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March 21, 2024

State and Local Tax Weekly for March 1 and 8

Ernst & Young's State and Local Tax Weekly newsletter for March 1 and 8 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.


New York Division of Tax Appeals finds out-of-state winery entitled to reduced tax rates as a qualified New York manufacturer

A California-headquartered winery that hired an independent land-management contractor to maintain and work vineyards the company owns in New York meets the requirements of a qualified New York manufacturer (QNYM), an Administrative Law Judge (ALJ) for the New York Division of Tax Appeals has found. In so holding, the ALJ determined that the winery principally used the New York property to produce goods during the 2016-2019 tax years and nothing in the law suggests an eligible property is not "used by the owner" if that owner contracts another entity to perform labor on the otherwise eligible property.1

The taxpayer computed the tax due on its New York State (NYS) combined franchise tax returns for the 2016 through 2019 tax years, using the reduced rates for QNYMs under N.Y. Tax Law Section 210(1)(a)(vi). On these returns, the taxpayer checked the box for "qualification for preferential tax rates" to indicate it was using the higher of the following tax rates available to QNYMs: (1) business income base tax rate, which is currently zero percent; (2) fixed-dollar minimum tax amount; or (3) capital base tax rate. For these years, the capital tax base was the taxpayer's highest tax base.

Following an audit, the New York Division of Taxation (Division) took the position that the taxpayer did not meet all three of the QNYM requirements. The Division agreed the taxpayer met the first two requirements (i.e., derived more than 50% of its receipts from the production of goods by qualifying QNYM activities, and had NYS property whose adjusted basis exceeded $1 million at the end of each tax year at issue). The Division took the position, however, that the taxpayer did not meet the third requirement of principally using the property to produce goods. According to the Division, the taxpayer itself did not use the NYS vineyard property (i.e., grapevines, stakes and wires, drainage tiles and wind machines) in the production of goods upon outsourcing those activities to a land-management contractor. The Division's audit file referenced TSB-M-15(3)C "Real Property Tax Credit and Reduction of Tax Rates for Qualified New York Manufacturers" (the TSB-M), which precludes taxpayers from considering production activities they contract out to another entity when determining their eligibility as a manufacturer.

After finding the taxpayer was not a QNYM, the Division re-computed the taxpayer's franchise tax using the generally applicable tax rates. Applying these tax rates, instead of the reduced rates for QNYMs, the Division computed the taxpayer's highest tax under the business income base.

Regarding which party bears the burden of proof, the ALJ rejected the Division's argument that the special zero percent business income base tax rate for QNYMs "is an exemption and exclusion," which would have required the taxpayer to show its interpretation of QNYM qualification was the only reasonable construction. Rather, the ALJ agreed with the taxpayer that the statutory provision2 reducing rates for QNYMs "is to be construed most strongly against the government and in favor of the taxpayer," likening the reduced rates to a tax limitation. The ALJ noted that the evolution of adjusting the business income base rate to zero percent, coupled with the statutory language, "shows that it is not an exemption but a rate reduction."

The ALJ also rejected the Division's reliance on its own TSB-M since a NYS Technical Service Bureau Memorandum is effectively an advisory statement without any legal force or effect. In determining whether the taxpayer principally used the property to produce goods, the ALJ found the property was "used by" the taxpayer regardless of who worked and maintained the NYS vineyard. The taxpayer "employed its grapevines for a purpose and put the grapevines into service and … qualifies as a QNYM … for the years at issue," the ALJ said. In reaching this conclusion, the ALJ found the taxpayer had title to and owned vineyards, noting that land-management contracts, which are common for vineyards, do not detract from the landowner still owing and using the land and attendant crops. Moreover, the ALJ found that "[n]othing in Tax Law [Sections] 210(a) or 210-B suggests that property is not 'used by' its owner if the owner contracts with another entity to perform labor on or related to the property."

The ALJ further found the Division's regulations and administrative guidance on the meaning of "used by the taxpayer" for the related investment tax credit (ITC)3 supported the taxpayer's eligibility as a QNYM. Under those regulations, eligibility to claim an ITC for property used to produce goods is limited if the taxpayer leases the property to another entity. The ALJ found no similar limitation for engaging a land-management contractor/service provider to produce goods under the QNYM provisions. In this case, the taxpayer did not lease the property to the land-management contractor.

