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 SALT developments in several states which may be important to you.
Alabama – Updates Reported
Sales Tax Exemption Extended for Certain Aircraft Refurbishing Parts: On May 12, 2022, the Alabama Department of Revenue (Department) published a Notice advising the tax exemption for the gross receipts from the sale of parts, components, and systems for refurbishing certain aircraft, which was scheduled to expire May 30, 2022, was extended by a 2021 legislative Act without an expiration date; however, the Department also noted that certain legislation in 2022 reinstated the expiration date such that the exemption is available to sales made through May 30, 2030, on contracts or projects entered into on or before May 30, 2027. More information can be found here.
District of Columbia – Updates Reported
Assistance for Businesses Needing a Certificate of Clean Hands: On May 18, 2022, the Office of Tax and Revenue (OTR) published an announcement stating the OTR has dedicated staff available from May 18 through May 20 to review requests for Certificate of Clean Hands for bars, restaurants, and other establishments seeking to renew their liquor licenses prior to the May 31 deadline. The announcement stated businesses seeking a license renewal before the upcoming deadline may make appointments with the OTR for such purposes. The announcement also provided contact information in the event of questions related to the Certificate of Clean Hands. More information can be found here.
Florida – Updates Reported
Corporate Income Tax – Adoption of 2022 Internal Revenue Code and Tax Rate: On May 9, 2022, the Florida Department of Revenue (Department) issued Tax Information Publication (TIP) No: 22C01-03 addressing actions in 2022 by the Florida Legislature in adopting the Internal Revenue Code retroactively to January 1, 2022, such that the Department will follow the computation of federal taxable income with several modifications. Those modifications, according to the TIP, included areas such as bonus depreciation under Section 168(k) of the Code; qualified improvement property as referred to in Section 168(e)(6) of the Code; the deductibility of certain business meal expenses; and the amount of deduction to be taken with respect to film, television, and live theatrical production expenses. Additionally, the TIP stated for taxable years beginning on or after January 1, 2022, the Florida corporate income/franchise tax rate is 5.5 percent. More information can be found here.
Georgia – Updates Reported
Credit for Historic Preservation Extended: On May 2, 2022, Governor Kemp signed HB 469, which extends the existing historic property rehabilitation income tax credit through 2027. The credit was set to expire in 2022. It is available for repairs and alterations to certain structures certified by the Georgia Department of Community Affairs as meeting the standards of the U.S. Secretary of the Interior's or the Georgia Standards for Rehabilitation as provided by the Georgia Department of Community Affairs. The credit is 25 percent of the certified rehabilitation expenses (with an extra 5 percent for a historic home located in a target area). Various conditions and limitations also apply to the utilization of this credit. More information can be found here.
Louisiana – Updates Reported
Managed Audits Must be Closed by June 30, 2022: The Louisiana Department of Revenue (Department) previously issued a news release providing the application deadline (April 30, 2022) for the Louisiana Transfer Pricing Managed Audit Program, which is a voluntary initiative aimed at resolving intercompany transfer pricing issues. That news release reviewed the benefits of the program and conditions for participating in the program. Further, however, the release references Revenue Information Bulletin No. 21-029 dated October 26, 2021, which further provides all managed audits pursuant to this Program must be closed by June 30, 2022. More information can be found here and here.
Maryland – Updates Reported
Personal Property Tax Exemption Increased for Certain Business Property: On May 13, 2022, Governor Hogan signed into law HB 268, which increases from $10,000 to $20,000 the amount of personal property that can be exempt from the personal property tax if owned by an individual and used in connection with a business, occupation, or profession located in the individual's principal residence, and the sum total of the personal property, with some exclusions, had a total original cost of less than $20,000. This increase applies to all taxable years beginning after June 30, 2022. More information can be found here.
