State and local taxes impact almost every taxpayer, and developments in any one jurisdiction can be frequent and sometimes confusing. ln this newsletter edition, we will briefly summarize selected state and local tax (SALT) developments in several states which may be important to you.

Alabama

Utility Gross Receipts Tax Exclusion: The Alabama Department of Revenue (Department) issued Revenue Ruling 2023-002 dealing with the question of whether a certain set of facts qualifies for the exclusion from utility gross receipts tax. According to this Ruling, a particular company manufactures pipe at a facility in Alabama, and the pipe is manufactured first by heating iron until it is molten. The molten iron is then poured into a rotating mold and undergoes centrifugal casting. After the pipe is cast, the pipe then undergoes various heat treatments, referred to as the annealing process to transform the cast pipe. The company uses a furnace to heat the iron into a molten state and uses natural gas to generate heat for the annealing ovens that are used to transform the cast pipe. The Ruling noted that the company plans to install electric induction melting holders and furnaces to replace the current furnace system, and the induction melting furnaces will utilize coils carrying alternating electric current to generate heat to melt the iron for casting the pipes. The question addressed by the Department in this Ruling is whether the electricity used for heating in the induction furnaces and the electricity used for heating in certain zones of the annealing ovens qualify for the exclusion from the utility gross receipts tax, provided that the electricity is separately metered. The Department reasoned in the Ruling that the electricity that will be used in the induction furnaces will directly heat the iron and transform it into a molten state, enabling the iron to be centrifugally cast into pipe; and that following the casting of the pipe, electricity will be used in those certain zones for annealing ovens to produce heat that is directly used to transform the cast pipe. According to the Ruling, which cannot be cited as precedent, the pipe product is manufactured by the application or direct use of electrically produced heat both in the induction melting furnaces and the annealing ovens. Consequently, the Department determined that electricity used for heating in the induction furnace and in annealing ovens to manufacture the pipe qualifies for the exclusion, provided the electricity is separately metered. More information can be found here.

District of Columbia

2023 Real Property Discount Tax Sale: The Office of Tax and Revenue (OTR) recently published an announcement regarding the discount tax sale that is scheduled to begin December 5, 2023. The OTR stated in this publication that notice is given that all real properties that were bid back to the District during the July 2023 Real Property Tax Sale, were not sold at a subsequent special deed sale, and have not been redeemed, will be offered for sale by the OTR to the highest bidder at a public auction beginning December 5, 2023. Information pertaining to this public auction can be found here.

Florida

Interest Rate for January 1 through June 30, 2024: The Florida Department of Revenue (Department) recently issued Tax Information Publication No: 23ADM-04 addressing the floating rate of interest for the period beginning January 1, 2024, through June 30, 2024. In this Publication, the Department states that the rate of interest for that period is 12 percent, with such rate being subject to change effective July 1, 2024. The Department in this Publication sets forth various examples as to the calculation of the interest rate, as well as addresses the various taxes that are subject to this interest rate. More information can be found here.

Georgia

High-Technology Data Center Equipment Sales Tax Exemption: On October 24, 2023, the Georgia Department of Revenue (Department) issued Notice SUT-2023-02, advising that the Department intended to address a proposed amendment to Rule 560-12-2-.117 involving high-technology data center equipment for purposes of the sales and use tax exemption. The Department in that Notice stated that the amendment to the foregoing Rule will be considered at a hearing on November 28, 2023, and that comments from interested parties must be received by the Department no later than 10:00 a.m. on that same day. It appears that the proposed amendments address issues involving, among others, the counting of new quality jobs created and maintained by the data center owner, as well as addressing extension requests for the required annual report. More information can be found here.

Louisiana

No Availability of Extension When Filing Only a Franchise Tax Return: The Louisiana Department of Revenue (Department) updated, as of November 6, 2023, the Frequently Asked Questions regarding extensions for business tax returns. In that regard, Louisiana Revised Statutes 47:612 and 47:287.614(D) provide that the Department may grant an extension for filing corporation income and franchise tax returns. The Department previously issued information regarding the corporation income and franchise tax return stating that Louisiana law allows the granting of an automatic extension of six months for filing the corporation income tax return if the taxpayer timely requested an extension for federal tax purposes. According to this Q&A update, and as to the question of "How do I receive a filing extension if I am filing a franchise tax return only?" the response is that such extension only applies to corporation franchise tax if the taxpayer is also filing a corporation income tax return; but that a taxpayer who files a corporation franchise tax return without a corporate income tax return is ineligible for filing an extension pursuant to Louisiana Revised Statutes 47:612. More information can be found here.

