05 October 2017 State and Local Tax Weekly for September 22 Ernst & Young's State and Local Tax Weekly newsletter for September 22 is now available. Prepared by Ernst & Young's State and Local Taxation group, this weekly update summarizes important news, cases, and other developments in U.S. state and local taxation. South Dakota Supreme Court affirms that the state's sales tax economic nexus statute is unconstitutional; appeal to US Supreme Court filed On September 13, 2017, the South Dakota Supreme Court (Court) in Wayfair Inc., ruled the state's sales tax economic nexus statute is unconstitutional in violation of Quill.1 In so doing, the Court said "However persuasive the State's arguments on the merits of revisiting the issue, Quill has not been overruled … [and] remains the controlling precedent … ." South Dakota v. Wayfair, Inc. et al, 2017 S.D. 56 (S.D. S. Ct. Sept. 13, 2017), petition for cert. filed, Dkt. No. 17-494 (U.S. S. Ct. Oct 3, 2017). In 2016, South Dakota enacted SB 106 which established an economic nexus standard for sales and use tax purposes. Under this standard, a remote seller selling tangible personal property, electronically transferred products or taxable services (collectively, goods) for delivery into South Dakota is required to register, collect and remit South Dakota sales taxes on such sales as if the seller had a physical presence in the state. This requirement applies only if, in the previous calendar year, the seller either: 1) has over $100,000 in gross revenue from delivery of these goods into South Dakota, or 2) sold these goods for delivery into South Dakota in 200 or more separate transactions. Lawsuits challenging this new law were filed. The circuit court found the law unconstitutional, stating it is "duty bound to follow applicable precedent of the United State Supreme Court … This is true even when changing time and events clearly suggest a different outcome." The court also noted that it is not its role to disregard such precedent. On appeal to the Court the parties agreed that each out-of-state seller did not have a physical presence in South Dakota, in the previous calendar year each seller met the economic nexus provision's revenue threshold, and none of the sellers were registered to collect sales tax in South Dakota. The Court said in light of these facts and the U.S. Supreme Court holdings in Bellas Hess2 and Quill, "SB 106 could not impose a valid obligation on Sellers to collect and remit sales tax to this State because none of them had a physical presence in the state." Further, the Court found no distinction between the collection obligation invalidated in Quill and the requirements of SB 106. Lastly, although the Court acknowledged the state's "persuasive" argument to revisit Quill (e.g., change of circumstances since Bellas Hess and Quill, including advancements in computer technology and software, the state's streamlining of its sales tax laws, evolution of the retail industry), it nevertheless ruled Quill is still binding precedent on the issue of Commerce Clause limitations on interstate collection of sales and use tax. New York Division of Tax Appeals classifies online litigation support as services, sourced to location where services were performed based upon prior statute In In the Matter of the Petitions of Catalyst Repository Systems, Inc.,3 the New York Division of Tax Appeals (DTA) determined that a corporation's receipts from online litigation support services are services sourced to the location where they were performed under the law4 applicable for the years at issue (i.e., 2008 through 2010). (The law was substantially changed by New York tax reform in 2015.) The DTA determined that the services were performed in Colorado, where its servers, computer infrastructure, and the majority of the corporation's employees were located. The DTA noted that the allocation sourcing approach applied to the corporation's receipts by the New York Division of Taxation (Division) based on the location of the customers' addresses did not become effective until Jan. 1, 2015 when New York substantially revised its law. Consequently, the receipts sourcing allocation method the Division used did not apply retroactively to the tax years at issue. The DTA's determination in this case is not precedent nor binding upon the Division and it is not yet known whether the Division will appeal the ruling. Accordingly, taxpayers providing services to New York State and City customers from outside of the State and/or City should review this DTA determination as it may offer a basis for filing a claim for refund for New York State and City corporate income (franchise) tax purposes for tax years beginning before Jan. 1, 2015 as long as the applicable statute of limitations on refunds is open (generally three years from the date of