The ALJ found additional support for taxpayer's QNYM eligibility in the Division's own Advisory Opinion, TSB-A-98(24)C, which found property was principally used in the production of goods by a taxpayer despite the use of subcontractors. The ALJ reasoned that the taxpayer would be considered the user of the NYS vineyard property under the related ITC regulations and the Division's prior interpretation of those regulations in TSB-A-98(24)C.

The ALJ rejected the Division's "very narrow interpretation" of "used," which stemmed from its view that the taxpayer's employees must service the NYS vineyard. The only employee requirement in the QNYM provisions, the ALJ noted, is in the alternative QNYM qualification test, which was not at issue. In the ALJ's view, the Division was "effectively rewriting the statute" to include an employee requirement.

Lastly, the ALJ rejected the Division's proposed recharacterization of the NYS vineyard acquisition and its argument that the taxpayer and the land-management contractor could "double-dip" by both claiming QNYM benefits. For more on this development, see Tax Alert 2024-0516.

New Mexico governor signs omnibus tax bill

On March 6, 2024, Governor Michelle Lujan Grisham signed into law an omnibus tax bill, HB 252 (ch. 67), which includes changes to corporate and individual income taxes and gross receipts and compensating taxes, and creates new and enhances certain existing tax credits. The governor, however, used her line-item veto authority to veto amendments to the Oil and Gas Severance Tax Act and the Natural Gas and Crude Oil Production Incentive Act that would have added an exemption to severance taxes for certain stripper well properties. In her veto message the governor urged the provisions' sponsors to work with her administration to limit the exemption to small and independent operators.

Corporate income changes: The law replaces the two-bracket corporate income tax rate system with a flat 5.9% income tax rate, effective Jan. 1, 2025. The two-brackets, which remain in effect through 2024, apply a 4.8% rate to taxable income of $500,000 or less, and a 5.9% rate to income over $500,000.

Currently, corporate taxpayers can subtract 100% of subpart F income (as defined in IRC Section 952) included in the corporation's federal taxable income. Effective for tax years beginning on and after Jan. 1, 2025, this subtraction is eliminated. Also, effective as of that date, the exclusion from the "water's-edge group" for entities with substantive presence outside the US is limited to foreign corporations. Currently the water's-edge group does not include corporations wherever organized or incorporated that have less than 20% of their property, payroll and sales sourced to locations within the US. Starting in 2025, the exclusion applies to such corporations organized or incorporated outside the US or its possession or territories.

The law permanently allows taxpayers engaged in power generation to make an election to apportion business income by the single sales factor by removing the sunset date, which had been tax years beginning before Jan. 1, 2024. This change applies to tax years beginning on or after Jan. 1, 2024.

Tax credits and incentives: The law creates a new advanced energy equipment corporate and individual income tax credit. New Mexico taxpayers who make a qualified expenditures for a New Mexico located qualified manufacturing facility may claim this credit for tax years beginning on or after Jan. 1, 2025 and before Jan. 1, 2033. The amount of this credit is the lesser of 20% of the amount of the qualified expenditures made by the taxpayer for a qualified manufacturing facility or $25 million. Taxpayers need to apply for preliminary certification of eligibility for this credit from the Energy, Minerals and Natural Resources Department, before they incur qualified expenditures. Only one certificate of eligibility will be issued for all activities at a qualified manufacturing facility. Taxpayers that meet the credit's requirements will be issued a dated certificate of eligibility, which will specify the amount of credit the taxpayer may claim and the years in which the credit may be claimed. Taxpayers can sell, exchange or transfer their certificate of eligibility to another taxpayer in increments of not less than $1 million. If, however, the amount of the certificate is less than $1 million, the entire credit may be transferred. The amount of credit that exceeds the taxpayer's liability may be carried forward for up to five consecutive years.

A new geothermal electricity generation corporate and individual income tax credit also has been created. Effective for tax years beginning on or after Jan. 1, 2025 and before Jan. 1, 2032, taxpayers holding an interest in a geothermal electricity generation facility may apply for, and if allowed may claim, this credit. The amount of the credit is equal to $0.015 per kilowatt-hour of electricity generated in New Mexico by such facility. The amount of aggregate credit available annually is $5 million. Applications will be considered in the order received. The amount of credit that exceeds the taxpayer's liability may be carried forward for up to three consecutive years.

