State Tax Matters - October 29, 2021
State Tax MattersThe power of knowing.October 29, 2021In this issue:Income/Franchise: Alabama: Proposed New Financial Institution Excise Tax RuleExplains Federal Income Tax Deduction . 2Income/Franchise: California FTB Legal Ruling Considers Unitary Treatment of Pass-ThroughEntities and Holding Companies. 2Income/Franchise: Louisiana DOR Announces Transfer Pricing Managed Audit Program thatBegins November 1. 3Income/Franchise: Oregon: Proposed Rules Address Fiscal Year CAT Returns, AccountingPeriod Differences and Designated Filers . 4Sales/Use/Indirect: Missouri: M&E Used to Produce Vehicle History Reports Qualifies forManufacturing Exemption . 5Sales/Use/Indirect: Texas: Mobile Restaurant Ordering and Payment Platform ProviderDeemed a Marketplace Provider. 6Property: New York: New Law Revises How Assessors Value Some Commercial PropertyUsing Comparable Sales . 7Multistate Tax Alerts . 8State Tax MattersOctober 29, 2021Page 1 of 8Copyright 2021 Deloitte Development LLCAll rights reserved.
Income/Franchise:Alabama: Proposed New Financial Institution Excise Tax Rule Explains FederalIncome Tax DeductionProposed New Reg. section 810-9-1-.06, Ala. Dept. of Rev. (10/20/21). The Alabama Department of Revenueproposed a new rule involving Alabama’s financial institution excise tax (FIET) pursuant to Alabama’s FinancialExcise Tax Reform Act of 2019-284, which permits the deduction of federal income taxes paid or accruedduring the taxable year in accordance with a taxpayer’s method of accounting used in computing its taxableincome. The proposed rule generally provides that a cash basis taxpayer must deduct federal income tax in theyear paid, while an accrual basis taxpayer must deduct federal income tax in the year for which the tax isaccrued, and explains how to determine the federal income tax attributable to Alabama under various federalincome tax filing scenarios and which adjustments may apply. The proposed rule includes several examplecalculations. A virtual public hearing on the proposal is scheduled for December 7, 2021, and writtencomments are due on the same date. Please contact us with any questions.URL: CARR/JCARR-OCT-21/REV%20810-9-1-.06.pdf—Chris Snider (Miami)Managing DirectorDeloitte Tax LLPcsnider@deloitte.comJoe Garrett (Birmingham)Managing DirectorDeloitte Tax LLPjogarrett@deloitte.comJohn Paek (Atlanta)PrincipalDeloitte Tax LLPjpaek@deloitte.comMeredith Harper (Birmingham)Senior ManagerDeloitte Tax a FTB Legal Ruling Considers Unitary Treatment of Pass-Through Entitiesand Holding CompaniesLegal Ruling No. 2021-01, Cal. Fran. Tax Bd. (10/25/21). A recently released California Franchise Tax Board legalruling (Legal Ruling 2021-01) considers whether, in a series of differing situations, pass-through entity holdingcompanies are unitary with other pass-through entities – ultimately concluding that pursuant to state caselawand because traditional tests for unity are not “an exact fit” in the context of pass-through entity holdingcompanies, “it becomes apparent that a unity determination in the context of pass-through holding companiesrequires additional consideration, and may expand on a traditional unity analysis.” Legal Ruling 2021-01explains that in some instances where a pass-through entity holding company holds less than a controllinginterest in an operating entity, the holding company potentially can still be unitary with the operating entity, toState Tax MattersOctober 29, 2021Page 2 of 8Copyright 2021 Deloitte Development LLCAll rights reserved.
