State and local taxes impact almost every taxpayer, and developments in any one jurisdiction can be frequent and sometimes confusing. In this newsletter edition, we will briefly summarize certain state and local tax (SALT) developments in several states which may be important to you.
Alabama – Updates Reported
Extension of Time for Motor Vehicle Registration/Property Tax Payments Due to Storms: On January 25, 2023, the Commissioner of the Alabama Department of Revenue (Department) issued an Executive Order providing residents of Autauga, Chambers, Coosa, Dallas, Elmore, and Tallapoosa Counties additional time to obtain motor vehicle registrations and pay property taxes on motor vehicles. This extension applies to registrants in those counties declared to be under a state of emergency. It would relate to both motor vehicle registration laws and property tax laws for registration of vehicles purchased or otherwise required that are subject to the 20-day registration requirement, as well as for motor vehicle registration laws and property tax laws for motor vehicle registrations and renewals for vehicles pursuant to the International Registration Plan, when the ad valorem tax was due in a county declared be under a state of emergency. The extension is to the last business day of the subsequent month that registration was otherwise due in those counties. The Executive Order also stated that penalties associated with motor vehicle registrations and renewals extended under the Order will not be charged until after the last business day of the subsequent month. Penalty charges associated with motor vehicle property tax payments so extended will not be charged until after such date. More information can be found here.
District of Columbia – Updates Reported
Tax Filing Season Began January 23, 2023: On January 12, 2023, the D.C. Office of Tax and Revenue (OTR) published an announcement that it will begin to accept and process Tax Year 2022 individual income tax returns on Monday, January 23, 2023, consistent with the start of the federal tax filing season. The OTR included a tax rate schedule in that publication; information regarding the standard deduction, the District's Earned Income Tax Credit, Homeowner and Renter Property Tax Credit, and Unemployment Insurance; and information about the deadline to submit the Tax Year 2022 individual income tax returns or extension to file and pay tax, which is April 18, 2023. The OTR also announced that it will be closed on April 17, 2023, in observance of Emancipation Day. More information can be found here.
Florida – Updates Reported
2023 Governmental Leasehold Intangible Tax Valuation Factor Table: On January 6, 2023, the Florida Department of Revenue (Department) issued Tax Information Publication (TIP) No. 23C02-01, addressing the governmental leasehold intangible tax valuation factor for 2023. As stated in this TIP, Florida law provides that all leasehold estates or related possessory interests in property of United States, the State of Florida, or any political subdivisions or other governmental units are taxed as intangible personal property if the leased property is undeveloped or predominantly used for residential or commercial purpose and rental payments are due in consideration of the leasehold estate or possessory interests. Unless an exemption applies, lessees of governmentally owned property are required to file an annual intangible tax return. The TIP also states that the just value of a lessee's leasehold estate or possessory interests reported on that return is determined by the rent payments for the remaining term of the lease, at the Federal Reserve-Atlanta discount rate on the last business day of the previous year plus 1 percent. This TIP includes a valuation factor table for the 2023 intangible property tax return. Contact information for the Department is included in the TIP for submitting written questions to the Department More information can be found here.
Georgia – Updates Reported
Important Income Tax Updates: The Georgia Department of Revenue (Department) recently published information regarding important income tax updates for the 2022 year. As noted in that publication, the Department states that the deadline to file 2022 individual income tax returns, without an extension, is April 18, 2023. The publication also noted that February 1, 2023, is the beginning date for the Department's processing of 2022 individual income tax returns. The publication also provides information important to both individuals and businesses, such as about tax credits, federal tax changes, and other details. More information can be found here.