filing). Moreover, this determination should be considered for current State and City audits if the auditors are asserting that certain receipts derived from services rendered by electronic means should be sourced to the State/City on a customer/market based approach. For additional information on this development, see Tax Alert 2017-1525. In response to the widespread damage and destruction caused by Hurricane Irma in Florida, Georgia, Puerto Rico, the U.S. Virgin Islands, and, to a lesser extent, in other US jurisdictions, the federal government and many states, including those outside of the damaged areas, are providing various tax relief to affected individuals and businesses. To date, this relief includes: extending tax filing deadlines, providing exemptions or suspensions from tax, waiving certain regulatory requirements, and providing non-income tax filing and payment relief. Taxpayers should note that often the receipt of such relief is not automatic and taxpayers may be required to file specific requests for relief with the relevant state taxing authorities following each's unique procedures. The relief provided so far for victims of Hurricane Irma is substantially similar to relief offered to victims of Hurricane Harvey. Looking ahead, states are starting to issue tax relief for those affected by Hurricane Maria, and it is expected that additional disaster declarations and tax relief will be issued. For a summary of the federal and state tax relief, see Tax Alert 2017-1631. All States: The latest state income and franchise tax quarterly newsletter provides a summary of the corporate income and franchise tax legislative, administrative, and judicial updates that occurred during the period from July 1, 2017 through Sept. 21, 2017. Highlights include: (1) a summary of legislative developments in Illinois, Delaware, District of Columbia, Hawaii, Illinois, North Carolina, Oregon, Rhode Island and Wisconsin; (2) a summary of judicial developments in Alabama, Indiana, Minnesota, North Carolina, Oregon, Pennsylvania, South Carolina, Texas, Virginia and Wisconsin; (3) a summary of administrative developments in Arkansas, Colorado, Illinois, Indiana, Massachusetts, Minnesota, New Mexico, New York and Virginia; and (4) a discussion of items to watch in Texas and Virginia. Alabama: In affirming a circuit court ruling, the Alabama Court of Appeals (Court) held a multinational affiliated group engaged in the beverage manufacturing and distribution business that began filing an Alabama consolidated return in 2007 is allowed to deduct net operating losses (NOLs) it incurred since 1999, the year in which Alabama allowed the filing of a consolidated return, because the filing of an Alabama consolidated return is not a prerequisite to the existence of an Alabama affiliated group. In an Aug. 15, 2012 opinion and preliminary order, an Administrative Law Judge ruled that the affiliated group was allowed to deduct NOLs incurred after 1999, but was not allowed to deduct NOLs incurred prior to 1999 because of the application of the separate return limitation year (SRLY) rule, which limits "an acquired corporation's pre-acquisition NOLs to only offset the current year and future income of the acquired corporation." A circuit court affirmed the ALJ's decision. On appeal, the Alabama Department of Revenue argued that an Alabama affiliated group cannot exist prior to when the group first filed an Alabama consolidated return and, because the taxpayer's affiliated group did not file its first Alabama consolidated return until 2007, all of the affiliated group's NOLs incurred prior to 2007 are subject to the SRLY rule and cannot be claimed. The affiliated group argued, and the Court agreed, that no such prerequisite existed; rather, Ala. Code §40-18-39 (b)(1)f "describes how an [Alabama affiliated group] is to prepare an Alabama consolidated return and does not govern the determination whether an [Alabama affiliated group] exists." The Court further agreed with the circuit court and ALJ that Alabama law (Ala. Code §40-18-39(h)) does not prohibit members of the Alabama affiliated group from sharing NOLs incurred prior to 2007, reasoning the phrase "that has elected to file an Alabama consolidated return must be referring to the current year consolidated return on which the NOL is claimed, and not the return for the prior loss year." Alabama Dept. of Rev. v. Coca-Cola Refreshments, U.S.A., Inc., No. 2160412 (Ala. Ct. App. Sept. 8, 2017). Massachusetts: The Massachusetts Department of Revenue revised TIR 10-16: Non-US Corporation with US Income Exempt from US Tax Pursuant to a Bilateral US Income Tax Treaty to reflect a change in its policy. The revisions focus on the calculation of the non-income measure of the corporate excise tax and the exclusion of receipts, property or payroll related to treaty-exempt