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Ohio revises the Commercial Activity Tax exclusion for quarterly taxpayers

Effective January 1, 2013, a taxpayer that pays the Ohio Commercial Activity Tax (“CAT”) on a quarterly basis shall apply the annual exclusion of $1 million of taxable gross receipts to the first quarter of the calendar year. Any unused portion of the exclusion amount may be carried forward to subsequent quarters within the same calendar year. Taxpayers may not carry forward any unused exclusion amount to the following calendar year.

Under prior law, a quarterly taxpayer would exclude up to $250,000 of taxable gross receipts on each of the four quarterly returns in a calendar year and could carry forward any unused exclusion amount for three calendar quarters.

The CAT is an annual tax imposed on the privilege of doing business in Ohio, which is measured by gross receipts from business activities in Ohio.

Ohio Consumer's Use Tax Amnesty Program ends soon

The Ohio Department of Taxation has reminded taxpayers that Ohio’s Consumer’s Use Tax Amnesty Program (the “Tax Amnesty Program”) ends Wednesday, May 1, 2013.

The use tax was passed into law in the 1930s as a companion tax to the sales tax. In general, a taxpayer either pays the sales tax to a vendor or self-assesses and remits a use tax to the Ohio Department of Taxation for taxable purchases of tangible personal property or certain services.

The Tax Amnesty Program is intended to help Ohio businesses who are unaware of the use tax or behind on paying their use tax obligations to pay their past use tax liability without incurring additional penalties or interest. Companies that are behind on their use tax obligations and have not received an assessment notice may qualify for amnesty. To be considered for amnesty, the Tax Amnesty Program application must be postmarked by May 1, 2013.

Click here for more information.

California proposed legislation – Repeal of net operating loss carryback

On February 21, 2013, a bill (AB 769) was introduced to the California State Assembly that would repeal all provisions in the California tax law that allow individual and corporate taxpayers to utilize net operating loss carrybacks to offset individual and corporate tax liabilities. If passed, the bill would be effective beginning with the 2013 tax year. Existing law allows net operating losses attributable to taxable years beginning on or after January 1, 2013 to be carried back to the two preceding tax years. 

Click here to review the text of AB 769.

Missouri – House of Representatives sends tax amnesty bill to Senate

On February 20, 2013, the Missouri House of Representatives sent H.B. 55 to the Senate. If signed into law, this bill would provide taxpayers the opportunity for tax amnesty from the assessment or payment of all penalties, additions to tax, and interest arising from tax liabilities due, or due but unpaid on or before December 31, 2012. This bill would apply without regard to whether the penalties, additions or interest were previously assessed. However, any payments made before August 1, 2013 with respect to penalties, additions to tax and interest paid would not qualify for amnesty under the program.

As with most tax amnesty programs, the benefits can be great but the time to take advantage of the program would be limited. If the bill is passed, acceptance into the program will require completion of an application and the payment of all unpaid taxes or taxes due and still owed. Submission of the application and payment of the underlying taxes must occur between August 1, 2013 and October 31, 2013.

Click here to review the text of H.B. 55.

Virginia transportation bill relies on federal “remote seller” legislation not yet signed into law

As states seek new ways to raise revenue, the Virginia House and Senate approved a transportation bill (H.B. 2313) containing provisions to use a majority of sales taxes collected from online sellers to fund approximately a quarter of the package. The problem? Virginia (and other states) currently lacks the authority to enforce existing sales tax laws on remote sellers. As discussed in a previous alert, the Marketplace Fairness Act of 2013 (the "Fairness Act") is federal legislation that, if signed into law, would enable the states to tax such remote sellers.  

Alternatively, the bill includes a provision that will raise the state gas tax if a federal law enabling states to tax remote sellers, such as the Fairness Act, is not signed into law by January 1, 2015.

This new Virginia bill demonstrates how readily states would adopt laws to enable them to require remote sellers to collect and remit state sales taxes. It also is some indication of how likely Virginia lawmakers see the prospect of Congress passing legislation enabling states to collect sales tax from remote sellers in the near term. 

Click here to review the text of H.B. 2313.

For additional information regarding these subjects or any other multistate tax issues, please contact:

David M. Kall

216.348.5812

dkall@mcdonaldhopkins.com

Susan Millradt McGlone

216.430.2022

smcglone@mcdonaldhopkins.com

Jeremy J. Schirra

216.348.5444

jschirra@mcdonaldhopkins.com

Multistate Tax Services

Businesses must be vigilant and careful in managing their state and local tax liabilities and exposures. We understand this can be a daunting task. McDonald Hopkins Multistate Tax Services provides a broad range of state and local tax services including tax controversy, tax evaluation, tax planning, and tax policy. With professionals who have worked both inside and outside government agencies, our multistate tax team leverages its knowledge and experience to help clients control their complex multistate taxes.

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