the extent of its ownership interest in the entity – “this is because pass-through entities need not hold morethan fifty percent of an entity to be unitary with that entity.” In this respect, “if a pass-through entity holdingcompany provides value and support to the operating business, it will be properly treated as unitary with thatbusiness.”URL: 2021-01.pdfSee forthcoming Multistate Tax Alert for more details on Legal Ruling 2021-01, including related taxpayerconsiderations, and please contact us with any questions in the meantime.—Christopher Campbell (Los Angeles)PrincipalDeloitte Tax LLPcwcampbell@deloitte.comGregory Bergmann (Chicago)PartnerDeloitte Tax LLPgbergmann@deloitte.comShirley Wei (Los Angeles)Senior ManagerDeloitte Tax LLPshiwei@deloitte.comOlivia Schulte (Washington, DC)ManagerDeloitte Tax LLPoschulte@deloitte.comIncome/Franchise:Louisiana DOR Announces Transfer Pricing Managed Audit Program that BeginsNovember 1Revenue Information Bulletin No. 21-029, La. Dept. of Rev. (10/26/21). The Louisiana Department of Revenue(Department) announced that beginning November 1, 2021, it “invites eligible corporation income taxpayersto participate in a voluntary initiative aimed at proactively and efficiently resolving intercompany transferpricing issues via the Louisiana Transfer Pricing Managed Audit Program.” According to the Department, thisinitiative will utilize the managed audit program as established by La. Rev. Stat. section 47:1541(D). TheDepartment’s announcement bulletin additionally explains the new program’s eligibility requirements forinterested taxpayers, as well as procedures for approved taxpayers. To qualify for participation, theDepartment states that a taxpayer must meet the following requirements:URL: 0Program.pdf Established history of “voluntarily tax compliance” with the Department, if previously registered withthe Department;Certification that the taxpayer has available time and resources to dedicate as a participant in this newprogram;“Available and suitable records” concerning intercompany transactions; andReasonable expectation of ability to pay an expected liability.State Tax MattersOctober 29, 2021Page 3 of 8Copyright 2021 Deloitte Development LLCAll rights reserved.
Benefits of participation potentially may include abatement of underlying penalties and up to 180 days ofinterest. The Department provides that requests for approval to participate in the program must be receivedon or before April 30, 2022, and that all managed audits pursuant to this program must be closed by June 30,2022.See forthcoming Multistate Tax Alert for more details on this new program, including related taxpayerconsiderations, and please contact us with any questions in the meantime.—Robert Topp (Houston)Managing DirectorDeloitte Tax LLPrtopp@deloitte.comJoe Garrett (Birmingham)Managing DirectorDeloitte Tax LLPjogarrett@deloitte.comMichael Matthys (Houston)Senior ManagerDeloitte Tax LLPmmatthys@deloitte.comGrace Taylor (Houston)Senior ManagerDeloitte Tax LLPgrtaylor@deloitte.comIncome/Franchise:Oregon: Proposed Rules Address Fiscal Year CAT Returns, Accounting PeriodDifferences and Designated FilersProposed OAR sections 150-317-1015, 150-317-1022, 150-317-1023, Or. Dept. of Rev. (10/21/21). Reflectingrecently enacted legislation [see S.B. 164 (2021) and previously issued Multistate Tax Alert for details on newlaw in Oregon that modifies various provisions of the Oregon corporate activity tax related to fiscal year filings,insurance companies, and other exemptions and definitions], the Oregon Department of Revenue(Department) has proposed the following rule changes:URL: ocuments/NoticeFilingTrackedChanges.pdfURL: loads/MeasureDocument/SB164/EnrolledURL: ovisions-of-the-corporate-activity-tax.pdf Proposed OAR section 150-317-1015: Provides guidance to Oregon corporate activity tax (CAT)taxpayers who are required to change their tax year from a calendar year to a fiscal year or experiencechanges in their federal income tax year and are required to file a short tax period return; andprescribes the manner in which such taxpayers must calculate proration amounts for their short yearCAT returns;Proposed OAR sections 150-317-1022: Provides guidance to unitary group taxpayers whose membershave an annual accounting period that differs from the unitary group’s required annual accountingperiod; andState Tax MattersOctober 29, 2021Page 4 of 8Copyright 2021 Deloitte Development LLCAll rights reserved.