income from the corporation's Massachusetts apportionment formula. The changes in TIR 17-7 apply going forward and to open tax years. Mass. Dept. of Rev., TIR 17-7 (Aug. 25, 2017). Michigan: In the August 2017 Treasury Update, the Michigan Department of Treasury reminds taxpayers that the Michigan Business Tax (MBT) surcharge expired on Jan. 1, 2017. Under Mich. Comp. Laws Ann. § 208.1281, the surcharge would end effective Jan. 1, 2017, if Michigan experienced "positive personal income growth" in either 2014, 2015 or 2016. Because Michigan met these requirements, the surcharge will no longer apply to those continuing to file an MBT return. For fiscal-year filers whose 2016 tax year end falls after Jan. 1, 2017, the surcharge is calculated by dividing the number of months in the filer's tax year contained in calendar year 2016 by the total number of months in the filer's tax year. The resulting prorated surcharge is then applied to the taxpayer's MBT liability before application of credits. MBT forms and instructions for 2016 and 2017 tax years will reflect the end of the application of the surcharge. Minnesota: The Minnesota Department of Revenue issued revised guidance on how an unrelated business income taxpayer should calculate NOL carryforwards. Minnesota law defines "unrelated business income" by cross-referencing IRC §§ 511 to 515; Section 512 allows an NOL deduction in calculating unrelated business income as provided in IRC § 172. Thus, in calculating Minnesota unrelated business income an exempt entity must use the federal attribute calculation and timing provision in IRC § 172. The NOL limitations and modifications provided for under Minn. Stat. §§ 290.0133 (subd. 5) and 290.095, do not apply to unrelated business income taxpayers. Minn. Dept. of Rev., Revenue Notice #17-04 (Sept. 5, 2017) (revokes and replaces Rev. Notice # 93-19). New Mexico: A multistate corporation's interest income from payment in kind (PIK) notes it received as part of the sale and disposition of its grain elevator business is nontaxable nonbusiness income under the Uniform Division of Income for Tax Purposes Act and the requirements of both the Commerce and Due Process clauses of the US Constitution. The New Mexico Administrative Hearings Office (AHO) found the PIK interest income is not business income under the transactional test because the income did not arise from transactions and activity in the regular course of the corporation's trade or business. Under the functional test, the taxpayer, at the time of disposition of the line of business correctly apportioned the proceeds from the sale, including the full face value of the financing instrument PIK notes, as business income in New Mexico. The subsequent interest income from the PIK notes, however, is not business income under the functional test as no meaningful relation exists between the PIK notes and the corporation's line of business. Rather, according to the AHO, the PIK notes are merely investment income.In the Matter of Conagra Foods, No. 17-39 (N.M. Admin. Hearings Off. Sept. 15, 2017). New York: In Whole Foods Market Group, the New York Tax Appeals Tribunal (TAT) affirmed the New York Division of Tax Appeals (DTA) ruling that a corporation operating a multistate grocery store chain and a related intangible holding company should have filed tax returns on a combined basis for the audit period (2008-2010 tax years), instead of adding back the related party royalty payments. Starting in 2007, New York's related party add-back provisions were amended to provide an exception where the taxpayer was included in a combined report, and modified its combined reporting provisions to require combination where there are substantial intercorporate transactions (SIT) among the related corporations. The New York Department of Taxation and Finance (the DOTF) issued guidance which generally provided that a SIT exists when, during the taxable year, 50% or more of a corporation's receipts included in the computation of entire net income were from one or more related corporations. Here, the parties stipulated that the intangible holding company received more than 50% of its total receipts from the corporation for each of the years in the audit period. Thus, under the DOTF's guidance, combined filing was required rather than merely adding back the related party royalty payments. The TAT, however, reversed the DTA finding that the corporation was not entitled to abatement of the substantial understatement tax penalty; instead the DTA found the corporation's interpretation of the statute after the 2007 amendment, although erroneous, was reasonable. In the Matter of the Petition of Whole Foods Market Group, Inc., DTA No. 826409 (N.Y. Tax App. Trib. Sept. 11, 2017). North Carolina: A bank is not allowed to deduct as interest the Market Discount