In addition, the law:

  • Establishes new clean car corporate and individual income tax credits, applicable Jan. 1, 2024 and before Jan. 1, 2030
  • Establishes new clean car charging unit corporate and individual income tax credits, applicable Jan. 1, 2024 and before Jan. 1, 2030
  • Restores the geothermal ground-coupled heat pump corporate and individual income tax credit applicable to purchases and installations made on and after Jan. 1, 2024, but before Dec. 31, 2034
  • Amends the new solar market development income tax credits by increasing the aggregate amount of credit available to $30 million for calendar year 2024 and thereafter
  • Extends the period to make a qualified investment to be eligible for the angel investment credit to Dec. 31, 2030 (from Dec. 31, 2025)

Gross receipts and compensating tax: The law expands the gross receipts tax deduction to include sales of energy storage equipment to a government. Specifically, for periods before July 1, 2034, taxpayers may deduct from gross receipts, receipts from selling (1) wind or solar generation equipment or (2) energy storage equipment or related equipment, to a government for the purpose of installing a wind or solar electric generation facility or an energy storage facility, respectively.

Starting Jan. 1, 2025, receipts from the following may be deducted from gross receipts in computing compensating tax due: (1) selling tangible personal property (TPP) installed as part of, or services rendered in connection with, constructing and equipping a geothermal electricity generation facility; (2) selling TPP installed as part of a system used for the distribution of electricity generated from a geothermal electricity generation facility; and (3) selling or leasing TPP or selling services that are construction of plant costs. The deduction is available before July 1, 2032, and only for sales made to a person holding an interest in a geothermal electricity generation facility and who gives an appropriate nontaxable transaction certificate to the seller or lessor or provides alternative evidence.

The law provides a credit against the gross receipts tax for sales of dyed special fuel used for agricultural purposes. Effective July 1, 2024 and before July 1, 2029, taxpayers making such sales can claim a tax credit against gross receipts taxes due, if certain conditions are met. The amount of credit that exceeds the taxpayer's gross receipts tax liability can be carried forward for 36 consecutive tax periods; it is not refundable.

Individual income tax: Starting with tax years beginning on or after Jan. 1, 2025, the law modifies individual income tax brackets and rates, with the number of brackets increasing to six (from five) and the tax rates ranging from 1.5% up to 5.9% (from 1.7% up to 5.9%).

The law also modifies the limit on the net capital gain income deduction to the greater of (1) the taxpayer's net capital gain income for the tax year the deduction is being claimed not to exceed $2,500 (from $1,000) or (2) 40% of up to $1 million of the taxpayer's net capital gain income from the sale of a business that is allocated or apportioned to New Mexico for the tax year the deduction is being claimed (new material italicized). This change takes effect Jan. 1, 2025.

Other individual income tax provisions in HB 252 that have limited applicability are not discussed in this summary.


The following is a summary of recent governors' budget proposals and state-of-the state addresses.

Multistate: As of early March, governors across the country have delivered their state-of-the-state addresses and presented state legislatures with proposed budgets for the upcoming fiscal year, with many of them including tax law changes affecting individuals and businesses. While these individual proposals have been wide-ranging, some trends have emerged, including individual income tax rate reductions, modifications to net operating loss provisions, expansion of the sales tax base, property tax relief, and business-focused tax credits and administrative provisions. These governors' proposals are summarized in Tax Alert 2024-0534.

Mississippi: On Feb. 26, 2024, Governor Tate Reeve gave his 2024 State of the State Address. In it, he renewed his call to ensure a low tax burden on Mississippians "as low as we can possibly afford". The governor also asked the legislature to establish incentives to retain and attract top researchers in relevant fields at state universities. The governor also wants to attract manufacturing for components and assembly of small modular nuclear reactors.

New Jersey: On Feb. 27, 2024, Governor Phil Murphy delivered his FY2025 Budget Address. The governor's budget includes a proposed a Corporate Transit Fee, which would consist of reinstating the 2.5% surtax on top of the current Corporation Business Tax rate of 9% for corporations with income exceeding $10 million.4 The revenue generated from the Corporate Transit Fee would be earmarked for NJ Transit, which is currently running an annual deficit of over $100 million. (The proposed surtax has been introduced in the legislature as A.4009, which would impose the surtax on New Jersey taxable net income over $1 million, effective for tax periods through Dec. 31, 2025) The governor also proposed tax relief for middle- and working-class families and seniors, including property tax relief and $700 million for child tax credits, the child and dependent care tax credit and the earned income tax credit. The governor also wants New Jersey to be "the home-base for research and development in generative AI."


