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

Revised Interest Chart Effective January 1, 2023: On December 12, 2022, the Alabama Department of Revenue (Department) provided a certain Memorandum to various license issuing officials in the state regarding the revised interest chart effective January 1, 2023. The Department stated in that Memorandum that the updated interest rate chart was issued consistent with Section 40-1-44, Code of Alabama, 1975, interest on delinquent taxes and overpayments. Further, the Department noted in that Memorandum that the underpayment rate for the second quarter of the fiscal year, established by the Secretary of Treasury under 26 U.S.C. Section 6621, is 7 percent. The updated interest chart can be found at the link set forth in the Memorandum. That chart states in part that it may be used through September 2023 or until further notice. More information can be found here.

District of Columbia – Updates Reported

Annual Tax Institute Workshop on January 12, 2023: On November 10, 2022, the Office of Tax and Revenue (OTR) published an announcement that the OTR's annual Tax Practitioner's Institute is scheduled to be held online on January 12, 2023, from 9 a.m. to 3:30 p.m. EST, using the Teams platform. The seminar is free, but registration is required. A registration link is in that announcement. More information can be found here.

Florida – Updates Reported

Revised 2023 Fuel and Related Tax Rates: On November 7, 2022, the Florida Department of Revenue (Department) issued Tax Information Publication (TIP) #22B05-06 regarding fuel tax rates and related information adjusted beginning January 1, 2023. The TIP includes not only fuel tax rates for 2023, but also collection allowance, refund, and pollutants tax rate information for the new year. More information can be found here.

Georgia – Updates Reported

Sales Tax Includes "Safe Rider" Fees: The Georgia Tax Tribunal has issued a decision upholding the position of the Georgia Department of Revenue (Department) holding that a separately stated charge by Uber for transportation services was subject to the Georgia sales tax. The case of Uber Technologies, Inc. v. Robyn A. Crittenden (November 1, 2022) involved the "Safe Rider" fee charged by Uber. This fee is a flat charge for each ride, separate from the service fee charged to drivers, and is a separate line item on the rider's receipt. The Georgia sales tax applies to charges for most transportation services, subject to specific exceptions. The Safe Rider fee was charged beginning in April 2014 and was intended to recover costs for regulatory compliance, insurance, driver background checks, motor vehicle records checks, and safety features in the Uber App. The Georgia Sales Tax Act exempts some components of the charges for transportation services from the tax; however, since the Safe Rider fee could not be fit within any of the exceptions, the Tax Tribunal held those charges to be subject to sales tax. More information can be found here.

Louisiana – Updates Reported

2023 Interest Rate Collected on Unpaid Taxes: The Louisiana Department of Revenue has published Revenue Information Bulletin No. 23-001, dated January 1, 2023, setting forth the interest rate that will be applied to unpaid taxes during the 2023 year. That interest rate on unpaid taxes will be collected at the annual rate of 9.5 percent from January 1, 2023, through December 31, 2023. Based on the chart in this Bulletin, that 2023 rate is up from the 2022 rate, which was 6.5 percent. More information can be found here.

Maryland – Updates Reported

2023 Employer Withholding Guide: The Comptroller of Maryland (Comptroller) recently published the Withholding Guide, effective January 2023 (updated December 2022), which includes local income tax rates. The Comptroller stated in this Guide that these rates were current at the time the Guide was developed. The Comptroller also cautioned that the Maryland Legislature might change such tax rates when in session and suggested checking the Comptroller's website at www.marylandtaxes.gov during such time in session for any changes. More information can be found here.

Mississippi – Updates Reported

2023 Tax Credit from the Children's Promise/Pregnancy Resource Acts: In October 2022, the Mississippi Department of Revenue (Department) issued Notice 80-22-003, which addresses the tax credits available in 2023 under the Children's Promise Act, as well as under the Pregnancy Resource Act. According to the Notice, the Children's Promise Act authorizes a credit for businesses that donate to an Eligible Charitable Organization or an Educational Services Charitable Organization. These credits, according to the Notice, have been amended to increase the aggregate amount that may be allocated for contributions to such Organizations to $18 million for the 2023 calendar year, with the aggregate credit amount being applicable up to $9 million for the Eligible Charitable Organizations and $9 million for the Educational Services Charitable Organizations. Further, the Notice stated that the Pregnancy Resource Act authorizes a credit for businesses that donate to a Pregnancy Resource Charitable Organization, with the aggregate credit amount for the 2023 calendar year being $3.5 million. The Notice reviews terms and conditions with respect to using these credits. The Department noted that application for the credit must be made on official forms, which are referenced in the Notice. The Department also noted that the credit caps are expected to be reached quickly. More information can be found here.