Income it received on discounted bonds that matured during 2001 because such deduction is not provided for under North Carolina corporate income tax law. In affirming the North Carolina Business Court, the North Carolina Supreme Court (Court) found that the plain meaning of "interest" as used in the statute was unambiguous and should be understood to involve "periodic payments received by the holder of a bond." The Court further found that although Market Discount Income is treated as interest income for federal income tax purposes that "does not … mean that [it] should be treated as 'interest' for all purposes under the North Carolina Revenue Act." If the North Carolina General Assembly had intended for the term "interest" as used in the statute to be defined under the IRC, it would have incorporated that definition into the North Carolina statute by clear and specific reference. Fidelity Bank v. N.C. Dept. of Rev., Nos. 392A16 and 393PA16 (N.C. S. Ct. Aug. 18, 2017). Oregon: In Apollo Education Group, Inc. and Subs, the Oregon Tax Court (Court) held an online college's receipts from online course offerings, for purposes of calculating the Oregon sales factor numerator, were calculated using only faculty cost data for the periods ending in 2009 and 2010. The Court found that, under the state's cost-of-performance sourcing method, the "income-producing activity" of providing online course sections was comprised of faculty, curriculum development and eCampus activities, but only faculty costs were "direct costs." Apollo Education Group, Inc. and Subs. v. Ore. Dept. of Rev., No. TC-MD 150352C (Ore. Tax Ct., Magistrate Div., Aug. 24, 2017). For more on this development, see Tax Alert 2017-1483. Pennsylvania: The Pennsylvania Commonwealth Court rejected exceptions filed by the Commonwealth and taxpayer to its June 15, 2016 order in RB Alden Corp.,5 thus leaving in place its ruling that Pennsylvania's $2 million statutory cap on net loss carryforwards in place for tax year 2006 is unconstitutional in violation of the Pennsylvania Constitution's Uniformity Clause. RB Alden Corp. v. Commonwealth, 73 F.R. 2011 (Pa. Cmwlth. Ct. Sept. 12, 2017). Florida: An entity's mobile point of sale devices (which facilitate restaurant order placement, check out and payment, among other activities, as well as provide access to premium content for an additional fee), are not subject to Florida's sales and use tax as coin operated amusement machines, but are subject to sales and use tax as the lease of tangible personal property. In addition, the "Premium License Fee" charged to customers for access to premium content is subject to sales and use tax as a license to use tangible personal property. Customers paying the Premium License Fee take "possession or use" of the device as the device is "operated by or under the direction or control" of the customer. Fla. Dept. of Rev., Tech. Assist. Advisement No. 17A-009 (March 7, 2017) (released Aug. 25, 2017). Florida: An entity's charges for membership subscription fees for online legal document drafting services are not subject to sales tax because the entity does not transfer possession of, lease, or license tangible personal property. The drafting services use cloud computing and on-demand software, and members do not need to download any software to their local computers or servers to gain access to the legal document drafting software located on the entity's servers or the cloud. Fla. Dept. of Rev., Tech. Assist. Advisement No. 17A-010 (April 27, 2017) (released Aug. 25, 2017). Florida: The US Supreme Court has been asked to review the Florida Supreme Court's ruling in EchoStar Satellite (nka Dish Network) upholding the state's communications services tax (CST), which imposes a higher tax rate on satellite services than cable services. EchoStar Satellite LLC, nka Dish Network LLC v. Florida Dept. of Rev., No. SC15-1249 (Fla. S. Ct. April 13, 2017), petition for cert. filed, Dkt. No. 17-379 (U.S. S. Ct. filed Sept. 12, 2017). New York: A company's charges for custom reports that provide satellite images and analysis of business facilities, which can be used to make investment decisions, are not subject to New York's sales and use tax because they are nontaxable information services. The reports are special ordered by the customer and the company by contract is precluding from providing or reusing the images or analysis contained in the report. Thus, the reports qualify as nontaxable information services as they are personal or individual in nature and are not and may not be substantially incorporated into reports furnished to other persons. Moreover, the images do not come from a common source or database and, therefore, are distinguished from the information at issue in Matter of RetailData, LLC,6 which "sat on shelves," and was widely