Michigan: The Michigan State Treasurer announced that the individual income tax rate will remain at 4.25% for the 2024 tax year. In 2015 legislation was enacted to provide a temporary individual income tax rate reduction that starting in 2023 would be effective in any year in which the general fund grew faster than the rate of inflation.5 In 2022 the general fund grew father than the rate of inflation, resulting in the individual income tax rate being reduced to 4.05% for tax year 2023. In 2023, however, the general fund was down while inflation increased. Because the conditions for the temporary rate reduction were not present in 2023, the individual income tax rate went back to 4.25% for the 2024 tax year. Mich. Dept. of Treas., Press Release "Calculation of State Individual Income Tax Rate Adjustment for 2024 Tax Year" (Feb. 28, 2024).

Minnesota: New law (HF 2757) modifies the state standard deduction amount to fix a change made in 2023 (ch. 64) that reduced the standard deduction for 2024 by undoing inflation adjustments made over the last few years. Effective retroactively for tax years beginning after Dec. 31, 2022, the standard deduction is as follows: (1) $27,650 (from $24,400) for a married joint filer or a surviving spouse; (2) $20,800 (from $18,350) for a head of household filer; and (3) and half of the amount in (1) for any other filers. Minn. Laws 2024, ch. 76 (HF 2757), signed by the governor on March 26, 2024.

Mississippi: The Mississippi Department of Revenue (MS DOR) issued updated FAQs on the pass-through entity tax (PTET) election. Partnerships, S corporations or similar PTEs can elect to be subject to the PTET; fiduciaries are not eligible to make the PTET election. The FAQs describe the requirements and timing for making the PTET election as well as for revoking a PTET election. PTEs that make the PTET election must make estimated tax payments if they have an annual income tax liability exceeding $200. An electing PTE that underestimates the required amount of tax due or fails to pay such tax may be subject to interest and penalties. The FAQs explain how to calculate the amount of credit for taxes paid on a PTET return available to the partner. Excess credit can be carried forward or refunded to the partner. Incentive credits earned by an electing PTE can be passed through to the electing PTE's partners. The credits are passed through to partners on a pro rata basis, however, if the electing PTE claims the incentive credit, then these credits will not flow through to the partners. The MS DOR explained that a partner can choose to claim the incentives credit before claiming the credit for taxes paid by an electing PTE. A partner's credit for taxes paid to other states cannot be taken on the electing PTE return; it can only be taken by individual resident taxpayers. Miss. Dept. of Rev., "Updated Electing Pass-Through Entity FAQs" (updated March 4, 2024).

Virginia: The Virginia Department of Taxation issued guidelines for making the retroactive tax year 2021 pass-through entity tax (PTET) election and how to claim a retroactive PTET credit. The PTET election for tax year 2021 can be made by (1) submitting Tax Year 2021 Form 502PTET, including all owner credit allocation information, using the Business Online Services by Sept. 16, 2024; and (2) making all payments electronically either before or at the time the Tax Year 2021 Form 502PTET is submitted. The 2021 form will not be accepted without full payment of the 2021 PTET. The electing PTET also must provide sufficient information on its Schedule VK-1s to be able to identify all PTET credit-eligible taxpayers and their credit amounts. Eligible owners may claim a refundable PTET credit, but they cannot file an amended Tax Year 2021 owner returns to claim the retroactive 2021 PTET credit. Rather, eligible owners will report the retroactive 2021 PTET credit on their Tax Year 2023 return. Interest will not be paid on the retroactive 2021 credit. Further, eligible owners cannot claim the credit until the electing PTE issues the Schedule VK-1. The guidance includes an example. Va. Dept. of Taxn., Dkt. No. 24-12 (Feb. 19, 2024).

Washington: Approved Initiative 2111 prohibits the state, counties, cities and other local jurisdictions in Washington from imposing a personal income tax on individual persons. For purposes of this provision "income" has the same meaning as "gross income" in 26 U.S.C. Section 61. The Initiative takes effect June 6, 2024. Wash. Laws 2024, ch. 5 (Initiative 2111), signed by the Speaker of the House and President of the Senate on March 5, 2024.