Mississippi – Updates Reported
Sales Tax Account Required for All Medical Cannabis Dispensary License Applicants: On May 17, 2022, the Mississippi Department of Revenue (Department) issued a news release stating all Medical Cannabis Dispensary License applicants will be required to have a sales tax account and a sales tax permit prior to applying for a license. The Department stated in the news release applicants should visit the Department's website referenced in the news release, and select 'Register for Taxes' to create a profile; and, after completing the set-up of the profile, the site will allow applicants to then 'Register a New Account' to apply for an account. The Department warned that this process could take up to three weeks, so applicants should address this matter at their earliest convenience. Additionally, a list of NAICS Codes is provided in the news release for applicants. More information can be found here.
North Carolina – Updates Reported
Information Regarding New Deduction for Certain Military Retirement Pay: On May 3, 2022, the North Carolina Department of Revenue (Department) issued an Important Notice addressing North Carolina's new deduction for certain military retirement pay and survivor benefit plan payments. As stated in this Notice, a 2021 legislative act contained a provision that allows eligible retired members of the Armed Forces of the United States to deduct certain military retirement pay when calculating the North Carolina taxable income beginning tax year 2021; and such law also allows eligible beneficiaries of the Survivor Benefit Plan to deduct certain of the Plan payments beginning tax year 2021. Specifically, the Notice states for taxable years beginning on or after January 1, 2021, North Carolina allows a deduction for the following payments received during the taxable year from the United States government: (a) retirement pay for service in the Armed Forces to a retired member that has served at least 20 years and who is medically retired under Federal law, as well as (b) payments of a Plan to a beneficiary of a retired member who is eligible to deduct retirement pay under this new North Carolina law. The Notice also contains various frequently asked questions, as well as contact information for assistance. More information can be found here.
South Carolina – Updates Reported
Draft Guidance on Income Taxes Paid by a Pass-Through Entity to Other States: On May 19, 2022, the South Carolina Department of Revenue (Department) issued a draft of a Revenue Ruling that, when finalized, will address questions regarding income taxes paid by a pass-through entity to other states on personal service income and other business income and the credit for taxes paid to other states. Comments on this draft Ruling are due by June 1, 2022 to the Department. As noted in this draft Ruling, the Department has received questions from resident and non-resident owners of pass-through entities during this filing season regarding the availability of a South Carolina credit for income taxes paid to other states on their personal service income or other business income in light of many states now permitting an income tax to be imposed on, and paid by, a pass-through entity to work around the individual partner's or shareholder's federal limit of $10,000 for the itemized deduction of state and local taxes on their federal income tax return. The draft goes on to state a pass-through entity may continue to pass income through to its owners in the traditional manner, or if it meets South Carolina's definition of a "qualified" pass-through entity, it may elect to tax only the South Carolina "active trade or business income" at the entity level; and it if is a multi-state business, it may make an entity level tax election in other states that allow it. The draft then addresses situations involving a non-personal service partnership or S corporation either operating solely in South Carolina or in multiple states including South Carolina, as well as personal service partnerships or S corporations operating solely in South Carolina or operating in multiple states including South Carolina, among other areas addressed by the draft. Further, the draft sets forth various questions and answers pertinent to the topic of the draft Ruling. More information can be found here.
Tennessee – Updates Reported
Potential Sales Tax Exemption for Sales of Gold, Silver, and Other Coins and Bullion: The Tennessee General Assembly recently passed Senate Bill 1857/House Bill 1874, which establishes a new exemption from sales and use tax with respect to the sale of all coins, currency, and bullion that are (i) manufactured in whole or in part from gold, silver, platinum, palladium, or other materials, (ii) used solely as legal tender, security, or commodity, and (iii) sold based primarily on their intrinsic value as precious material or collectible items rather than their representative value as a medium of exchange. This bill was transmitted on May 18, 2022 to Governor Lee for action, and it is likely this bill will become law. More information can be found here.
Texas – Updates Reported
Due Dates for Taxes, Fees and Information Reports: The Comptroller's Office has published the 2022 reporting due dates for taxes, fees and reports, as well as published the 2022 reporting due dates for information only reports. The publication also references various payment deadlines as applicable. More information can be found here.
