13 March 2026 State and Local Tax Weekly for March 6 and March 13 Ernst & Young's State and Local Tax Weekly newsletter for March 6 and March 13 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. Indiana updates IRC conformity, expands upcoming tax amnesty program and denies tax benefits to businesses and individuals from foreign adversaries On March 5, 2026, Indiana Governor Mike Braun signed SB 243, which updates Indiana's Internal Revenue Code (IRC) conformity date, expands the upcoming tax amnesty program and clarifies provisions on the elective pass-through entity tax. Governor Braun also signed SB 256 (enacted March 4, 2026) and HB 1406 (enacted March 12, 2026) which, among other things, denies tax benefits to affiliates of foreign terrorist organizations and prohibits certain tax credits from being awarding to taxpayers that are organized under the laws of, or headquartered in, a country that is a foreign adversary, among other situations. SB 243 updates Indiana's IRC conformity date to January 1, 2026 (from January 1, 2023). SB 243's effect on certain One Big Beautiful Bill Act (OBBBA) provisions is described next. Bonus depreciation: SB 243 decouples Indiana from IRC Section 168(n) bonus depreciation for certain qualified production property as of July 4, 2025. Indiana's decoupling from IRC Section 168(k) remains in place. Taxpayers must add or subtract any amounts that reflect the depreciation that would have been allowed had bonus depreciation not been elected in the year the eligible asset was placed in service. Research and experimental (R&E) expenditures: For tax years beginning on or after December 31, 2024, SB 243 updates the state's existing law concerning the treatment of R&E to reference OBBBA provisions for domestic R&E expenditures. SB 243 requires an addition to taxable income for amounts deducted under IRC Section 174A(b)1 and amounts deducted under the transition rule election concerning amortization of R&E expenditures incurred in 2022-24. Indiana continues to require the expensing of both domestic and foreign R&E expenditures in the year paid or accrued. A small-business taxpayer electing to amend a prior-year federal income tax return under OBBBA provisions allowing retroactive deduction of certain domestic R&E expenditures must amend the Indiana corporate income tax return to add back those amounts to Indiana taxable income, if the taxpayer deducted those expenditures on a prior-year Indiana return. If the taxpayer does not make the retroactive federal election, the R&E expenses are treated as capitalized for federal purposes and must be added back to taxable income in the year the amortized amounts are deducted for federal purposes. Net CFC tested income (NCTI):SB 243 updates state law reference from global intangible low-taxed income to NCTI, such that the IRC Section 250(a)(1)(B) deduction remains disallowed for Indiana purposes and must be added back to taxable income. Tax amnesty program: The Indiana Department of Revenue (Department) announced that the tax amnesty program will run from July 15, 2026, through September 9, 2026. SB 243 extends eligibility for the program by one additional year and will now include unpaid tax liabilities due for tax periods ending before January 1, 2024 (from January 1, 2023). The Department is expected to issue additional guidance in the near future. Elective pass-through entity tax (PTET): SB 243 makes a technical correction to a provision on the PTET, allowing credits for out-of-state income-tax payments to be applied to the PTET. RAR adjustments: SB 243 extends the deadline for filing a notice of final federal revenue agent report adjustments to one year after the modification is made if the modification is made after December 31, 2025. Before January 1, 2026, taxpayer have 180 to file such report. Electronic notices: SB 243 authorizes the Department to send documents electronically through its online tax system (INTIME). It also allows taxpayers to request to receive all documents from the Department through INTIME. Tips, overtime and car loan interest: For a tax year beginning after December 31, 2025, and ending before January 1, 2027, individual taxpayers are allowed to claim federal deductions for tips, overtime and car interest loans from state and local tax. SB 256 restricts individuals and businesses from "foreign adversary" nations from purchasing real property in Indiana. It also requires certain foreign agents to register with the Indiana Attorney General. Among its provisions, SB 256 denies tax benefits to individuals or entities that are designated an affiliate of a foreign terrorist organization. HB 1406 (enacted March 12, 2026) prohibits the Indiana Economic Development Corporation (IEDC) from awarding an applicable tax credit to a taxpayer if it determines that the taxpayer is: (1) organized under the laws of a country that is a foreign adversary; (2) headquartered in a country that is a foreign adversary; or (3) majority owned by an organization that is an agency or instrumentality of a foreign adversary or is a business that is organization headquartered or organized under a foreign adversary. An applicant will have to affirm that it is not prohibited from such award. If the IEDC determines that and award is materially false it will revoke the award of the tax credit and require repayment of any benefit received. For additional information on this development, see Tax Alert 2026-0714. Over the past few months, governors from across the country have delivered their state-of-the-state addresses and presented state legislatures with proposed budgets for the upcoming fiscal year (collectively, "proposals"), with many including tax law changes affecting businesses and individuals. While these proposals have been wide-ranging, and frequently with affordability top of mind, some trends have emerged, including:
Meanwhile, governors in Alabama, Kansas, Kentucky, North Dakota, Tennessee and Wyoming did not mention new state tax changes in their proposals. State legislatures are now acting on these proposals as numerous budget bills make their way through statehouses. For a summary of the governors' budget proposals, see Tax Alert 2026-0609. Meanwhile, negotiations remain ongoing between the New York State Legislature and Executive branch concerning the details of the 2026-2027 New York State (NYS) budget. For more on the New York budget proposals, see Tax Alert 2026-0679. Federal: Proposed bill (HR 7619) would prohibit a state from taxing nonresident individuals based on the assets of such individuals if (1) the tax is attributable to the value of such assets for any period before the date such tax was enacted, and (2) they do not reside in the State as of the date the tax is enacted. HR 7619 was introduced on February 20, 2026, and referred to the House Committee on the Judiciary. California: A bill introduced in the California Senate (SB 1435) on March 11, 2026, would make "clean-up" changes to the state's Internal Revenue Code (IRC) conformity laws for personal and corporate income tax purposes, most notably, by clarifying that California decouples from the federal business interest expense limitation under IRC Section 163(j) for personal income tax purposes. SB 711, enacted October 1, 2025, updated California's conformity to the IRC for both personal and corporate income tax purposes for the first time in a decade. While SB 711 specifically decoupled from IRC Section 163(j) for corporate income tax purposes, it did not specifically do so for personal income tax purposes. SB 1435 would add Cal. Rev. and Tax. Code Section 17225(c) to specifically decouple from the business interest limitation provisions of IRC Section 163(j) for personal income tax purposes, retroactively applicable to tax years beginning on or after January 1, 2025. This proposed nonconformity language mirrors the corporate income tax nonconformity language enacted under SB 711. For more on this development, see Tax Alert 2026-0638. Colorado: In response to a ruling request from an out-of-state S Corporation that has a controlling interest in a partnership that sold Colorado real estate to an unrelated buyer, the Colorado Department of Revenue (CO DOR) said that gross receipts from the partnership's sale of this real estate are not included in the receipts used to calculate the apportionment factor used to determine the S corporation's Colorado apportionable income. The CO DOR explained that because the sale of Colorado real estate was not a transaction or activity in the regular course of the partnership's trade or business, which primarily is the operation of assisted living facilities, the gross receipts from this sale are not receipts. Because the receipts from the sale are excluded from the partnership's apportionment factor, no share of the receipts are included in the calculation of the S corporation's apportionment formula. Colo. Dept. of Rev., PLR 26-002 (February 17, 2026). Minnesota: The Minnesota Department of Revenue (MN DOR) announced that it has updated its Minnesota tax forms and instructions to reflect federal changes made by the One Big Beautiful Bill Act (OBBBA). Minnesota currently conforms to the IRC as amended through May 1, 2023. Accordingly, taxpayers may need to adjust their income because Minnesota has not adopted the federal changes made by OBBBA. The MN DOR has posted specific guidance on bonus depreciation. Since the state has not adopted the federal changes made by the OBBBA, taxpayers must calculate bonus depreciation allowed under IRC Section 168(k) based on the law in effect before the OBBBA. Under prior federal law, 40% bonus depreciation would