Tax Developments
November 3, 2003
Pennsylvania Supreme Court Determines that Credit for Tax Erroneously Paid to Vendors Should Be Allowed in Audit.
The Pennsylvania Supreme Court in
McNeil-PPC, Inc. v. Commonwealth of Pennsylvania, No. 99
MAP 2002, October 22, 2002, ruled that auditors are required to issue determinations for the
correct amount of tax, including credits for overpayments of tax paid to vendors.
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November 3, 2003
Louisiana Supreme Court Reverses Ruling on Local Interest/Penalty Maximum Rate Issue.
The original case involving the limiting of the interest/penalty rate for local
jurisdiction was
Elevating Boats, Inc. v. St. Bernard, et al, Docket 00-E-3518, Supreme
Court of Louisiana, 09-15-01.
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October 23, 2003
New York Initiates Unclaimed Property Amnesty with Outreach Program.
The State of New York today began sending letters to non-compliant holders of unclaimed property,
offering them a unique opportunity to comply without penalty. The New York Office of Unclaimed
Funds recently researched the New York Secretary of State business registry to match company names
with its holder compliance database.
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October 23, 2003
Appeals Court Decision Affects South Carolina Manufacturing Machine Exemption.
The South Carolina Department of Revenue has historically interpreted its
manufacturing machine exemption under the more restrictive "Ohio-Georgia rule" or the
"physical change theory," which permits the exemption only for assets causing a chemical
or physical change to the raw materials during the manufacturing process.
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September 8, 2003
Throughput Services Provided at a Bulk Storage Facility Excluded from New Mexico Gross Receipts Tax.
The Taxation and Revenue Department of the State of New Mexico ("Department") recently affirmed
Ryan & Company's position that receipts from the storage of jet fuel at a bulk liquid storage
terminal were for leases of real property. Accordingly, the taxpayer was entitled to a deduction
from taxable gross receipts as provided in NMSA 1978 § 7-9-53.
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September 8, 2003
Kentucky Court of Appeals Determines Use Tax Due on Materials Fabricated Out of State.
The Kentucky Court of Appeals ("the Court") affirmed a Franklin County Circuit Court of Appeals
decision denying the refund of use tax paid on materials purchased, stored, and transformed
outside of Kentucky in a decision issued on July 25, 2004.
Morton Buildings, Inc. v. Revenue
Cabinet,
2002-CA-001787-MR, Court of
Appeals of Kentucky.
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September 8, 2003
California Extends and Expands Managed Audit Program.
CA A1043, which extends and expands Cal. Rev. & Tax. Cd. §7076.1, et.al, Managed Audit
Program ("MAP"), is effective January 1, 2004 through January 1, 2009. The revised MAP
allows taxpayers on a prepayment reporting basis to participate in the program, (i.e.
the program now applies to taxpayers with a measure of tax liability averaging $17,000 or
more per month.)
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August 18, 2003
Virginia Announces Unclaimed Property Amnesty Program.
The State of Virginia is currently offering amnesty for holders of unclaimed property. The program
allows businesses and organizations with unclaimed property obligations to voluntarily report past
obligations without penalty or interest assessments. The program also limits the state's look-back
period to ten (10) years. On audit, the look-back period for non-compliance can go as far back as
the date in which operations commenced in the state.
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August 18, 2003
California Legislature Excludes Manufacturers' Investment Credit from New England Budget.
The Manufacturers Investment Credit ("MIC"), which allows a 6% credit against income for
purchases of qualified manufacturing equipment, did not make the cut in the recently passed
California budget. In an effort to narrow the nearly $40 billion budget deficit, the California
legislature did not include the MIC in the budget, opting instead for the $350 - $450 million in
estimated additional tax revenue annually.
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August 8, 2003
Texas Comptroller Releases Proposed Amendment to General Rule 3.2 Interpreting Rider 11.
On Thursday, August 7, 2004, the Texas Comptroller of Public Accounts ("Comptroller") released a
draft amendment to
General Rule 3.2, concerning the application of payments, unjust enrichment, and refunds.
The rule amendment, which was proposed in response to recent legislative changes, outlines the Comptroller's
proposed policy for administering
Rider 11, H.B. 1.
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July 12, 2003
New Retention Incentives Reflect Texas Economy.
At the close of the 78th Texas
Legislative Session, Governor Rick Perry signed into law Senate Bill 275, again expanding and easing
the acquisition of incentives offered by the Texas Enterprise Zone Program. The changes create
a new multi-tiered investment that rewards larger investment with double or triple tax incentives for
Texas businesses for investing and keeping jobs in Texas.
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June 11, 2003
Texas Budget Rider on Tax Refunds Jeopardizes Taxpayer Refunds.
