Upcoming National Meeting

2024 Spring Conference / Audit Session

This three and a half day conference will bring multistate tax professionals, with various levels of experience in state and local income/franchise taxes and sales/use taxes together in an environment that allows for extensive interaction and exchange of information as well as updates on key SALT issues and insights regarding state tax trends and opportunities. The program is targeted to all level

books background

Newsletters & Media

Cost Conscious

ISSUE 24-08; April 19, 2024

State Corporate Income Tax Filing Methods (Part 1) – In recent years, many states have either changed or considered changing their default corporate tax filing. New Jersey adopted water’s-edge combined reporting in 2019 only to come back in 2023 with a proposal to allow the Director of Tax to “decombine” taxpayers. Maine, New Hampshire, and Vermont have studied the implementation of mandatory worl

Twitter

Bloomberg TAX

Chicago Woman Sentenced for Filing Over 900 False Tax Returns

April 23, 2024

A Chicago woman has been sentenced to one year and one day in prison in connection to a $1.3 million tax return scheme, according to the Justice Department Tuesday.

Virginia Man Pleads Guilty to Bribing Ex-Culpeper County Sheriff

April 23, 2024

A Fairfax County, Va. businessman has pleaded guilty to paying former Culpeper County sheriff Scott Jenkins thousands of dollars to make him an auxiliary deputy sheriff.

Case: Federal District Court Finds Corporate Transparency Act is Unconstitutional (N.D. Ala.)

April 23, 2024

A federal district court found the Corporate Transparency Act (CTA) is unconstitutional, entering a declaratory judgment for Plaintiffs and permanently enjoining the government from enforcing the CTA against Plaintiffs. After FinCEN's issuance of a final rule implementing the CTA, Plaintiffs, the National Small Business Association, filed suit alleging the mandatory disclosure requirements exceeded Congress's constitutional authority. In finding for the Plaintiffs, the court rejected the government's three arguments supporting constitutionality, holding (1) Congress's extensive powers over foreign affairs and national security do not extend to purely internal affairs; (2) the CTA does not regulate the channels and instrumentalities of commerce; and (3) collecting data that would be useful for tax enforcement is not sufficiently incidental to Congress's taxing power. [National Small Business United v. Yellen, No. 5:22-cv-1448-LCB (N.D. Ala. Mar. 1, 2024)]

OECD Global Minimum Tax Guidance Expected in Coming Months

April 23, 2024

The OECD will release an additional administrative guidance package on the 15% global minimum tax before the second half of 2024.

Nebraska Law Likely to Lower Future Unemployment Tax Rates

April 23, 2024

Nebraska made slight modifications to its unemployment insurance law that is intended to lower employers' experienced tax rates, under a bill that went into effect on April 16.

Democrats Urge Appeals Court to Revive Anti-Money Laundering Law

April 23, 2024

Congressional Democrats are urging the Eleventh Circuit to resurrect a law for combating money laundering after a federal court in Alabama called the statute unconstitutional.

UK Taxpayer Avoids £14 Million Value-Added Tax Penalty on Gold

April 23, 2024

The UK high court waived over £14 million ($17.35 million) in value-added tax invoicing and record-keeping penalties for a taxpayer because of its customer contracts.

Summons on Swiss Bank Paused IRS Deadline to Issue Tax Penalties

April 23, 2024

The IRS was on time asserting more than $500,000 in penalties against a couple for not reporting about $6.79 million in offshore income because the statute of limitations was suspended when the agency served a John Doe summons on a Swiss bank.

Case: Petitioner’s Loss Deduction from Disguised Sale Transaction Disallowed, Accuracy-Related Penalties Sustained (T.C. Memo) (IRC §707)

April 23, 2024

Petitioner's $22.7 million loss deduction, claimed on its 2002 Form 1065 in connection with the sale of distressed Brazilian trade receivables, was properly disallowed and accuracy-related penalties applied, the U.S. Tax Court held, ruling that Petitioner and other partnerships involved in the transaction were formed for tax avoidance purposes in violation of the partnership anti-abuse regulations and could be disregarded. In 1996, a metal products supplier (Santa Barbara), organized in Brazil, sold products to a Brazilian real estate construction company (Encol) on credit. Following Encol's bankruptcy, Santa Barbara, in August 2002, contributed the Encol receivables to newly formed XBOXT, LLC, in exchange for a 99% interest. XBOXT then transferred the majority of the receivables to Pimlico in exchange for a 99% interest. In December 2002, Howard, an investor with experience investing in distressed assets, acquired an 89% interest in Pimlico from XBOXT for $300,164 cash, and within a few days Santa Barbara received the same amount in redemption of its interest in XBOXT. Pimlico transferred the Encol receivables to Petitioner, which, in turn, sold them for $357,144. The bulk of Petitioner's claimed loss flowed through to Howard. Because the tiered partnerships were not formed for any business purpose, and the payment to Santa Barbara was not from operational profits, but rather from Howard's acquisition of his Pimlico interest, the court determined that XBOXT was formed solely as a conduit to execute a disguised sale under I.R.C. §707(a)(2)(B) of the Encol receivables, and the purpose of the redemption was to trigger a §704(c) loss allocation to benefit Howard. Accordingly, the court sustained disallowance of the loss deduction to the extent it exceeded Petitioner's transferred basis and noted it lacked evidence to determine basis. [Piccirc, LLC v. Commissioner, T.C. Memo 2024-50 (Apr. 22, 2024)]

Case: Petitioner Failed to Justify Missing Deadline to File Tax Court Petition; Motion to Dismiss Granted (T.C. Memo) (IRC §6330)

April 23, 2024

Petitioner was not entitled to review of a determination sustaining a notice of intent to levy because his petition was filed after the 30-day deadline specified in I.R.C. §6330(d)(1), and Petitioner failed to allege facts that would entitle him to equitable tolling of the deadline, the U.S. Tax Court held in a memorandum opinion, granting the government's (recharacterized) motion to dismiss for failure to state a claim. In 2021, Petitioner received a notice of deficiency attributable to unpaid taxes for 2014. Petitioner requested a collections due process hearing, but failed to file tax returns for 2015-2021 or submit financial documents, and therefore was ineligible for collection alternatives. More than 120 days after receiving a notice of determination, Petitioner mailed a letter to the Tax Court, which was filed as his petition. Petitioner failed to respond to the court's order requesting an explanation as to why he was unable to file within the 30-day deadline. Thus, the court recharacterized the government's motion for summary judgment as a motion to dismiss for failure to state a claim, and granted it. [Shaw v. Commissioner, T.C. Memo 2024-48 (Apr. 22, 2024)]

Featured Resources

COST - Council on State Taxation

Amicus Briefs

Garcia, D. v. American Eagle Outfitters, Inc.

COST’s brief in the Supreme Court of Pennsylvania Western District addresses whether a class action filed under Pennsylvania’s consumer protection laws for alleged overcollections of sales tax should be dismissed.

COST - Council on State Taxation

COST Studies, Articles & Reports

Mandatory Worldwide Combined Reporting: Elegant in Theory but Harmful in Implementation

This paper documents the harmful and unnecessary implications surrounding state adoption of mandatory worldwide combined reporting (MWWCR), by Douglas L. Lindholm and Marilyn A. Wethekam of the Council On State Taxation (COST).

COST - Council on State Taxation

COST Comments & Testimony

Letter to the Legislature in Support of S.B. 150, Centralization of Accommodations Taxes

COST submitted testimony in support of Alabama legislation S.B. 150 and H.B. 220, seeking centralization of accommodations taxes.