IRS Announces Interest Rates for Calendar Quarter Beginning April 1, 2009 (IR-2009-21; Rev. Rul. 2009-7)

The IRS has announced that the interest rates for the calendar quarter beginning April 1, 2009, will drop one percentage point, to 4 percent for overpayments (3 percent in the case of a corporation), 4 percent for underpayments and 6 percent for large corporate underpayments. The interest rate for the portion of a corporate overpayment exceeding $10,000 is 1.5 percent. The interest rates are computed by using the federal short-term rate based on daily compounding determined during January 2009.

The Internal Revenue Code provides that the rate of interest is to be determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points, and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half of a percentage point.

2009FED ¶46,288

Rev. Rul. 2009-7, 2009FED ¶46,289

Rev. Rul. 2009-7, FINH ¶30,616

Rev. Rul. 2009-7, ETR ¶66,872

Other References:

Code Sec. 6601

CCH Reference - 2009FED ¶174.01

CCH Reference - 2009FED ¶175.01

CCH Reference - 2009FED ¶175.30

CCH Reference - ETR ¶102

CCH Reference - ETR ¶50,615.01

Code Sec. 6621

CCH Reference - 2009FED ¶39,455.01

CCH Reference - 2009FED ¶39,455.51

CCH Reference - FINH ¶15,685.01

CCH Reference - FINH ¶15,685.30

Code Sec. 6622

CCH Reference - 2009FED ¶39,465.01

Tax Research Consultant

CCH Reference - TRC ACCTNG: 33,204.15

CCH Reference - TRC PENALTY: 9,152

North Carolina --Sales and Use Tax: Legislation Targeting Online Retailers Introduced

A bill has been introduced in the North Carolina Senate that would enact a presumption of nexus for certain online retailers and extend the sales and use tax to digital products.

The legislation would create a rebuttable presumption that an online retailer is soliciting business in the state, for sales and use tax purposes, if an in-state entity refers customers to the retailer by a link on a Web site in return for a commission or other consideration. The legislation is essentially identical to the so-called Amazon law that was enacted by New York in 2008 and upheld by a New York state court in January. The presumption under the North Carolina legislation would, as in the New York law, only apply when the retailer's cumulative gross receipts from sales to customers referred to the retailer by in-state entities exceed $10,000 in the preceding year. The presumption could be rebutted by proof that the in-state entity did not engage in any solicitation in the state on the retailer's behalf that would satisfy the nexus requirement of the U.S. Constitution.

 Digital Products

The legislation also would extend the general state sales and use tax rate to the sales price of an audio or audiovisual work, a book, and computer software that is delivered or accessed electronically and would be subject to sales and use taxes, as specified, if sold in a tangible medium. In addition, the retail sale of a digital code that is used to obtain any such items would be considered a sale of that item. The tax would be applicable regardless of whether the purchaser of the item has a right to redistribute it, to use it permanently, or to use it without making continued payments. The proposed definitions in the bill are similar to the uniform definitions in the Streamlined Sales and Use Tax (SST) Agreement.

Subscribers can view the bill as introduced.

S.B. 487, introduced in the North Carolina Senate on March 9, 2009, and referred to the Senate Committee on Finance on March 10, 2009

Rhode Island --Multiple Taxes: Proposed Budget Contains Corporate Income Tax Phase-Out, Cigarette Tax Increase, and Other Tax Changes

Rhode Island Gov. Donald L. Carcieri's proposed budget contains numerous tax changes, including (1) phasing out the corporate income tax, (2) revising the personal income tax, (3) expanding the insurance companies gross premiums tax, (4) increasing the inheritance tax exemption amount, and (5) raising the cigarette tax.

Corporate income tax proposals: Under the proposed budget, the corporate income tax would be phased out. The current tax rate is 9%, but it would be reduced to 7.5% on January 1, 2010, 6% on January 1, 2011, 4% on January 1, 2012, 2% on January 1, 2013, and 0% on January 1, 2014. In its place, a tiered minimum tax would be instituted, with payments ranging from $450 to $10,000. No combined reporting would be allowed.

Personal income tax proposals: The personal income tax would be significantly revised so that there are fewer modifications to adjusted gross income. Only a standard deduction and personal exemptions (indexed to inflation) would be permitted. The number and tax rates of the taxable income brackets would be reduced so that rates ranged from 3.5% to 5.5%. Capital gains income would be taxed at the same rate as all other income. Finally, after 2010, only four credits would be available: income taxes paid to other states, earned income tax, property tax relief, and lead paint abatement.

Insurance companies gross premiums tax proposals: The insurance companies gross premiums tax would be expanded to include nonprofit hospital service corporations, nonprofit medical service corporations, nonprofit dental service corporations, health maintenance organizations, and Title XIX managed care health plans.

Inheritance tax proposals: The inheritance tax exemption would be increased from $675,000 to $1,000,000. The proposal would become effective on January 1, 2010.

Cigarette tax proposals: The governor also reintroduced his proposals for the supplemental budget for 2009, which included an increase in the state cigarette tax from $2.46 to $3.46 per pack of 20 cigarettes. The supplemental budget proposal was previously reported. (TAXDAY, 2009/01/12, S.23)

The governor's proposed budget and other supporting documents can be found at http://www.budget.ri.gov/CurrentYear/GovernorsBudget.php.