have been allowed in tax year 2025. Minn. Dept. of Rev., "2025 Federal Nonconformity for Income Tax" (last updated February 5, 2026); Nonconformity Chart "Minnesota Tax Impacts Resulting from the 2025 Federal Tax Budget and Reconciliation Bill (H.R. 1)" (February 2026); Webpage "Bonus Depreciation" (last updated March 5, 2026). Minnesota: The Minnesota Department of Revenue (MN DOR) issued guidance on the apportionment of income from the S-portion of an electing small business trust (ESBT). It is the MN DOR's position that the business income of the S-portion of the ESBT is apportioned under Minn. Stat. Sections 290.17, 290.191 and 290.20. The MN DOR noted that the same principles apply to tax preference items. The Minnesota taxable income of the S-portion of the ESBT is a combination of the apportioned business income with the any allocable nonbusiness income. Minn. Dept. of Rev., Revenue Notice #26-02 "Estate, Fiduciary, S-Corporation Taxes — Apportionment of Income — Electing Small Business Trust" (February 23, 2026). Missouri: The Missouri Department of Revenue adopted amendments to its consolidated income tax return rule, 12 CSR 10-2.045. The adopted amendments update the method of determining interstate apportionment for certain consolidated filers and update the rule's references to apportionment methods, among other changes. The amended rule takes effect April 30, 2026. Mo. Dept. of Rev., Final Rules 12 CST 10-2.045 (Mo. Register, Vol. 51, No. 5, March 2, 2026). (The rules were adopted as proposed, see Mo. Register, Vol. 50, No. 23, December 1, 2025). New Mexico: New law (SB 151) decouples from select provisions of the One Big Beautiful Bill Act (OBBBA). Taxpayers in computing base income are required to add back: (1) amounts deducted under IRC Sections 168(k) and 168(n) in excess of the deduction amount that would have been allowed by IRC Sections 168(a) through 168(j); and (2) additional interest deducted as a result of the change to IRC Section 163(j)(8)(A) made by the OBBBA. Such disallowed interest is eligible for carryforward under IRC Section 163(j)(2). SB 151 eliminates the subtraction for amounts of a corporation's income under IRC Section 951A, i.e., net CFC tested income or NCTI (formerly global intangible low-taxed income or GILTI). SB 151 also allows a corporation to include in its apportionment calculation the factors of a controlled foreign corporation (as defined by IRC Section 957) to the extent its income is included in net income. These changes apply to tax years beginning on or after January 1, 2027. N.M. Laws 2026, ch. 69 (SB 151), signed by the governor on March 11, 2026. Ohio: New law (SB 9) updates Ohio's Internal Revenue Code (IRC) conformity for purposes of the state's individual income tax. SB 9 updates Ohio Rev. Code 5701.11, the state's IRC conformity provision, to the effective date of the legislation — March 5, 2026 — and incorporates recent changes to the IRC taking effect after March 7, 2025 (from March 15, 2023). The incorporated changes include those made by the One Big Beautiful Bill Act (OBBBA). The most significant OBBBA provisions affecting Ohio law include allowing a deduction for domestic research and experimental expenses, increasing the cap on deductible business interest and allowing 100% depreciation of the adjusted basis of qualified production property in the year in which property is placed into service. While Ohio couples to the new bonus depreciation for qualified production property under IRC Section 168(n), it appears that the state continues to decouple from bonus deprecation under IRC Section 168(k) as well as increased IRC Section 179 deduction limits. Taxpayers are required to add-back such amounts claimed for federal income tax purposes and may then gradually deduct these amounts over a period of years on their Ohio return. SB 9 also permits taxpayers with a tax year ending after March 7, 2025, and before March 5, 2026, to irrevocably elect to incorporate all IRC provisions that were effective in their 2025 tax year (2026 tax year for some fiscal-year taxpayers). Taxpayers would make the election on their 2025 tax return (2026 tax return for some fiscal-year taxpayers). The election allows Ohio taxpayers to incorporate the changes made by the OBBBA into their latest return. SB 9 takes immediate effect. Ohio Laws 2026, SB 9, signed by the governor on March 5, 2026. For more on this development, see Tax Alert 2026-0593. West Virginia: New law (SB 393) updates West Virginia's Internal Revenue Code (IRC) conformity date for corporate net income tax purposes to federal changes made after December 31, 2024, but before January 1, 2026 (from federal changes made after December 31, 2023, but before January 1, 2025). No amendment to the IRC made on or after January 1, 2026, will be given any effect. This change is