California: In reversing a lower court ruling, a California appeals court upheld a California regulation (Cal. Code Regs., tit. 18, Sections 1585(a)(4) and (b)(3)) that measures the sales tax on a cell phone purchased as part of a bundled transaction — i.e., a cell phone purchased for significantly less than full price from a wireless service provider when the purchaser also signs a contract to use the provider's wireless services for a period into the future — at the cell phone's unbundled, full price. The court noted that the parties did not dispute whether the cell phone is taxable, but they disagreed on how to measure the payment — thus, finding the issue to be an accounting problem of segregation. While statutory provisions did not provide guidance on this problem, the court found Regulation 1585 does so by "effectively attributing the portion of the contract price that is equivalent to the unbundled sales price to the cell phone, and the rest to the wireless services." The court also rejected the taxpayer's argument that the regulation was not adopted in compliance with the Administrative Procedures Act. Bekkerman et al. v. California Dept. of Tax and Fee Admin., No. C093763 (Cal. Ct. App., 3rd App. Dist., Feb. 27, 2024).

Illinois: The Illinois Department of Revenue (IL DOR) has determined that federal clean vehicle credits applied toward the purchase price of a clean vehicle are included in the taxable selling price of the vehicle under the Retailers' Occupation Tax (ROT). The federal Inflation Reduction Act of 2022 established a federal income tax credit for eligible purchases of qualifying new or used clean vehicles (i.e., certain electric vehicles), plug-in hybrids and fuel cell vehicles — the clean vehicle credit. Applicable to clean vehicles purchases on or after Jan. 1, 2024, a purchaser can transfer their clean vehicle credit to the qualifying new or used vehicle dealer in exchange for a payment from the dealer. The payment can be in the form of a cash payment to the purchaser or a payment applied to the purchase price of the vehicle. Payments applied to the purchase price of the clean vehicle are included as taxable consideration for the sale of the vehicle. The IL DOR explained that the payment toward the purchase price of the clean vehicle is like manufacturer rebates or manufacturer-reimbursed coupons. Thus, payments applied to the purchase price of the clean vehicle are included in taxable gross receipts under the ROT. Ill. Dept. of Rev., Informational Bulletin "Illinois Sales Tax Treatment of Point-of-Sale Transfer of Federal Clean Vehicle Tax Credits" (Feb. 2024).

Missouri: The Missouri Department of Revenue adopted amendments to Missouri regulation, 12 CSR 10-117.100, for determining the applicable local sales or use tax. Generally, when an order is taken outside the state for a sale of taxable tangible personal property, the sale is subject to the local sales tax in effect where title to the item transfers to the purchaser. The amendment provides an exception to this general rule. Under this exception, when the merchandise is shipped from one of the seller's Missouri locations to the Missouri customer the sale is subject to the local sales tax at the location of the Missouri seller from where the merchandise was shipped. The amendment further provides that sales made entirely at a temporary location are subject to local sales tax in effect at that location. The amendment takes effect 30 days after publication in the Code of State Regulations. Mo. Reg., Vol. 49, No. 4, Feb. 15, 2024. (See Mo. Reg., Vol. 48, No. 18, Sept. 15, 2023, for the proposed text, which was adopted without change).

Oklahoma: New law (HB 1955) eliminates the excise tax on all retail sales of food and food ingredients sold for human consumption off the premises where sold. Specifically, on or after the effective date of this act, the rate of the excise tax imposed on such food and food ingredients will be zero percent. Local sales and excise taxes still apply to sales of food and food ingredients. Further, until June 30, 2025, if a county or municipality submits a question of sales or excise tax to its voters, it must provide that the increased rate does not apply to "food and food ingredients". "Food and food ingredients" mean substances sold for human consumption for their taste or nutritional value, and the term includes bottled water, candy and soft drinks. "Food and food ingredients" do not include alcoholic beverages, dietary supplements, marijuana (as well as usable marijuana and marijuana-infused products), prepared food or tobacco. The law also added definitions of the following terms: "alcoholic beverages", "candy", "dietary supplements", "prepared food" and "soft drinks". The law takes effect 90 days after the session adjourns sine die. Okla. Laws 2024, ch. 2 (HB 1955), signed by the governor on Feb. 27, 2024.

Wyoming: New law (HB 197) modifies the remote seller threshold by eliminating the 200 separate transaction threshold; thus, remote sellers will create nexus if their gross revenues from the sale of tangible personal property, admissions or services delivered into this state exceed $100,000. In addition, the law amends the definition of "vendor" to clarify that a person is not in the business of selling if selling taxable tangible personal property, admissions or services is not a habitual or regular activity of the person. The sales and use tax exemption for sales of power or fuel is revised to apply to a person transporting tangible personal property by railroad or by pipeline when the power or fuel is consumed directly in generating motive power for actual transportation (changed from sales to a person engaged in the transportation business when the same is consumed directly in generating motive power for actual transportation). In addition, the law adjusts vendor credit provisions. As modified, a credit equal to 1.95% of the amount of tax due, up to $500 in any month, is available to the vendor or direct payer for paying tax due on or before the 15th day of the month the taxes are due. These changes, as well as other changes in HB 197 not discussed in this summary, take effect on July 1, 2024. Wyo. Laws 2024, ch. 67 (HB 197), signed by the governor on March 8, 2024.