accessible. N.Y. Dept. of Taxn. and Fin., TSB-A-17(12)S (July 31, 2017). New York: A company's charges to customer-retailers (retailers) for electronically delivered training software, video and software license fees charged in a lump sum, and monthly or annual subscription fees are subject to New York state and local sales tax when they are used by retailers' employees in New York but are not subject to tax when sold for use by retailers 'employees outside the state. The company's charge for training software constitutes receipts from the lease or license to use or consume prewritten computer software, which includes a charge for the prewritten software used for all retailers before it is "skinned" (i.e., customized) to a specific retailer. When the charges for skinning are not separately stated from the charge for prewritten software, the entire charge is subject to sales tax. Charges to provide employees and management access to and the right to use or consume prewritten software constitutes the transfer of prewritten software subject to New York State and local sales tax. The company's charges for creating videos and other media content (collectively "content") delivered electronically or online are not tangible personal property and as such, the charge for creating such content delivered electronically is not subject to New York State and local sales tax. If, however, the company bundles the charge for the nontaxable video creation and taxable software, the entire charge is subject to tax. N.Y. Dept. of Taxn. and Fin., TSB-A-17(15)S (Aug. 1, 2017). Illinois: New law (HB 162) restores the Economic Development for a Growing Economy (EDGE) tax credit. Under the bill, the Illinois Department of Commerce and Economic Opportunity (DCEO) is allowed to enter into EDGE agreements through June 30, 2022 (from the prior expiration date of April 30, 2017). The bill also modifies the manner in which the maximum amount of credit allowed is determined, changes the requirements that must be met in order to qualify for the credit, prohibits EDGE credits from being credited against the taxpayer's withholding tax liability, and establishes clawback provisions. Ill. Laws 2017, Pub. Law 100-511 (HB 162), signed by the governor on Sept. 18, 2017. For additional information on this development, see Tax Alert 2017-1363. Washington: An Appellate Body Report issued by the World Trade Organization (WTO) found that incentives provided by Washington State for certain aerospace activities were not prohibited subsidies under the WTO Agreement on Subsidies and Countervailing Measures. World Trade Org., Appellate Body Report, United States — Conditional Tax Incentives for Large Civil Aircraft, AB-2016-8, WT/DS487/AB/R (Sept. 4, 2017). Massachusetts: In NSTAR Electric Co. v. Bd. of Assessors of the City of Boston, the Massachusetts Appellate Tax Board (Board) upheld the tax assessment made by the Assessor of the City of Boston (Assessor) which was based on the excess of the net book value (NBV) of a utility's personal property, which consisted of electric utility transmission and distribution property throughout the city. The Board found that special circumstances existed to justify the Assessor's use of a valuation method other than (or in addition to) net book value. Such circumstances include the possibility that the utility company's net earnings may exceed the rate of return approved by the regulatory agency (Department of Public Utilities, DPU) and may exceed that which an investment of comparable risk could bring in the open market. Other circumstances cited included the potential for growth of the utility business and that the applicable regulatory agency had departed from its longstanding policy of prohibiting rate recovery of acquisition premiums associated with prior merger activity, thereby making an investment in the company more attractive than the net book value of the assets upon which a rate of return is applied for ratemaking purposes. Based on these special circumstances, the Assessor valued the subject property using an equal weighting of the net book value reported by the company coupled with the "replacement cost new" less physical depreciation of the subject property. Such valuation was in keeping with the regulatory and legal landscape affecting regulated utilities that could encourage a buyer to pay more than net book cost for regulated utility assets. NSTAR Electric Co. v. Bd. of Assessors of the City of Boston, Dkt. No. F316346 (Mass. App. Tax Bd. Aug. 11, 2017). For additional information on this development, see Tax Alert 2017-1546. Texas: The US Supreme Court has been asked to review the Texas Supreme Court's ruling in ETC Marketing, in which it held that the Harris County property tax as applied to surplus gas stored in Texas for future sale did not violate the Commerce Clause of the