effective retroactive to the extent allowable under federal income tax law. W.Va. Laws 2026, SB 393, enacted on March 2, 2026. West Virginia: New law (SB 400) for personal income tax purposes, updates the state's Internal Revenue Code (IRC) conformity date to federal changes made after December 31, 2024, but before January 1, 2026 (from federal changes made after December 31, 2023, but before January 1, 2025). No amendments to the IRC made on or after January 1, 2026, will be given any effect. W.Va. Laws 2026, SB 400, enacted on March 2, 2026. Louisiana: The Louisiana Department of Revenue (LA DOR) revised its guidance on the tax collection and remittance requirements for peer-to-peer (P2P) vehicle sharing platforms to reflect law changes enacted in 2025. P2P vehicle sharing platforms do not own or rent vehicles; instead, they facilitate the lease or rental of vehicles between vehicle owners and drivers. Under Louisiana law, the term "dealer" includes anyone that operates, maintains or facilitates a P2P vehicle sharing program and collects a portion of the amount paid under the vehicle sharing agreement. Regarding the platform company's collection and remittance obligations for vehicles leased or rented through its platform, the LA DOR determined that the company, through its operation, maintenance and facilitation of a P2P vehicle sharing program, is a "dealer." As a "dealer", the company must collect and remit sales tax on transactions facilitated on its vehicle sharing platform. Sales tax must be electronically remitted and paid. The LA DOR noted that local sales tax collected on these transactions must be remitted to the appropriate local sales tax collector. The March 2026 revision removes discussions on the applicability of the automobile rental tax and notes that under prior law, and until June 30, 2025, P2P vehicle sharing platforms were specifically excluded from the definition of marketplace facilitator. Due to a 2025 law change, P2P dealers that meet the definition of marketplace facilitator have the option of remitting state sales and use tax to the Louisiana Sales and Use Tax Commission for Remote Sellers. Such remittance is required when the marketplace facilitator has gross revenue of more than $100,000 for sales made or facilitated for delivery in the state during the previous or current calendar year. (La. Dept. of Rev., Revenue Ruling 23-001 "Sales and Use Tax Peer-to-Peer Vehicle Sharing Platforms: Tax Collection and Remittance Requirements" (revised March 9, 2026). New Mexico: New law (SB 151) creates a gross receipts tax deduction for sales of construction materials and labor used for the development of affordable multifamily residential housing projects. Specifically, the deduction applies to sales made before July 1, 2030, for construction materials and labor being used for the purpose of developing multifamily residential housing, provided that 80% or more of such housing units will be for affordable housing and the materials and labor are sold to a qualifying grantee for a single residential housing project under the Affordable Housing Act. The buyer of the construction materials and labor must provide a nontaxable transaction certificate to the seller. This provision takes effect July 1, 2027. N.M. Laws 2026, ch. 69 (SB 151), signed by the governor on March 11, 2026. Oklahoma: The Oklahoma Tax Commission issued guidance on rounding cash transactions due to the penny shortage caused by the federal government's ending of the production of the penny. Retailers are required to calculate the state's sales tax to the nearest cent, regardless of payment method. Thus, if a vendor/retailer chooses to round a cash transaction that requires change to the nearest nickel, sales tax is calculated on the sales price before any rounding is applied. The Commission's guidance includes examples of rounding cash transaction. The Commission noted that this guidance is for the state's sales and use tax and does not address other state and federal laws. Okla. Tax Comm., "End of Penny Production" (March 2026). South Dakota: New law (SB 96) allows a county to impose a county option gross receipts tax to reduce owner-occupied property taxes. The gross receipts tax may not exceed one-half percent of gross receipts from taxable sales of tangible personal property, products transferred electronically, and services. The gross receipts tax may not be imposed on materials incorporated in construction work related to construction contracts bid or entered into on or before the effective date of the tax. The county tax must conform to the state sales and use tax, except for the rate. All proceeds from the county gross receipts tax must be deposited into the county's property tax reduction fund. Amounts from the fund will be used as a credit against the county property tax