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January 22, 2009

Federal Headlines

GOP Lawmakers Seek to Slow Consideration of Economic Stimulus Bill

 

The House Ways and Means Committee plans to mark up the American Recovery and Reinvestment Tax Bill of 2009 (HR 598) on January 22, despite criticism from House GOP lawmakers who object to some of the tax provisions in the bill. Committee ranking member Dave Camp, R-Mich., and House Minority Leader John Boehner, R-Ohio, said the legislation should undergo the normal committee hearings, thereby giving lawmakers the chance to receive views from industry experts.

 

Boehner and Camp were joined by other House Republicans at a press briefing on January 21 where lawmakers said they planned to meet with President Obama and present their own ideas for more effective tax incentives to provide economic stimulus. In particular, Camp objected to the Making Work Pay tax credit in the measure because it would provide a greater tax incentive to people than the amount they actually paid in taxes. Instead, House Republican Whip Eric Cantor, R-Va., said that Obama should consider other tax incentives for families, small businesses, self-employed workers and entrepreneurs.

 

Cantor said they planned to let Obama know that House Republicans are opposed to the Democratic economic stimulus legislation, especially since more than $500 billion is targeted to new government spending. The largest item in the tax bill is a two-year Making Work Pay tax credit, which would cost $145.3 billion over 10 years (TAXDAY, 2009/01/16, C.1). Members of the House Republican Study Committee introduced their own legislation, the Economic Recovery and Middle Class Relief Bill (HR 470), on January 13. Among other things, the GOP legislation would provide a 5-percent, across-the-board income tax cut, increase the child tax credit to $5,000, repeal the alternative minimum tax and make permanent the current 15-percent tax rate on capital gains and dividends.

 

By Stephen K. Cooper, CCH News Staff

State Headlines

All States --Corporate Income Tax: CCH Audio Seminar: Michigan Business Tax Update Scheduled for Thursday, January 29

 

CCH Tax and Accounting is hosting a live two-hour audio seminar, The New Michigan Business Tax, on Thursday, January 29, 2009, at 1 p.m. Eastern; noon Central; 10 a.m. Pacific. This two-hour CCH Audio Seminar is presented by seasoned Michigan tax practitioners Terry Conley and Ralph Ourlian of Grant Thornton, and will provide an in-depth and practical update on the latest Michigan Business Tax (MBT) changes passed on December 19, 2008, and the filing of MBT returns. This practical review will discuss the new MBT structure and its impact on in-state and out-of-state businesses, how the MBT is computed, and the issues and challenges that the MBT presents for dealing with business taxes and compliance. In addition, the new forms will be covered as taxpayers get closer to the filing of the MBT returns. The common forms and the flow of the computations will also be discussed, as well as the impact of the newly passed legislation and its effect on gross receipts.

 

Program topics include the following:

 

-- the MBT's structure and its major components,

 

-- single factor sales apportionment,

 

-- unitary reporting,

 

-- lower nexus threshold,

 

-- a heavy emphasis on credits,

 

-- new forms and computation of the MBT, and

 

-- new changes to the MBT.

 

The learning objectives include:

 

-- gaining a practical understanding of the recent Michigan tax developments affecting business entities,

 

-- learning the key issues and concerns regarding compliance that the MBT presents for companies,

 

-- understanding how the MBT is computed, and

 

-- learning how to gather the information to maximize available deductions.

 

Registration can be completed online at http://www.krm.com/cch or by calling 1-800-775-7654. Participants can receive two hours of CPE credit for an additional $25 per person. Firms registering for this audio seminar will also receive a copy of CCH's Guidebook to Michigan Taxes (2009).

New Mexico --Multiple Taxes: Governor Says Budget Will Not Increase Taxes

 

On January 20, 2009, New Mexico Governor Bill Richardson delivered his 2009 State of the State address. While the Governor stated that his proposed budget does not raise taxes, he did call for increasing or expanding several specific credits, including the renewable energy production credit, advanced energy credit, rural health care practitioner credit, hybrid vehicle credit, and child day care credit.

 

Subscribers to CCH Tax Research NetWork can view the text of the speech.

 

Press Release, New Mexico Governor's Office, January 20, 2009

 

Wyoming --Sales and Use Tax: Improper Tax on Telecommunications Charge Must Be Refunded

 

The Wyoming Department of Revenue has been ordered to allow a refund or credit for Wyoming sales taxes that were collected by a telecommunications provider from Wyoming customers on federal customer access line charges (CALC).

 
Invalidation of Tax

 

On March 22, 2006, the Wyoming Supreme Court invalidated the taxation of federal access line charges in Qwest Corp. v. State ex rel. Dept. of Revenue (2006 WY 35, 130 P.3d 507). At the time of the decision, the telecommunications provider was under audit for not collecting sales tax on such charges during a prior period. After the court's decision, the audit focus shifted to verifying the telecommunications provider's request for a refund or credit for taxes that were collected on such charges during another period.

 

Under the refund plan proposed by the telecommunications provider, most of the disputed credit amount would be used to reduce the sales tax liability of current customers on other charges. A smaller credit amount would be used to allow a refund to customers who no longer had service or who wanted an individual review.

 

This plan was a reasonable approach to return taxes to customers in light of the extreme impracticality of identifying the customers who actually paid the original taxes prior to the court's 2006 decision. The plan also minimized any current fiscal disruption to the state and local jurisdictions. The Department did not offer a critique of this plan or present an alternate refund plan.

 
Refund Amount

 

The State Board of Equalization approved the credit amounts reflected in reports presented by the telecommunications provider at the hearing, even though the reports had not been provided to the Department during the audit. The reports contained information that allowed calculation of sales taxes collected on the charges at the county level. Exclusion of the evidence, as proposed by the Department, would have resulted in denial of the refund or credit and the retention of the improperly collected taxes by the taxing jurisdictions.

 

The full text of the case is available on the State Board of Equalization's Web site at http://taxappeals.state.wy.us.

In the Matter of Qwest Corporation, Wyoming State Board of Equalization, No. 2007-44, January 15, 2009

 
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