- Proposed regulations regarding implementation of the centralized partnership audit rules were released, and generally contain measures similar to those in regulations that were posted and then almost immediately removed by the IRS in January 2017.
- The U.S. Tax Court—in a case of “first impression” concerning application of section 267(a) to S corporation employers and ESOP participants—concluded that an employee stock ownership plan (ESOP) formed by an S corporation and the ESOP-participating employees are “related persons” for purposes of section 267. As such, the court held that deductions for accrued but unpaid payroll expense must be deferred until the pay was received by the employees and includible in their gross income.
- The IRS provided a reminder that the deadline for reporting foreign financial accounts on FinCEN Form 114, “Report of Foreign Bank and Financial Accounts,” (the FBAR) is now the same as the deadline for filing a federal income tax return, but that the FBAR for 2016 may be filed by the extended deadline of October 16, 2017.
- The California Franchise Tax Board (FTB) scheduled its second “interested parties meeting” to discuss the second round of proposed amendments to a regulation that addresses “sourcing for sales other than sales of tangible personal property” with respect to management fees of asset managers.
- The Indiana Department of Revenue denied a taxpayer’s refund request based on the taxpayer’s sourcing of certain of sales to out-of-state customers to the places where the customers were located. It was determined that the Indiana-based company was a service provider of a galvanization process and that its income-producing activity occurred in Indiana.
- A hearing officer in New Mexico determined that two pharmaceutical companies were not protected from corporate income tax by virtue of Public Law 86-272 in part because of their own activities (through ownership of an LLC that was the selling entity of a branch of a French pharmaceutical company) and in part because of activities attributed to them from another affiliate. It was determined that the LLC’s activities in New Mexico exceeded the protection under Public Law 86-272, and therefore, the corporations were subject to New Mexico corporate income tax on their flow-through income.
- A South Carolina administrative law court held that a bookseller’s sales of memberships to customers—i.e., the membership fees—were subject to sales tax.
- A Washington State administrative law judge found that accessories added to vehicles after import “interrupted” the availability of the state’s import transportation exemption, so that the taxpayer owed wholesaling B&O tax on imported vehicles later delivered to Washington dealers.
- A Washington State administrative law judge concluded that the resale exemption did not apply to beverage mixers used by airlines in mixed drinks (containing alcohol) sold to customers.
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- Members of the U.S. Senate Finance Committee introduced a bill to encourage charitable giving and make it easier for foundations and other tax-exempt organizations to conduct their charitable mission.
- The Ways and Means Committee of the U.S. House of Representatives scheduled a markup of H.R. 1551—legislation that would modify the tax credit for production from advanced nuclear power facilities.
Read TaxNewsFlash-Legislative Updates