U.S. Constitution because it met all four prongs of the Complete Auto test (i.e., the taxpayer had substantial nexus with the state and the tax was fairly apportioned, nondiscriminatory and fairly related to the services provided by the state). ETC Marketing, Ltd. v. Harris County Appraisal District, No. 15-0687 (Tex. S. Ct. April 28, 2017), petition for cert. filed, Dkt. No. 17-422 (US S. Ct. filed Sept. 18, 2017). California: The Franchise Tax Board (FTB) explained a new state filing requirement for federal Form 8975 and Schedule A (Form 8975), country-by-country (CBC) reporting. The CBC reporting regulations (Treas. Reg. § 1.6038-4) generally apply to US persons that are the ultimate parent entity of a US multinational enterprise (US MNE) group with revenue of at least $850 million in the preceding accounting year and whose taxable year begins on or after June 30, 2016. The federal Form 8975 filing requirements apply to California taxpayers subject to the information reporting requirements of IRC § 6038. California taxpayers subject to this requirement must attach a copy of federal Form 8975 to their California return. A taxpayer that fails to attach a copy of the Form 8975 may be subject to a penalty. Cal. FTB, TaxNews (Sept. 2017). California: New law (AB 131) makes clarifying changes to Taxpayer Transparency and Fairness Act of 2017, which overhauled the State Board of Equalization (SBE) — stripping it of most of its duties relating to the administration of many state taxes and fees and creating two new tax agencies: the California Department of Tax and Fee Administration (CDTFA) and the Office of Tax Appeals. AB 131 makes clear that the SBE can hear, decide or take action on an appeal regarding taxes that are now under the administration of the CDTFA (e.g., income and sales taxes) through the remainder of 2017. On and after Jan. 1, 2018, the SBE has no legal authority to and cannot conduct an appeals hearing, make a determination, issue or publish a decision, or take action on a matter heard prior to 2018. Cal. Laws 2017, Ch. 252 (AB 131), signed by the governor on Sept. 16, 2017. California: A state constitutional provision (Cal. Const. Art. XIII C) that limits the ability of local governments to impose, extend, or increase any general tax by requiring a two-thirds majority of voters, does not apply to taxes imposed by initiative. In reaching this conclusion, the California Supreme Court found that such a limitation on the people's initiative power must be directly referenced in the provision's text or otherwise must be indicated unambiguously, and the constitutional provision in this case did not include such a limitation. Neither the text nor the history of Art. XIII C contains any evidence that the enactors intended to constrain future voters' ability to raise taxes by initiative. Cal. Cannabis Coalition v. City of Upland, No. S234148 (Cal. S. Ct. Aug. 28, 2017). New Jersey: To assist New Jersey employers in the proper reporting of calendar year 2017 withholdings of employee contributions on the 2017 Form W-2, the New Jersey Department of Labor and Workforce Development and the New Jersey Division of Taxation established official Form W-2 reporting guidelines for 2017 for: (1) workforce development, (2) supplemental workforce fund, (3) New Jersey disability insurance, (4) family leave insurance, and (5) unemployment insurance. For additional information on this development, see Tax Alert 2017-1484. New York: After discussions with the IRS and its review of other legal sources, the New York Department of Taxation and Finance issued guidance regarding the tax implications of its new paid family leave program. Effective Jan. 1, 2018, the program establishes a system of insurance for paid family leave with the premium paid by employees through payroll deduction. For additional information on this development, see Tax Alert 2017-1476. North Carolina: The North Carolina Department of Revenue has released guidance regarding the requirement to file Forms W-2/1099/NC-3 electronically and future withholding tax changes based on recently enacted legislation. For additional information on this development, see Tax Alert 2017-1541. Rhode Island: On Sept. 19, 2017, the Rhode Island General Assembly passed legislation (HB 5413B) requiring employers of 18 or more employees to provide paid sick leave to their employees. Governor Gina Raimondo is expected to sign the bill into law. For more on this development, see Tax Alert 2017-1536. Hawaii: New law (SB 4) increases the transient accommodations tax imposed on the gross rental or gross rental proceeds derived from furnishing transient accommodations, including on the occupant of a resort time share vacation unit, to 10.25% (from 9.25%), effective Jan. 1, 2018 to Dec. 31, 2030. Additionally, SB 4 permits each county that has