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January 27, 2011

Federal Headlines

President to Propose Electric Vehicle Rebate


President Obama will propose to replace the existing $7,500 tax credit for electric vehicles with a rebate immediately available to consumers at the time of purchase. The consumer rebate proposal is similar to the "Cash for Clunkers" program and will be included in the president's fiscal year 2012 budget, noted Vice President Biden in announcing the incentive on January 26.


The proposal aims to spur the purchase of electric vehicles because "you don't have to wait until tax time" to receive the rebate, Biden said in remarks at Ener1, Inc., an advanced electric battery manufacturer in Greenfield, Indiana. The proposal is part of the administration's new advanced technology vehicle plan, which also includes investments in research and development and competitive programs to encourage communities to invest in electric vehicle infrastructure, noted a White House release. In 2008, the president set a goal to put one-illion advanced-technology vehicles on the road by 2015.


By Paula Cruickshank, CCH News Staff


Baucus, Grassley Introduce Bill Offering Tax Incentives for Hiring Vets


Senate Finance Committee Chairman Max Baucus, D-Mont., and outgoing ranking member Charles E. Grassley, R-Iowa, on January 26 introduced legislation that would give a tax credit up to $2,400 to employers for every qualified veteran they hire who recently completed military service. The credit was originally part of the Work Opportunity Tax Credit, which expired at the end of 2010.


The Veterans Employment Transition (VETs) Bill (Sen 146) would reinstate the tax credit and simplify requirements for veterans and small businesses. The legislation would allow recently discharged service members to provide documentation directly from the Department of Defense without having to go through the tax credit's current certification process. Any veteran who has left active duty in the past five years who has discharge paperwork showing 180 days of qualified active duty would be eligible for the credit, including those activated by their states as members of the National Guard. The bill also would help service members market themselves to prospective employers by requiring the military to educate service members about how the credit works.


"Helping businesses create jobs needs to be our number-one priority and this tax cut would help create new job opportunities for veterans by making it easier for employers to offer veterans a job," said Baucus.


Baucus and Grassley first introduced the bill in May 2010 after noting that the unemployment rate for veterans is higher than for nonveterans nationwide. The Iraq and Afghanistan Veterans of America (IAVA), the Veterans of Foreign Wars and other veteran service organizations have endorsed the legislation.


By Jeff Carlson, CCH News Staff

SFC Press Release: Baucus, Grassley Introduce Bill to Create Job Opportunities for Veterans

Veteran Employment Transition Act of 2011, Sen 146


House Votes to End Taxpayer Funding of U.S. Presidential Elections


House lawmakers on January 26 approved a measure to end the post-Watergate-era option of allowing taxpayers to check a box on their federal tax returns to designate $3 of their tax liability to finance presidential campaigns. Introduced by Rep. Tom Cole, R-Okla., the bill (HR 359) would amend the tax code to prohibit taxpayers from financing the Presidential Election Campaign Fund and the Presidential Primary Matching Payment Account. Cole said that only 7 percent of American's support the program, which he called a frivolous waste of federal spending used to pay for political party conventions and to prop up the candidacies of long-shot presidential hopefuls.


The measure, which would reduce federal spending by $617 million over 10 years, passed the House by a vote of 239-to-160. The Obama administration strongly opposes the legislation. In a statement of administration policy, the White House said that HR 359 would expand the power of corporations and special interests and force many candidates into an endless cycle of fund-raising at the expense of engagement with voters on the issues. "It is imperative to strengthen the presidential election finance system established in the aftermath of the Watergate scandal, not eliminate it," said Rep. Donna Edwards, D-Md. "Elimination simply means even more unfettered spending on our elections by large corporations and wealthy individuals."


By Stephen K. Cooper, CCH News Staff

Legislation to Reduce Federal Spending and the Deficit by Terminating Taxpayer Financing of Presidential Election Campaigns and Party Conventions, HR 359


State Headlines

Arizona --Sales and Use Tax: "Click-Through" Nexus Bill Introduced


A so-called "click-through" nexus bill has been introduced in the Arizona House of Representatives that would provide that for Arizona transaction privilege tax purposes a person making sales of tangible personal property is presumed to be conducting business in Arizona if the seller contracts with a resident of Arizona who, for a commission or other consideration, directly or indirectly refers potential customers to the seller by an Internet website link or otherwise. The presumption would be applicable only if the cumulative gross income or gross proceeds from sales by the seller to customers in Arizona who are referred to the seller by all residents with that type of an agreement with the seller exceed $10,000 during the preceding 12 months.