levy on all owner-occupied classified property, in an equal percentage. Additional money in the fund will be used to provide a credit against the county property tax levy on property classified as agricultural and nonagricultural in an equal percentage. A county seeking to impose a gross receipt tax must adopt an ordinance that specifies that the county's governing board will provide property tax relief; an ordinance may be referred to voters for approval. The South Dakota Department of Revenue will administer any county gross receipts tax. An ordinance or amendment must be effective on the earlier of January 1 or July 1 following at least 90 days notification by the governing body of the county to the Secretary of the Department of Revenue that such was enacted, unless the ordinance or amendment is suspended by operation or referendum. Starting in 2028, a written property tax bill must state the amount of any property tax credit applied to the property because of the imposition of a gross receipts tax by the county. S.D. Laws 2026, SB 96, signed by the governor on March 12, 2026. Wisconsin: The Wisconsin Department of Revenue (WI DOR) issued guidance to retailers on rounding cash transactions due to the penny shortage caused by the federal government's ending of the production of the penny. The WI DOR stated retailers choosing to round a cash transaction to the nearest nickel should round after sales tax is calculated. The WI DOR noted that this guidance applies only to Wisconsin sales and use tax; the guidance includes an example of state tax calculated on a rounded cash transaction. Wis. Dept. of Rev., Webpage "Penny Shortages and the Impact on Wisconsin Sales and Use Tax" (March 10, 2026). Wyoming: New law (HB 145) exempts sales of alternative fuels taxed under Wyo. Stat. Sections 39-17-301 through 39-17-311 from state sales tax. HB 145 also imposes a license tax of $0.035 per kilowatt hour on all electric energy sold or dispensed for sale or use in Wyoming for charging a plug-in hybrid electric vehicle or all-electric vehicle at a direct current fast charging station. HB 145 takes effect on July 1, 2026. Wyo. Laws 2026, ch. 92 (HB 145), signed by the governor on March 7, 2026. Wyoming: New law (HB 120) creates industrial sovereign zones in an area where there is an opportunity for the production and distribution of value-added manufactured products. The law provides a sales and use tax exemption for the sale/purchase or lease of machinery to be used within these zones and used directly and predominantly in production of a value-added manufactured product. HB 120 took effect on March 7, 2026. Wyo. Laws 2026, ch. 93 (HB 102), signed by the governor on March 7, 2026. Indiana: New law (HB 1406) requires the Indiana Finance Authority in collaboration with the Indiana Economic Development Corporation to prepare a report evaluating property tax incentives, state income tax incentives, state sales and use tax incentives, and other tax incentives available to data centers or are applicable to data center equipment under state law. The report should review the state and local fiscal impact of utilization of these incentives and include recommendations on whether the incentives should continue with or without modifications to statutory limitations on the amount of the incentives that may be awarded. The report also must evaluate the impact of data centers on the costs of utilities and water supply for local governments and consumers, as well as the local and regional environmental impacts of data centers and include recommendations concerning these impacts. The report is due to the Indiana Finance Authority by November 1, 2026. Ind. Laws 2026, Pub. L. 162 (HB 1406), signed by the governor on March 12, 2026. New Mexico: New law (SB 151) extends the sunset date of the high-wage jobs tax credit through July 1, 2036 (from July 1, 2026). SB 151 also creates (1) the local journalist employment corporate income tax credit, which is equal to 30% of wages paid to each journalist employed by a local news organization; and (2) the local news printer corporate income tax credit. The local news printer credit is equal to the amount of wages paid to each qualified employee employed by a local news printers not to exceed $10,000 for a qualified employee working an average of 20 hours or more per week and $5,000 for a qualified employee working an average of less than 20 hours per week. These new credits may be claimed for tax years beginning on or after January 1, 2027, and before January 1, 2032. N.M. Laws 2026, ch. 69 (SB 151), signed by the governor on March 11, 2026. New Mexico: New law (HB 154) modifies the definition of "advanced energy product" for purposes of the advanced energy equipment tax credit, which may be claimed against corporate and individual income taxes. Before 2026, the