Tax Developments
August 2, 2004
Illinois Tax Budget Bill Reinstates Corporate Credits and Exemptions.
Both Houses of the Illinois General Assembly passed Senate Bill 2207 on July 24, 2004,
which provides for the reinstatement of the Manufacturer's Purchase Credit ("MPC") and the
Graphic Arts Machinery and Equipment Exemption. These benefits were negotiated within
the context of the 2004-2005 fiscal year budget. Governor Blagojevich is expected to
sign the bill within the next two weeks.
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July 9, 2004
Indiana Tax Court Determines Maintenance Equipment and Chemicals Qualify for the Processing Exemption.
In
Guardian
Automotive Trim, Inc., v. Indiana Department of State Revenue, June 30, 2004,
the Indiana Tax Court ("Tax Court") determined that purchases of cleaning equipment and
chemicals used to clean production equipment qualify for exemption from sales and use
taxes under both the equipment exemption and consumption exemption.
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July 1, 2004
Maine Imposes Service Provider Tax.
The Maine Legislature has repealed the sales tax on certain services and replaced it with
a new Service Provider Tax effective July 1, 2004. The tax is imposed on the provider,
not the consumer, but it can be passed to the consumer. Providers that pass on the tax
to the consumer must show the tax separately on invoices as "service provider tax."
Providers of the affected services will be required to register with the state and file
new Service Provider Tax returns. The deadline to register is July 9, 2004.
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June 1, 2004
Tennessee Governor Signs Bill for Taxpayers Claiming Refunds of Sales Tax on Internet Access Charges.
House Bill 3484 was signed into law and made effective by Governor Bredesen on May 18, 2004.
This bill will enact procedures for taxpayers and Internet service providers to obtain
refunds of sales tax paid on Internet access charges pursuant to the decision handed down in
Prodigy Services Corp., Inc. v. Johnson, No. M2002-00918-COA-R3-CV (Tenn. Ct. App. August
12, 2003.)
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May 25, 2004
SEC Prohibits Accounting Firms' Use of Contingency Fees.
On May 21, 2004, U.S. Securities and Exchange Commission (SEC) Chief Accountant
Donald T. Nicolaisen issued a
letter clarifying the SEC's position that the receipt
by an accounting firm of a contingent fee from an audit client impairs the auditor's
independence with respect to that client. Accordingly, the SEC concluded that the use
of contingent fees in tax matters for audit clients is prohibited.
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April 28, 2004
Texas House Proposes $17.9 Billion Tax Plan.
Eight days into the special session called for school finance reform, Texas House
leaders have presented a
tax plan proposal
that raises $17.9 billion in new taxes, while cutting
school property tax and eliminating the "Robin Hood" plan.
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April 22, 2004
Texas Governor Unveils School Finance Plan.
Republican Governor Rick Perry has unveiled his proposal to revamp funding for
Texas public schools.
Draft legislation was
laid out before the 29-member House Select Committee yesterday. He also presented a
draft constitutional amendment to implement
his school finance proposal.
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April 5, 2004
Minnesota Supreme Court Determines Telecommunications Network Equipment is Exempt Capital
Equipment Used in Manufacturing.
The Minnesota Supreme Court ("Supreme Court") reversed the appellate court's denial of refund
claims in
Sprint
Spectrum LP, et al., v. Minnesota Commissioner of Revenue, April 1, 2004.
In this decision, the Supreme Court determined that purchases of network equipment that transformed
sound into an electronic form for transmission and then reconstructed for delivery to a recipient
were capital equipment and eligible for the manufacturing exemption.
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April 3, 2004
Louisiana Legislature Approves Manufacturing Machinery and Equipment Exemption.
The Louisiana Legislature ended a special session dedicated to tax matters on Wednesday,
March 17, 2004. As mandated by the Louisiana Constitution, tax matters at the state level can
only be addressed by the Legislature in odd numbered years. This necessitated a special session
being called in 2004 in order to consider any tax-related legislative changes.
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March 10, 2004
Texas Announces Tax Amnesty Program.
On Wednesday, March 10, 2004, the Texas Comptroller of Public Accounts launched
Project:
Pay Up, a three-week amnesty period aimed at collecting delinquent taxes owed by Texas businesses.
The amnesty program will run from March 11, 2004 through March 31, 2004, during which time taxpayers
can pay past due taxes in full and receive waiver of penalty and interest charges normally assessed
against delinquent taxpayers.
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January 22, 2004
Update on South Carolina Court of Appeals Decision Affecting the 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 machinery causing a chemical or physical change to the
raw materials during the manufacturing process.
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