The presumption would be able to be rebutted by proof that the resident with whom the seller has an agreement did not engage in any solicitation in Arizona on the seller's behalf that would satisfy the nexus requirement of the U.S. Constitution during those preceding 12 months.


Subscribers can view the text of the bill as introduced.


H.B. 2551, as introduced in the Arizona House of Representatives on January 25, 2011


Hawaii --Multiple Taxes: Nexus, Remote Seller Reporting Bill Introduced


Legislation introduced in the Hawaii House of Representatives includes a so-called "click-through nexus" provision, an expanded nexus provision applicable to all taxes administered by the Department of Taxation, and a general excise tax reporting requirement for remote sellers.

"Click-Through Nexus"


The proposed "click-through nexus" provision in the introduced legislation would provide that the term "engaging" in business would include the sale of tangible personal property by a person soliciting business through an independent contractor or other representative if the person enters into an agreement with a Hawaii resident under which the resident, for a commission or other consideration, directly or indirectly refers potential customers to the person by a link on an Internet website or by other means. The presumption would be able to be rebutted by proof that the resident with whom the person has an agreement did not engage in any solicitation in Hawaii on behalf of the person that would satisfy the nexus requirement of the U.S. Constitution during the taxable year in question.

Expanded Nexus


As introduced, the legislation proposes an expanded nexus provision that would presume that an out-of-state person or entity conducting business in Hawaii is systematically and regularly engaging in business in Hawaii and is subject to Hawaii tax if, during any year, the person or entity:


-- engages in or solicits business with persons within Hawaii; and


-- earns income, gross proceeds, gross rental, or gross rental proceeds attributable to sources in Hawaii.


This provision would also allow the assessment and remittance of tax on a basis other than monthly, for good cause, which includes compliance with the U.S. or Hawaii Constitutions.

Remote Seller Reporting Requirement


The introduced legislation proposes a remote seller reporting requirement that would apply to any person or entity conducting business in Hawaii that:


-- has its commercial domicile in another state;


-- is presumed to be systematically and regularly engaging in business in Hawaii under the expanded nexus provision discussed above; and


-- does not collect the general excise tax on sales of tangible personal property to Hawaii residents.


If enacted as introduced, the legislation would require such persons and entities to file an annual statement with the Department of Taxation that includes:


-- the names of Hawaii residents to whom the out-of-state business sold tangible personal property during the taxable year;


-- the dates of each sale;


-- the ZIP code of the shipping address of each sale; and


-- the dollar amount of each sale.


Any out-of-state business presumed to be engaging in business in the state that files such an annual statement would be relieved of any duty to collect general excise tax on sales of tangible personal property to Hawaii residents for the taxable year for which the statement is filed.


Subscribers can view the introduced bill.


H.B. 1183, as introduced in the Hawaii House of Representatives on January 25, 2011


Massachusetts --Corporate Income, Sales and Use Taxes: Governor Proposes Apportionment, Hotel Tax Liability Changes


Massachusetts Gov. Deval Patrick has released a proposed budget that would amend the sales factor of the corporate excise tax apportionment formula to source sales of services to the location where the service is received. The FAS 109 deduction from corporate excise tax would be delayed for one year. The governor also proposed amending the room occupancy excise tax to require "room resellers" doing business in Massachusetts to register and remit tax on rent paid by occupants to room resellers.

FY2012 Budget Recommendation, Massachusetts Gov. Deval Patrick, January 26, 2011


Oklahoma --Sales and Use Tax: Bill Would Repeal Remote Seller Notice Requirement, Collection Initiatives, Nexus Provisions


Prefiled Oklahoma legislation, if enacted in its current form, would repeal numerous provisions contained in H.B. 2359, Laws 2010, that pertain to remote sellers, use tax collection initiatives, and other areas. Specifically, the legislation would repeal the provisions contained in H.B. 2359 related to notice requirements for remote sellers, nexus, the Retailer Compliance Initiative, the Consumer Compliance Initiative, an Internet retailer outreach program, and joint enforcement efforts between the Oklahoma Tax Commission and local governments. (TAXDAY, 2010/06/14, S.31) In addition, the legislation would (1) repeal the provisions in H.B. 2359 that decreased the vendor compensation rate and would restore previous rate levels; and (2) exempt from sales and use tax the first $1 million in sales by an Oklahoma vendor to Oklahoma residents if the vendor's business were limited to a retail Internet website located only in Oklahoma.


Subscribers can view the bill as prefiled.


S.B. 950, as prefiled on January 24, 2011


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