definition of "advanced energy product" is tied primarily to products eligible for the federal advanced manufacturing production credit under IRC Section 45X. As revised, and effective for tax years beginning on and after January 1, 2026, the reference to IRC Section 45X is replaced with a state-specific list of eligible products, including (1) components for solar energy, wind energy and battery; (2) a fusion machine and the components of a fusion machine that can transform atomic nuclei through the fusion process into different elements, isotopes or other particles; (3) critical mineral if converted or purified to specified purities or forms; and (4) inverter that is an end product, which can convert direct current energy from one or more solar module or certified distributed wind energy systems into alternating current electricity. The law list examples of such items. N.M. Laws 2026, ch. 17 (HB 154), signed by the governor on March 3, 2026. New Mexico: New law (HB 291) modifies eligibility for the film production tax credit by expanding the definition of a "qualified expenditure" to allow payments for a lease or rental of facilities and equipment located on, or purchased from businesses located on, a federally recognized Indian nation, tribe or pueblo located in New Mexico. The law adds a definition of "New Mexico film partner production" to mean a film or commercial audiovisual product in New Mexico for which such partner: (1) owns at least 50% of the production for which a budget is certified for at least one year; (2) owns or controls underlying intellectual property resulting from the production for at least five years; or (3) has funded at least 50% of the production budget. HB 291 clarifies provisions regarding the credit application due date and the process for claiming the credit. These changes apply to tax years beginning on or after January 1, 2027. HB 291 also modifies the Technology Jobs and Research and Development Tax Credit by modifying the definition of "qualified expenditure" to clarify that a qualified expenditure must be "essential for conducting qualified research" at a qualified facility, and to amend the definition of "wages" for purposes of the credit to cap wages at $500,000 per employee. These changes take effect July 1, 2026. N.M. Laws 2026, ch. 31 (HB 291), signed by the governor on March 4, 2026. Colorado: New law (SB 26-010) modifies the definitions of "farm" and "ranch" used to classify agricultural land for property tax purposes. Effective January 1, 2027, the classification of agricultural property is extended to producers that predominantly use their land to produce agricultural products (a farm) and predominantly use their land to graze livestock through a pasture-based operation (a ranch). Colo. Laws 2026, ch. 2 (SB 26-010), signed by the governor on March 9, 2026. Indiana: New law (HB 1406) provides that a tract of land of a nonprofit hospital system is exempt from real property tax if: (1) it is purchased for the purpose of erecting a building that is to be owned, occupied and used in an exempt manner, and (2) not more than four years after the property is purchased, the Indiana nonprofit hospital system proves it has been issued a certificate of occupancy (or submitted a certificate of completion and compliance). If the nonprofit hospital system sells, leases or otherwise transfers the exempt tract of land, it is liable for property tax that was not imposed on the track of land for the period beginning January 1 of the fourth year after purchase through December 31 of the year of the sale, lease or transfer. This provision takes effect January 1, 2027. Ind. Laws 2026, Pub. L. 162 (HB 1406) signed by the governor on March 12, 2026. Nebraska: New law (LB 783) exempts from the documentary stamp tax assignments transferring property from an assignor to an assignee pursuant to the Uniform Assignment for Benefit of Creditors Act. LB 783 takes effect three calendar months after the adjournment of the legislative session. Neb. Laws 2026, LB 783, signed by the governor on March 3, 2026. New Mexico: New law (SB 58) extends the property tax exemption period for project property in metropolitan redevelopment areas to 14 years (from seven years). This change applies to leases of project property executed on or after the effective date of SB 58, which will take effect 90 days after the legislature adjourns. N.M. Laws 2026, ch. 23 (SB 58), signed by the governor on March 4, 2026. Indiana: New law (SB 259) removes penalty provisions that apply if a pass-through entity fails to include in a composite return nonresident partners, shareholders, or beneficiaries that do not have distributive share income greater than $0. Under prior law, pass-through entities that failed to include all nonresident partners, nonresident shareholders, or nonresident