In the last hours of the 78th Texas Legislature, the conference committee on the
appropriations bill (H.B. 1) launched its own version of "shock and awe" on Texas taxpayers.
In an unprecedented action taken without notice and without opportunity for public comment,
the conference committee added Rider 11, Appropriation on Tax Refunds, which sharply
limits the ability of taxpayers to obtain tax refunds from the State.
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June 9, 2003
Illinois Budget Bill Eliminates Exemptions and Credits.
Both Houses of the Illinois General Assembly passed Senate Bills 841, 842, and 1733 on
May 31, 2004, and Governor Rod Blagojevich is expected to sign the bills as early as this
week. In an attempt to raise revenues to fill the deficit gap, these bills eliminate the
Manufacturer's Purchase Credit, the Graphic Arts Machinery and Equipment Exemption, the
Out-of-State Natural Gas Use Tax Exemption, the Oil Field and Coal Exploration Equipment
Exemption, and the Rolling Stock Exemption for motor vehicles.
More >>
June 21, 2003
Governor Signs Illinois Tax Amnesty Bill.
Both Houses of the Illinois General Assembly passed Senate Bill 969 on May 31, 2004,
which establishes a Tax Amnesty Program for all taxpayers owing any tax imposed by any
law of the State of Illinois and collected by the Department of Revenue.
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June 5, 2003
Florida Department of Revenue Gearing Up For Tax Amnesty Implementation.
The Florida Department of Revenue is already receiving some calls
from taxpayers and tax preparers about the new tax amnesty legislation passed by the
Florida Legislature on May 27, 2004, in special session. The legislation has not
yet become law.
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May 30, 2003
Texas House Bill 2425 Limits Refund Claims.
The Texas House of Representatives concurred with Senate changes
to
HB 2425 yesterday. This means the bill becomes
law as soon as the Governor signs it, which could be as early as Tuesday, June 3rd. There are
numerous changes to the current Tax Code which will negatively affect taxpayers.
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April 3, 2003
The Valuation of Electric Companies - Past, Present, and Future.
Restructuring or deregulation of the electric industry began in earnest during the 1990's. The stated
objective of opening energy markets to competition through deregulation was the expected benefit that
consumers would realize by having a choice among energy suppliers. Since restructuring initiatives began,
deregulation has progressed in varying degrees throughout the United States.
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February 6, 2003
States Take Action to Ensure Revenue Generation Through Unclaimed Property.
States today are more aggressively focused on unclaimed property collections as a significant
source of revenue and all industries have become targets. Unclaimed property revenue has provided
many states with a windfall of general fund revenue without the political stigma of tax increases
or the introduction of new legislation. A recent issue of
The News Journal, a Delaware newspaper,
illustrated this fact with a headline that blared: "$51.5 Million Windfall Cuts Delaware Deficit."
$47.1 million of this reported "windfall" came from a single company settling a case with the Delaware
State Escheator.
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January 30, 2003
Texas Court of Appeals Releases Opinion on Overhead Materials Purchased by Government Contractor.
The Texas Court of Appeals, Third District, at Austin released its opinion in
Raytheon
E-Systems, Inc. v. Carole Keeton Strayhorn partially upholding the lower
court's decision and remanding a portion to the lower court for factual determination.
As was the case in the 200th Judicial District Court proceeding that occurred last year,
the Court of Appeals ruled that purchases of materials by Raytheon that were allocated to
qualifying contracts with the Federal Government qualify as exempt purchases for resale.
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January 24, 2003
Tennessee Unclaimed Property Amnesty Program.
The state of Tennessee is currently offering amnesty for holders of unclaimed property.
The program allows businesses and organizations with unclaimed property obligations to voluntarily report
past obligations without penalty or interest assessments. The program also limits the state's look-back
period to ten (10) years.
More >>
January 15, 2003
New Florida Law Allows Taxpayers to Use Sampling Methods to Determine the Amount of a
Sales and Use Tax Refund or Deficiency.
Effective January 1, 2003, taxpayers may establish the amount of a refund or deficiency in
sales and use taxes by conducting a statistical sample of their records. The amount of the refund or
deficiency may be established by sampling either in connection with an audit or for an application for a
refund that is filed independently of any audit. To qualify, a taxpayer's records must be adequate and
voluminous, and the sample must reflect both underpayments and overpayments of sales and use tax.
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January 15, 2003
Texas Comptroller Revises Managed Audit Program to Limit Refund Opportunities.
On Wednesday, January 15, 2003, the Texas Comptroller of Public Accounts ("Comptroller") announced
that the managed audit program for Texas sales and use tax audits has been revised to limit
refund opportunities that taxpayer participants are otherwise entitled to under Texas law.
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