North Carolina – Updates Reported

Interest Rates Set for January 1, 2023, through June 30, 2023: On December 1, 2022, the North Carolina Department of Revenue (Department) published a press release regarding the interest rate that will be applied to overpayments of tax and assessments of tax. That interest rate for the period from January 1 through June 30, 2023, is 7 percent, an increase from the previous amount of 5 percent. More information can be found here.

South Carolina – Updates Reported

Sales Tax Implications of Inflation/Convenience Fees: In October 2022, the South Carolina Department of Revenue (Department) issued Revenue Ruling #22-10, addressing the question of whether a separately stated "inflation fee," "convenience fee," "non-cash adjustment fee," or similar type of fee charged by a retailer as part of the retail sale of tangible personal property to a customer can be included in "gross proceeds of sales" or a "sales price" and therefore subject to the sales and use tax. The Department noted that as a result of recent inflationary times, some retailers are adding a separate fee to a customer's invoice or receipt to recover some or all of their increased operating costs (such as higher inventory costs, labor costs, fuel, rental rates, etc.). Other retailers, as noted by the Department, are adding a separate fee to recover their credit card processing costs. In response to questions asked about the applicability of the sales and use taxes to these various fees, the Department noted that the phrases gross proceeds of sales and sales price essentially are both defined as the total proceeds without deductions for expenses, including the cost of goods sold, cost of materials, labor or service, interest, losses, and other such expenses. Based upon this measure of the sales and use tax being the total proceeds of a sale, the Department concluded that these fees are subject to sales and use tax unless the retail sale of the tangible personal property is otherwise exempt from the tax or the retail transaction is not subject to the tax. The Department then gave two examples for guidance purposes. Further, the Department noted that if such a fee is imposed on the retail sale of multiple products when the items sold include both exempt and taxable items, then the sales and use tax is only due on that portion of the fee related to the taxable items, provided that the seller can reasonably prorate the fee between taxable and nontaxable items. More information can be found here.

Tennessee – Updates Reported

New Sales Tax Exemption Wording for Agricultural Operations: Effective January 1, 2023, a new law will replace the decades-old sales/use tax exemption wording previously available for farm equipment and machinery. Under the new law, 2022 Public Chapter 1104, qualified farmers and nursery operators may purchase tangible personal property used primarily (more than 50 percent) in agricultural operations exempt from the tax. In that regard, the Tennessee Department of Revenue (Department) issued Notice #22-14 in November 2022, briefly addressing the wording in this new law. While that Notice does not address all aspects of the new law, the Department noted that agricultural operations means land, buildings, and machinery used in the commercial production of farm products and nursery stock, and activities carried on in connection with commercial production of farm products and nursery stock. Further, the Notice referenced definitions for both farm products and nursery stock. In addition, the Notice stated that qualified farmers and nursery operators must provide the seller with a copy of their Agricultural Sales and Use Tax Exemption Certificate to purchase farm equipment and machinery exempt from the tax. Alternatively, purchasers may use a fully completed Streamlined Sales Tax Certificate of Exemption form that includes the exemption number on the Agricultural Certificate issued by the Department. Notably, contractors and subcontractors who use property in the performance of a contract with a qualified farmer or nursery operator are subject to the tax on such property and contractors may not use the qualified farmer or nursery operator's tax-exempt status to purchase property without paying appropriate taxes. More information can be found here.

Texas – Updates Reported

Extension of the Fair Market Value Deduction for Motor Vehicles: The Comptroller's Office has published an announcement in the Tax Policy News for October 22, advising that people in the business of selling, renting, or leasing motor vehicles will have an additional 12 months to purchase a replacement vehicle for vehicles retired in 2022. In that regard, the Comptroller stated that a person in that business may deduct the fair market value on a retired vehicle that is titled in Texas from the total consideration paid for a replacement vehicle. The deduction, according to the Comptroller, reduces the motor vehicle tax liability due on the replacement vehicle. Previously, the deduction from the retired vehicle had to be used within 18 months after it was removed from service and offered for sale. Recognizing the current difficulty in finding replacement vehicles, the Comptroller stated that a such a business will now have an additional 12 months to purchase a replacement vehicle for vehicles retired in 2022. For example, and as noted in the announcement, if a dealer retired a vehicle June 30, 2022, the dealer has until December 30, 2024, to deduct the fair market value deduction from the total consideration purchase price paid for a replacement vehicle. The announcement also notes that a person in such business must maintain records necessary to document when the vehicle was retired, the vehicle's fair market value, and the time the deduction was used. More information can be found here.