beneficiaries in a composite return were subject to a penalty of $500 per pass-through entity. The Indiana Department of Revenue began enforcing this penalty beginning in tax year 2024.2 SB 259 is effective immediately and applies to pass-through entity returns due, including extensions, after March 3, 2026. Ind. Laws 2026, Pub. L. 48 (SB 259), signed by the governor on March 3, 2026. For additional information on this development, see Tax Alert 2026-0615. New Mexico: New law (HB 291) allows the secretary, via regulation or instruction, to permit or require rounding to the nearest whole dollar of the amount due for individual income or corporate income/franchise tax purposes and to the nearest five cents of the amount due for all other taxes administered by the New Mexico Taxation and Revenue Department, including property taxes and amounts due under the Motor Vehicle Code. This change is effective July 1, 2026. N.M. Laws 2026, ch. 31 (HB 291), signed by the governor on March 4, 2026. Indiana: New law (SB 243 as amended by HB 1406) creates rounding rules for cash transaction due to the end of the production of the penny. New code section IC 23-15-13 provides rounding rules for payments to business entities, and new code section IC 5-36.5 provides rounding rules for payments to state and local units. For amounts payable to a business entity, the business entity may round the total transaction amount for all transactions with a number other than zero or five in the second decimal place. The entity may round the total transaction down or up to the next amount divisible by five cents, or to the nearest five cent increment by rounding down amounts ending in 1, 2, 6 or 7, or rounding up if the amount ends with 3, 4, 8 or 9. The law also prohibits amounts added or subtracted by a seller to comply with rounding rules from being considered in determining gross retail income. These provisions took effect on March 15, 2026, and apply only to cash transactions occurring after March 14, 2026. HB 1406 includes explanations of when a retail transaction is considered to have occurred after March 14, 2026, and before March 15, 2026. (The effective date of these provisions as originally provided for in SB 243, were subsequently amended by HB 1406.) A state or local unit must round the state or local tax down to the next amount divisible by five cents, if the state and local tax has a 1, 2, 3, 4, 6, 7, 8, or 9 in the second decimal place. If the state or local tax is less than five cents, the state or local unit must round the amount down to zero cents. For state and local tax that is imposed on a transaction and is required to be remitted by a person/entity to the state or local jurisdiction as an agent or trustee of such jurisdiction, state and local tax due is computed on the total transaction amount before rounding. For state and local tax that is not imposed on a transaction but is required to be withheld by a person/entity acting as an agent or trustee for a state or local unit, or otherwise included in the total transaction amount, the amount withheld or included is computed without rounding. The new rules provide rounding rules when the amount of tax is reduced by any collection allowances, when multiple state or local taxes are required to be reported on a single form, and when multiple state or local taxes are required to be paid. These provisions take effect on January 1, 2027, and apply to cash transactions occurring after December 31, 2026. Ind. Laws 2026, Pub. L. 128 (SB 234), signed by the governor on March 5, 2026; as amended by Pub. L. 162 (HB 1406) signed by the governor on March 12, 2026. Indiana: New law (HB 1042) prohibits a public agency, except the Department of Financial Institutions (Department) or a local unit (i.e., county, municipality or township) from adopting or enforcing a rule or regulation that would prohibit, restrict or impair a person's ability to: (1) use or accept digital assets as payment for goods and services, (2) take custody of digital assets using a self-hosted or hardware wallet, or (3) engage in specified activities related to blockchain, such as developing software on a blockchain protocol. The law also prohibits a public agency (except the Department) or local unit from imposing taxes or fees on the use or acceptance of digital assets as payment for goods and services, or taking/maintaining custody of digital assets using a self-hosted or hardware wallet; that are not applicable to comparable financial transactions that do not have digital assets. In addition, only the Department may prohibit the operation of a digital asset mining business, except that a public agency may enforce such rules in limited instances. These provisions take effect July 1, 2026. Ind. Laws 2026, Pub. L. 49 (HB 1042), signed by the governor on March 3, 