Maryland

Employers Required to Notify Employees of EITC: The Comptroller of Maryland (Comptroller) recently published a Tax Alert advising employers of the requirement to provide, on or before December 31, 2023, electronic or written notices to employees who may be eligible for federal and Maryland Earned Income Tax Credit (EITC) for 2023. According to this Alert, employees may be entitled to claim EITC on their 2023 federal and Maryland income tax returns if both their federal adjusted gross income and their earned income are less than those figures set forth in the Alert. Employees who meet this income eligibility, according to the Comptroller in this Alert, should be advised to visit the Internal Revenue Service Website as referenced in the Alert, or to contact a tax adviser to see if they meet the other federal criteria. The Comptroller in this Alert also noted that employees who are eligible for the federal EITC are eligible for the Maryland EITC. Further, the Comptroller noted that employers may choose to notify all employees or may choose to notify only those employees with wages less than or equal to the amount shown in the Alert. A sample notification is included with this Alert. More information can be found here.

Mississippi

Charitable Contribution Credits Notice: The Mississippi Department of Revenue (Department) recently issued Notice 80-23-002 addressing the charitable contribution credits that are available to Mississippi taxpayers. According to the Department in this Notice, there are four charitable credits available for individual taxpayers and six charitable credits available for business taxpayers. According to this Notice, as the Department's charitable contribution programs grow, so does the number of applications received by the Department. The Department states in this Notice that it is committed to ensuring applications are efficiently processed; and, therefore, the Department is implementing a new online system that will require users to submit applications online. In particular, beginning with the 2024 calendar year, applications according to the Department will only be accepted through the new online system, and the Department will not accept paper applications for any calendar year after 2023. For the 2024 calendar year, the Department stated in this Notice that it will begin accepting applications on January 2, 2024. The Department will also allow users, according to this Notice, to become familiar with the online application process prior to the filing of an application; and starting November 1 and ending December 1, users will be allowed to "test" the online application by going to the web address in the Notice. More information can be found here.

North Carolina

Upcoming Seminar Events: The North Carolina Department of Revenue (Department) has recently announced several tax seminars for taxpayers to better understand their tax obligations with respect to North Carolina. Included among these announcements by the Department are the following: sales and use tax basics seminar to be held November 29, 2023, which will assist participants in better understanding their sales and use tax obligations to the Department; business tax essentials seminar scheduled for November 30, 2023 which will cover basic requirements to help a North Carolina business understand the laws and regulations necessary to be a compliant business; and federal and state estimated individual income taxes seminar scheduled for December 7, 2023 so as to help participants gain a better understanding of their federal and state estimated income tax obligations. These seminars are free to the participants. More information regarding these particular seminars can be found here, here, and here.

South Carolina

Withholding Tax Tables Updated: On November 16, 2023, the South Carolina Department of Revenue (Department) issued a News Release stating that the Department's withholding tax tables have been updated. According to the Department in this Release, the withholding tax tables have annually been updated since 2017 and were updated just recently so as to take into account less money that was being withheld from paychecks during 2023 because of legislative tax cuts. As a result of the foregoing, the Department in this release stated that refunds next year may be less than in past years. The Department also noted in this Release that the amount of withholding change in taxpayers' paychecks depends on a variety of factors, including how much each taxpayer makes and how often they are paid, together with whether the taxpayer has experienced significant life changes such as marriage, divorce, birth of a child, and other such events. That Notice, in which the updated tax tables can be accessed, can be found here.

Tennessee

Agricultural Exemption Must Be Renewed by December 31, 2023: The Tennessee Department of Revenue (Department) issued an announcement on November 6, 2023, reminding agricultural exemption holders that they must verify their exemption with the Department by December 31, 2023, in order to keep buying agricultural items tax-free. The announcement noted that agricultural certificates of exemption allow holders to buy certain agricultural items used primarily in agricultural operations, such as fertilizer and farming equipment, without paying sales tax; however, these exemptions expire every fourth year, and certificates for the current period expire December 31, 2023. Exemption holders, according to this announcement, can renew their cards online by following the directions in the announcement or by contacting the Department at the telephone number or email address set forth in the announcement. The announcement also referenced that exemption holders should have already received a letter in the mail with instructions on how to renew their cards. More information can be found here.

Texas

Taxability of Electronic Games and Associated Content: As recently published by the Comptroller's Office (Comptroller) in September 2023, guidance has been issued as to the taxability of electronic games and associated content so as to include virtual currencies purchased for use with a game. As noted in the summary of such guidelines, electronic games are games operated on or through the use of devices such as a personal computer, game console, or mobile phone, where gameplay is accomplished through a connection to the internet. In recent years, according to this guidance, electronic games have evolved into more of an interactive virtual gaming experience by offering associated content including items such as additional content, character upgrades, and even their own virtual currencies. The guidance noted that consumers can purchase games and associated content directly through a game's website or from third-party retailers. Further, the guidance stated that when purchases are made via third-party retailers, they are often in the form of redeemable, physical cards. These cards, according to the guidance, include a code that grants access to the game and associated content; and they may also include a preloaded amount of virtual currency that the purchaser may redeem to access content within a game. The guidance notes that the purchase of electronic games and associated content, including virtual currencies, is taxable as an amusement service regardless of whether the access is purchased directly through a game's website or a redeemable card. More information can be found here.