended. The court found that the reference to payment of “all taxes due” in the amnesty provision meant “taxes that were properly reportable at the time the initial tax return was required to be fi led, rather than taxes known to be due during the amnesty period.” Therefore, the court held that because the company “failed to pay those taxes during the amnesty period, it became liable for the 200% interest” penalty imposed by the Illinois Department of Revenue. The court also held that the imposition of the 200-percent interest penalty did not violate the company’s substantive due process rights.

Indiana -

The Indiana Tax Court held that the income a corporation received as a partner of a general partnership doing business in Indiana was income derived from sources within Indiana. The corporation argued that, under Indiana law, receipts in the form of “dividends from investments” are attributable to Indiana only if a taxpayer’s commercial domicile is in Indiana. The court determined that the “critical question” was whether the income the corporation received as a partner had the character of operational income or investment income because, if it was operational income, it was not income in the form of “dividends from investments.” The court held that “the mere fact that” the corporation was a partner in a general partnership gave its income from the partnership the character of operational income and, therefore, it constituted income derived from sources within Indiana and was taxable. The court also found that the corporation’s “lack of control” by reason of its minority interest was insufficient to show that it did not participate in the management of the partnership and, thus, that it was a mere passible investor similar to a limited partner.

Originally published in Corporate Business Taxation Monthly on September 3, 2013.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP - State + Local Tax ("SALT") practice | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.