Proposed OAR sections 150-317-1023: Provides guidance for unitary groups regarding the designationof the designated filer who must register, file, and pay the CAT on behalf of the group; the proposalrequires the CAT designated filer to have substantial nexus with Oregon.A virtual public hearing to discuss these proposed changes has been scheduled for November 18, 2021, andany public comments are due on the same date.The Department also has updated its answers to related frequently asked questions (FAQs) to reflect therecently enacted CAT law changes. Under the new law, businesses filing on a fiscal year-end that are subject toOregon’s CAT are required to file fiscal-year returns beginning with the 2021 tax year; fiscal-year taxpayersmust file a short-year CAT return covering January 1, 2021 through the end of their fiscal tax year, which willbe due by April 15, 2022 [see State Tax Matters, Issue 2021-33, for additional details on these law changes].Please contact us with any businesses/Pages/CAT/CATFAQ.aspx?utm medium email&utm source govdeliveryURL: s/Tax/2021/STM/210820 4.html—Scott Schiefelbein (Portland)Managing DirectorDeloitte Tax LLPsschiefelbein@deloitte.comSara Clear (Minneapolis)ManagerDeloitte Tax LLPsclear@deloitte.comSales/Use/Indirect:Missouri: M&E Used to Produce Vehicle History Reports Qualifies forManufacturing ExemptionCase No. 18-1587, Mo. Admin. Hrg. Comm. (9/30/21). The Missouri Administrative Hearing Commission (AHC)held that a taxpayer providing vehicle history reports (VHRs) to individual consumers and automobile dealersthat buy, sell, and service used automobiles nationwide was entitled to a Missouri sales and use taxmanufacturing exemption on its purchase of certain machinery and equipment at issue – concluding that:1. The taxpayer was a qualified “manufacturer” under state law;2. The disputed items were purchased as machinery or equipment (M&E) used to expand its existing instate VHR manufacturing process;3. The disputed items were used directly in manufacturing or fabricating a product (i.e., the VHRs); and4. The VHRs were intended to be sold ultimately for final use or consumption with set prices for individualcustomers and dealer subscriptions.In doing so, the AHC rejected the Missouri Department of Revenue’s claims that the taxpayer is not amanufacturer, the VHRs are not “products,” and the VHRs were not intended to be sold ultimately for final useState Tax MattersOctober 29, 2021Page 5 of 8Copyright 2021 Deloitte Development LLCAll rights reserved.
or consumption. Under the facts, the taxpayer evaluates data and draws its own conclusions about a vehicle,such as: Whether it was well maintained in accordance with industry standards;Whether the vehicle was ever located in an area of known flooding;Whether the vehicle was driven less than industry standards;An explanation of title information such as whether the vehicle may have been a leased vehicle; andWhat the vehicle’s fair market value is based on its history.In light of these facts, the AHC reasoned that the taxpayer alters or physically changes the raw data to“produce an article with a use, identity and value different from the use, identity and value of the original.”Please contact us with any questions.—Collin Koenig (Kansas City)ManagerDeloitte Tax LLPcokoenig@deloitte.comSales/Use/Indirect:Texas: Mobile Restaurant Ordering and Payment Platform Provider Deemed aMarketplace ProviderPrivate Letter Ruling No. PLR20200218100745, Tex. Comp. (9/17/21). Referencing state law, including recentlyenacted legislation that amends the definition of “data processing service” under Texas Tax Code § 151.0035[see S.B. 153 (2021), and previously issued Multistate Tax Alert for more details on these law changes], theTexas Comptroller of Public Accounts (Comptroller) explained that a taxpayer providing a mobile ordering andpayment platform to restaurants that allows such restaurants to accept food orders from customers placedthrough a mobile application (APP) operated as a “marketplace provider,” while the APP itself constituted a“marketplace.” In doing so, the Comptroller held that under the provided facts:URL: URL: /SB00153H.pdf#navpanes 0URL: se-tax-purposes.pdf The taxpayer’s service fees (computed as a percentage of gross sales per week) and subscription feesconstitute charges for taxable data processing services as defined under Texas Tax Code § 151.0035 inthat they involve the compilation, storage, and manipulation of data for the restaurants;The taxpayer’s credit card fees (computed as a percentage plus a fixed dollar amount per transaction)are considered part of the taxable sales price of the service fees as charges for an expense that it incursState Tax MattersOctober 29, 2021Page 6 of 8Copyright 2021 Deloitte Development LLCAll rights reserved.
