RSSM CPA LLP

Certified Public Accountants & Strategic Advisors

 

RSSM SALT Alert

New Tax Developments from New Jersey, Connecticut, Massachusetts & California

Dear Clients and Friends of the Firm:

 

RSSM CPA LLP is pleased to provide new tax developments for the following States:

 

New Jersey

 

Personal Income Tax - Statute of Limitations Prevented Refund

In the case Bernard v. Director, Division of Taxation, N.J. Tax Ct., Dkt. No. A-1445-13T4 02/23/2015, the New Jersey Superior Court, Appellate Division, has upheld a ruling of the Tax Court that the Division of Taxation properly denied a taxpayer's refund claim because it was barred by the 3-year statute of limitations. The taxpayer contended that his refund claim was timely filed because an exception to the statute of limitations is provided for when the refund claim results from the readjustment of taxes paid to another state. The taxpayer did not claim a credit for income taxes paid to another state until he filed his amended income tax return more than three years later. The term "readjustment" refers to situations in which the other state adjusts the income tax on which a credit was claimed but does not apply to a situation where the taxpayer failed to claim a credit for income taxes paid to the other state until the amended return was filed. Therefore, the exception to the statute of limitations provided by the statute did not apply to the taxpayer.

 

Connecticut

 

Budget Proposals

 

In his FY 2016 - FY 2017 Biennial Budget Address on February 18, 2015, Connecticut Governor Daniel Malloy presented a budget proposal that would affect various taxes.  With respect to sales tax, there would be a phased-in a reduction in the sales tax rate.  This would be offset by the elimination of the recently enacted clothing exemption and reduce the sales tax free week as well as imposing the sales tax on such items as groceries, medical supplies and textbooks which are currently exempt. With respect to businesses, the proposal eliminates the $250 biannual business entity tax. However, the revenue loss would be offset by the following: the scheduled sunset of the 20 percent corporation tax surcharge is eliminated thereby keeping the corporate rate at 9 percent rather than allowing it to return to 7.5 percent; the use of net operating losses is capped at 50 percent of liability,  and the use of tax credits is capped at 35 percent of tax liability for calendar year 2015, 45 percent in 2016, and 60 percent in 2017 and thereafter. For individuals, the proposal delays the restoration of the Earned Income Tax Credit which in 2016 was supposed to be increased from 27.5% of the federal credit to 30% of the federal credit.

 

Massachusetts

 

Proposed Corporate Tax Amnesty for 2015
 

On February 12, 2015, the Massachusetts Legislature passed and provided the governor, a bill addressing the fiscal year 2015 budget shortfall, which authorizes the Commissioner of Revenue to establish a 2-month tax amnesty program within fiscal year 2015 to be determined by the Commissioner during which certain taxpayers can file and pay certain delinquent taxes without penalty. All required payments must be made on or before June 30, 2015. The amnesty program, however, does not authorize the waiver of interest or any amount treated as interest. The scope of the program, including the particular tax types and periods covered, including any limited look-back period for unfiled returns, will be determined by the Commissioner; provided, however, that the Commissioner must include, but not be limited to corporate excise. The Commissioner must maintain records of the penalties waived under the tax amnesty program and must file a report detailing the information with the clerks of the senate and the house of representatives, the joint committee on revenue, the house and senate committees on ways and means and the house and senate minority leaders not later than September 1, 2015.

 

California

 

FTB Discusses E-file Requirement for Business Entities

 

The California Franchise Tax Board (FTB) has issued a new publication (California FTB Informational Publication No. 1308, 01/01/2015) that discusses the California law that effective January 1, 2015, for tax years beginning on or after January 1, 2014, requires business entities (including corporations and certain exempt organizations) that prepare an original or amended return using tax preparation software to electronically file (e-file) their return with the FTB. This law does not apply to the filing of Form 109 (Exempt Organization Business Income Tax Return). The FTB may grant a waiver if it determines that the business entity is unable to comply with the requirements due to, but not limited to, the following reasons: technology constraints; compliance would result in undue financial burden; or circumstances that constitute reasonable cause and not willful neglect. Waiver requests may be submitted by completing a simple, fillable online form that is available on the FTB's website.

 

Special Local Taxes

 

Los Angeles Mayor Eric Garcetti has approved a Los Angeles City Council ordinance (Ordinance No. 183419, effective 03/20/2015) that lowers the business tax rate on professions and occupations over time, amends certain provisions of the business tax code and repeals certain others so as to consolidate several business classifications into two sections.

 

Should you have any additional questions, please feel free to contact Steven J. Eller at (212) 303-1051 or via email at seller@rssmcpa.com.

 

Sincerely,


RSSM CPA LLP