established a surcharge on state tax before July 1, 2015 to extend the surcharge until Dec. 31, 2030 at the same rates, provided the county extends it by ordinance after a public hearing, and the ordinance is adopted before Jan. 1, 2018. Each county that did not establish a surcharge on state tax before July 1, 2015 may establish the surcharge at the rates permitted by statute, provided the county holds a public hearing on the ordinance and adopts it before March 31, 2018. This new surcharge cannot be levied before Jan. 1, 2019 or after Dec. 31, 2030. Haw. Laws 2017, 1st Special Sess., Act 1 (SB 4), signed by the governor on Sept. 5, 2017. Oregon: New law (HB 2017) increases various highway fund taxes and fees and imposes a new payroll tax to help pay for improvements to transportation infrastructure and pay for transit around the state. Effective Jan. 1, 2018, the state's motor vehicle fuel excise tax will increase to $0.34 per gallon (from $0.30 per gallon). Additional $0.02 per-gallon increases will take effect on January 1st in 2020, 2022, and 2024, provided that the Oregon Transportation Commission certifies prior to each rate increase that certain conditions have been met (e.g., identifying sufficient shovel-ready highway projects, the completion of specific transportation infrastructure projects). Other vehicle related tax and fee changes include the following: (1) increase motor vehicles registration and titling fees; (2) impose an additional vehicle registration fee based on the vehicles' fuel efficiency rating; (3) increase various fees related to heavy trucks; (4) impose a privilege tax on vehicle dealers at a rate of 0.5% of the retail sales price of the taxable motor vehicle (a use tax at the same rate is imposed on taxable motor vehicles purchased at retail, as applicable); (5) impose a $15 excise tax on retail sales of taxable bicycles; (6) increase per-mile road usage charges for certain taxpayers; (7) establish a tax credit/rebate program to encourage the use of electric vehicles; and (8) prohibit local governments from imposing privilege tax on the sale of taxable motor vehicles unless authorized by statute or approved by the governing body on or before the measure's effective date. Effective July 1, 2018, HB 2017 creates a new 0.1% payroll tax on Oregon residents and nonresidents working in Oregon to fund state highway upgrades (for additional information on the new payroll tax, see Tax Alert 2017-1358). HB 2017 takes effect Oct. 6, 2017, with various applicable dates. Ore. Laws 2017, Ch. 750 (HB 2017), signed by the governor on Aug. 18, 2017. International: The latest edition of Trade Watch is now available. Highlights of this edition include: (1) Spotlight on changing trade block (Agreement in Principle reached on EU-Japan EPA: Potential for wide-reaching tariff reductions; Comparing the US, Mexico and Canada key NAFTA objectives for renegotiation; Canada-EU Comprehensive Economic and Trade Agreement update: Delay in provisional implementation to autumn 2017 due to dairy, pharmaceuticals and ISDS disputes; UK publishes proposals — for customs arrangements following Brexit); (2) Americas (Update on Argentina's foreign exchange control system; Organizational changes limit a company's ability to claim FTZ exemptions; Implementation of Customs Centers of Excellence and Expertise; Recent OFAC enforcement actions for apparent violations of US sanctions demonstrate OFAC's broad jurisdiction); (3) Asia-Pacific (China — Public notice regarding the promotion of the integrative customs clearance reform on a nationwide basis; China's new export control law; Japan — Liberalization of customs declaration policy to start Oct. 8, 2017); (4) Europe, Middle East and Africa (East African Community — Key takeaways for importers and exporters from the EAC Customs Gazette 2016/17; European Union — Customs valuation under the Union Customs Code; Gulf Cooperation Council — Saudi Arabian Tax Authority releases VAT Implementing Regulations for public consultation; UAE Government publishes new VAT Law). International: Ghana's Deputy Minister of Finance and Economic Planning has announced that the Government will discontinue the requirement for upfront duty payments on imported goods which are exempt from tax. According to the Minister, this new directive will be effective as of Oct. 1, 2017. For additional information on this development, see Tax Alert 2017-1545. Because the matters covered herein are complicated, State and Local Tax Weekly should not be regarded as offering a complete explanation and should not be used for making decisions. Any decision concerning matters covered herein should be reviewed with a qualified tax advisor. 3 In the Matter of the Petitions of Catalyst Repository Systems, Inc., DTA No. 826545 (N.Y. Div. Tax App. Aug. 24, 2017). Document ID: 2017-1638 |