in providing its taxable services and thus also are taxable as data processing services as defined underTexas Tax Code § 151.0035; andThe taxpayer’s setup fee charges to cover the initial installation and configuration of the equipment,including configuring the account and developing a digital version of a restaurant’s menu, also areconsidered taxable data processing services as defined under Texas Tax Code section 151.0035 in thatthey involve data entry, storage, and manipulation to configure and add a restaurant to the APP.The Comptroller additionally explained that the taxpayer’s optional “offers fee” and “earned plus” fees, whichprovide featured ad placement to the restaurants’ clients and allow restaurants to issue reward points tocustomers as an incentive to order food, constitute nontaxable services under state law. Please contact us withany questions.—Robert Topp (Houston)Managing DirectorDeloitte Tax LLPrtopp@deloitte.comRobin Robinson (Austin)Senior ManagerDeloitte Tax LLProrobinson@deloitte.comGrace Taylor (Houston)Senior ManagerDeloitte Tax LLPgrtaylor@deloitte.comChris Blackwell (Austin)Senior ManagerDeloitte Tax LLPcblackwell@deloitte.comProperty:New York: New Law Revises How Assessors Value Some Commercial PropertyUsing Comparable SalesA.B. 894 / S.B. 5715, signed by gov. 10/25/21. Effective immediately and applicable to assessment rollsprepared on or after January 1, 2022, new law amends New York real property tax law by requiring thoseassessors using the comparable sales method for some assessments involving the value of mixed-use ornonresidential property to consider only certain comparable properties in formulating the assessment.Specifically, when determining the value of certain mixed-use or nonresidential property using the comparablesales, income capitalization or cost method, the following must be considered by the assessor when selectingappropriate sales or rentals comparable to the subject property:URL:https://nyassembly.gov/leg/?default fld &leg video &bn A00894&term 2021&Summary Y&Actions Y&Memo Y&Text YURL: https://nyassembly.gov/leg/?default fld &leg video &bn S05715&term 2021&Summary Y&Actions Y&Text YState Tax MattersOctober 29, 2021Page 7 of 8Copyright 2021 Deloitte Development LLCAll rights reserved.
1. Sales or rentals of properties exhibiting similar use or the use at the time of sale in the same real estatemarket, wherein “comparable properties should include properties located in proximate location to thesubject property unless there is an inadequate number of appropriate sales or rentals within the samemarket;” and2. Sales or rentals of properties that are similar in age, condition, use or the use at the time of sale, typeof construction, location, design, physical features and economic characteristics “including but notlimited to similarities in occupancy and market rent.”However, these new requirements “shall apply only to assessing units other than cities having a population ofone million or more” – thus excluding, among others, New York City assessments. Please contact us with anyquestions.—David Hurrell (Cleveland)Managing DirectorDeloitte Tax LLPdhurrell@deloitte.comTed Kuch (New York)PrincipalDeloitte Tax LLPtekuch@deloitte.comMultistate Tax AlertsThroughout the week, we highlight selected developments involving state tax legislative, judicial, andadministrative matters. The alerts provide a brief summary of specific multistate developments relevant totaxpayers, tax professionals, and other interested persons. Read the recent alerts below or visit the archive.Archive: /multistate-tax-alertarchive.html?id us:2em:3na:stm:awa:taxNo new alerts were issued this period. Be sure to refer to the archives to ensure that you are up to date on themost recent releases.This document contains general information only and Deloitte is not, by means of thisdocument, rendering accounting, business, financial, investment, legal, tax, or otherprofessional advice or services. This document is not a substitute for such professionaladvice or services, nor should it be used as a basis for any decision or action that mayaffect your business. Before making any decision or taking any action that may affectyour business, you should consult a qualified professional advisor. Deloitte shall not beresponsible for any loss sustained by any person who relies on this document.About DeloitteDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its globalnetwork of member firms, and their related entities (collectively, the “Deloitteorganization”). DTTL (also referred to as “Deloitte Global”) and each of its member firmsand related entities are legally separate and independent entities, which cannot obligateor bind each other in respect of third parties. DTTL and each DTTL member firm andrelated entity is liable only for its own acts and omissions, and not those of each other.DTTL does not provide services to clients. Please see www.deloitte.com/about to learnmore.State Tax MattersOctober 29, 2021Page 8 of 8Copyright 2021 Deloitte Development LLCAll rights reserved.
Michael Matthys (Houston) Senior Manager . Deloitte Tax LLP : mmatthys@deloitte.com Grace Taylor (Houston) Senior Manager . Deloitte Tax LLP : grtaylor@deloitte.com . Income/Franchise: Oregon: Proposed Rules Address Fiscal Year CAT Returns, Accounting Period Differences and Designated File
New York State Withholding Tax Tables and Methods Effective July 1, 2021 The information presented is current as of the publication’s print date. Visit our website at www.tax.ny.gov for up-to-date information.File Size: 278KBPage Count: 22Explore further2020 tax tableswww.tax.ny.gov2021 Income Tax Withholding Tables Changes & Exampleswww.patriotsoftware.comWithholding tax forms 2020–2021 - current periodwww.tax.ny.govWithholding tax amount to deduct and withholdwww.tax.ny.govWithholding taxwww.tax.ny.govRecommended to you b
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