Federal: The IRS's Tax Exempt and Government Entities (TE/GE) division has announced, in an Exempt Organizations Update (EO Update), that it will be offering additional virtual office hours to assist eligible entities with the pre-filing registration process for the new Inflation Reduction Act (IRA) and Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act Pre-Filing Registration Tool. Applicable entities and eligible taxpayers must complete the pre-filing registration process through the Pre-filing Registration Tool to take advantage of elective payment or the transfer of credits available under the IRA and CHIPS Act. For more on this development, see Tax Alert 2024-0529.


Maine: The Maine Revenue Services (MRS) reminded pass-through entities (PTEs) that for tax years beginning on or after Jan. 1, 2023, PTEs filing Maine composite income tax returns on behalf of nonresident partners/shareholders must use new Form 1040C-ME and related schedules. Maine individual income tax Form 1040ME can no longer be used to file a composite return.

The MRS also explained that for tax years beginning on or after Jan. 1, 2023, partnerships must report final federal adjustments resulting from a federal partnership audit or administrative adjustment on Form 1040C-ME and Schedule 1040PA-ME. The MRS said that "Schedule 1040PA-ME may not be filed separately from Form 1040C-ME." The MRS noted that these forms can be filed electronically via the Maine Tax Portal. Maine Rev. Serv., Maine Tax Alert (Vol. 34, Issue 4, March 2024).


Multistate: EY's Payroll Month in Review, which summarizes the latest US federal, state and local employment tax and payroll and human resources developments, for January — February 2024 is now available. The full newsletter is available via Tax Alert 2024-0533.


South Dakota: New law (HB 1161) prohibits the state or any of its agencies or subdivisions from accepting central bank digital currency, foreign or domestic, as payment for taxes, fees or settlement of any account or debt, or for any other purpose. The law defines central bank digital currency as "a national digital currency issued by a central bank that is widely available to the general public." This law takes effect July 1, 2024. SD Laws 2024, HB 1161, signed by the governor on Feb. 27, 2024.

West Virginia: New law (HB 5157) provides for an increase in the tax rate imposed on eligible hospitals (i.e., any inpatient or outpatient hospital conducting business in West Virginia that is not a state-owned or state-designated facility). The increase is "as needed" to provide non-federal share funding for the Medicaid State Share Fund, up to the maximum allowed by the Centers for Medicare and Medicaid Services. The tax commissioner will publish the applicable rates at least 30 days before implementation on the first day of the next calendar quarter following publication. WV Laws 2024, HB 5157, signed by the governor on Feb. 29, 2024.


International: The most recent edition of TradeFlash, our roundup of the latest developments in global trade around the world, is now available. In this issue, we provide links to EY articles and webcasts covering key trade topics, many of them focused on the impact of sustainability on international trade including Carbon Border Adjustment Mechanisms in the European Union and United Kingdom. We also provide links to two important EY reports Top 10 geopolitical developments for 2024 and EY International Tax and Transfer Pricing Survey 2024, which detail key trends in geopolitics and transfer pricing that are having an impact on international supply chains and global trade. TradeFlash is available via Tax Alert 2024-0471.

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.

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1 Matter of E. & J. Gallo Winery, DTA Nos. 830227 and 850146 (N.Y. Div. Tax App. Feb. 15, 2024).

2 N.Y. Tax Law Section 210(1)(a).

3 N.Y. Tax Law Section 210-B(1)(b)(i)(A).

4 The prior 2.5% Corporation Business Tax surtax was imposed on New Jersey taxable net income over $1 million, effective for tax periods beginning on or after Jan. 1, 2018 through Dec. 31, 2023.

5 See Associated Builders and Contractors of Michigan, et al v. State Treasurer, No. 369314 (Mich Ct. App. March 7, 2024) (Michigan appeals court affirmed the Michigan Attorney General's opinion that the individual income tax rate reduction under MCL 206.51(1)(c) is temporary — i.e., for one year only — and reverts to the 4.25% rate in subsequent years. Thus, the 2023 tax reduction only applied to 2023 and does not become the new default rate in 2024 and thereafter.)