2026. Wyoming: New law (HB 128) provides an exemption from the 2% severance tax imposed by Wyo. Stat. Section 39-14-204(a)(iii) for tertiary production resulting from enhanced oil recovery projects certified by the Oil and Gas Conservation Commission after July 1, 2026, and before July 1, 2031. The exemption applies for a five-year period from the date of the first tertiary production resulting from the project. HB 128 takes effect on July 1, 2026. Wyo. Laws 2026, ch. 46 (HB 128), signed by the governor on March 6, 2026. Federal: On March 4, 2026, in Atmus Filtration, Inc. v. United States (Ct. No. 26-01259), the United States (US) Court of International Trade (CIT) ordered US Customs and Border Protection (CBP) to liquidate all unliquidated entries that were subject to tariffs imposed under the International Emergency Economic Powers Act (IEEPA) without regard to IEEPA duties. The CIT also ordered reliquidation, without IEEPA duties, of entries for which liquidation is not yet final. In Atmus Filtration, the plaintiff importer had challenged duties imposed under various executive orders issued under IEEPA and sought, among other relief, refunds and reliquidation of its entries, where necessary. Entry liquidation typically occurs 314 days after the date of entry, when CBP issues its final calculation of duties owed on imported merchandise, making the assessed amount binding unless a formal protest is filed. The CIT noted that the plaintiff's entries are among millions that were entered subject to IEEPA duties, which the US Supreme Court held unlawful in Learning Resources, Inc. v. Trump (February 20, 2026). On March 4, 2026, CIT stated that all importers of record whose entries were subject to IEEPA duties are entitled to the benefit of the Learning Resources decision. For additional information on this development, see Tax Alert 2026-0575. On March 6, 2026 the Executive Director of Trade Programs at the CBP submitted a sworn declaration to the CIT outlining the operational challenges associated requiring liquidation of all unliquidated entries that were entered subject to IEEPA duties without regard to IEEPA duties and reliquidation of any entries that have been liquidated, but for which liquidation is not final, without regard to IEEPA duties. As a result of the challenges, CBP proposed new Automated Commercial Environment functionality and associated process flow that could work to address the operational challenges associated with the IEEPA duty refund process. For additional information on this development, see Tax Alert 2026-0586. Federal: The United States Trade Representative (USTR) announced on March 11, 2026 that it has initiated investigations under Section 301 of the Trade Act of 1974 into acts, policies and practices of 16 economies (China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India) related to structural excess capacity and production in manufacturing sectors. The United States government may, depending on the outcome of the investigation, impose tariff or nontariff measures targeting products of the subject economies to address any identified burdens on US commerce. For more on this development, see Tax Alert 2026-0623. International - Netherlands: On March 10, 2026, the Dutch Ministry of Finance submitted an EY-prepared report to Parliament focusing on how best to implement new value-added tax (VAT) e-invoicing and digital reporting in the Netherlands. Based on interviews with stakeholders, a comparative legal analysis with other countries and a review of the advantages and disadvantages of e-invoicing, the report draws the following conclusions:
The EY report shows that the above conclusions align with the two objectives of the ViDA Directive: improving tax collection and reducing fraud, as well as simplifying VAT compliance for businesses and tax authorities through the use of technology. Broad implementation of the rules will provide benefits, including: (1) increased efficiency for businesses, (2) expected increase in tax revenues, (3) more efficient supervision by the tax authorities, and (4) potential facilitation of (partially) pre-completed VAT returns in the future. The report acknowledges that broad implementation of the ViDA rules will result in additional burdens for businesses. Nonetheless, all research on e-invoicing shows that the benefits for businesses outweigh the disadvantages. The report also notes that the Dutch government should consider excluding certain transactions and businesses from the e-invoicing and e-reporting obligations. Examples include businesses that operate almost exclusively on a business-to-consumer (B2C) basis, as well as certain exempt activities. For additional information on this development, see Tax Alert 2026-0624. 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.
Document ID: 2026-0972 | ||