Louisiana – Updates Reported
Filing Requirements for IRS Form 1099-NEC: On January 12, 2023, the Louisiana Department of Revenue (Department) published Revenue Information Bulletin 23-006, addressing the requirements, beginning January 1, 2023, for service recipients (businesses) that are required to file IRS Form 1099-NEC with the Internal Revenue Service. The Bulletin states that a copy of this Form, which involves non-employee compensation, must also be filed with the Department when issued by the business for services provided in Louisiana or for services performed by an individual residing in Louisiana at the time the services were performed. Unless an exemption applies, such businesses are required to file a copy of Form 1099-NEC with the Department on or before February 28 for the proceeding tax year — that is, before February 28, 2023, for 2022. The Bulletin further states that such businesses are required to file Forms 1099-NEC directly with the Department when the business did not timely electronically file all Forms 1099-NEC with the IRS and, if prompted, authorize sharing of the information provided with the Department. Such businesses, according to the Bulletin, are not required to file Form 1099-NEC directly with the Department when the business timely and electronically filed such with the IRS, either through commercial third third-party tax software, the IRS Filing Information Returns Electronically system, or otherwise IRS-approved electronic filing systems. The Bulletin also states that businesses filing 50 or more Forms 1099-NEC are required to file electronically. Other information, with frequently asked questions, is included in this Bulletin. More information can be found here.
Maryland – Updates Reported
New Local Tax Rate Changes for 2023: The Comptroller of Maryland (Comptroller) recently published a listing of local income tax rates for Maryland's 23 counties and Baltimore City. According to the Comptroller's publication, six counties (Allegany, and Anne Arundel, Cecil, Frederick, St Mary and Washington) have decreased their local rate for calendar year 2023. The Comptroller attached a complete list of current city and local counties' tax rates with footnote information for certain counties. More information can be found here.
Mississippi – Updates Reported
New Commercial Farmer Affidavit: On January 24, 2023, the Mississippi Department of Revenue (Department) announced that a new, single use Commercial Farmer Affidavit is now available. According to the Department, this single transaction Affidavit is to be used when claiming the reduced 1.5 percent rate for farmers purchasing farm tractors and farm implements to be used in the production of agricultural products on a commercial scale for market. The original copy of the Affidavit is to be submitted to the Department with the sales tax return and a copy is to be maintained for the seller's records. The Affidavit states that if sales tax returns are filed electronically, copies should be mailed to the address shown on that Affidavit. More information can be found here.
North Carolina – Updates Reported
Individual Income Tax Season Began February 2, 2023: The North Carolina Department of Revenue (Department) recently announced that the tax filing season for individual income tax purposes began February 2, 2023. The Department noted that taxpayers who file state tax returns electronically will now receive acknowledgments. The Department did note that even though it is accepting returns as of February 2, it will be early March before it begins processing and validating return information and issuing refunds. The Department also noted that, because of Emancipation Day, a 2022 calendar year income tax return filed on or before April 18, 2023, will be considered as timely filed. More information can be found here.
South Carolina – Updates Reported
Local Sales/Use Tax and Related Charts for 2023: The South Carolina Department of Revenue (Department) recently issued Information Letter #23-1 that is effective March 1, 2023. This Information Letter sets forth changes in local sales and use tax rates, as well as other local changes and related exemption information as summarized by the Department. More information can be found here.
Tennessee – Updates Reported
Clarification Regarding Foreign Derived Intangible Income Deduction: On January 26, 2023, the Tennessee Department of Revenue (Department) published a clarification of its Franchise and Excise Tax Manual, found under Overview of Upcoming Tax Manual Updates. Page 300 of the Manual indicates that Tennessee has decoupled from the federal provision (Internal Revenue Code Section 250) that allows a deduction for foreign derived intangible income (FDII). The Department noted that it reviewed this issue and determined that while Tennessee has decoupled from Internal Revenue Code 250 for purposes of global intangible low-taxed income, Tennessee has not decoupled for purposes of the FDII deduction. Therefore, in computing "net earnings" under Tennessee Code Annotated Section 67-4-2006, the Department stated that taxpayers are entitled to the full amount of the Internal Revenue Code Section 250(a) deduction to which they are entitled under federal law as it relates to FDII. More information can be found here.
Texas – Updates Reported
New/Additional Tax Rate Changes Effective January 1, 2023: The Comptroller's Office recently published an update regarding new and additional tax rate changes with respect to city, special purpose districts, and combined area jurisdictions. More information can be found here.
