State and local taxes impact almost every taxpayer, and developments in any one jurisdiction can be frequent and sometimes confusing. ln this newsletter edition, we will briefly summarize selected state and local tax (SALT) developments in several states which may be important to you.

Alabama

Sales/Use Tax Certificate Exemption Projects: The Alabama Department of Revenue (Department) recently announced that as to Statutorily Exempt Entities, as defined in Code Section 40-23-1, contractors and subcontractors will be eligible to apply for a Sales and Use Tax Certificate of Exemption for Governmental/Statutorily Exempt Entity Projects that begin on or after January 1, 2024. The Department noted in this announcement that to obtain the Exemption Certificate, the taxpayer must have a My Alabama Taxes account; and must log in to My Alabama Taxes, click on the "Other Actions" tab, and locate the "Apply for a Certificate of Exemption for Government Entity/Statutorily Exempt Entity Project" link. Afterward, the Department stated that the taxpayer must follow the required steps and submit the required documentation. Further, the Department noted that effective February 12, 2024, which is the effective date of amended Rule 810-6-3-.77, contractors and subcontractors will be able to apply and request extensions electronically for each project through My Alabama Taxes; and no longer be required to submit a monthly consumer use tax return on exempt purchases. Contact information is provided in this announcement for additional information. More information can be found here.

District of Columbia

IRS Combined Federal/State Filing Program: The Office of Tax and Revenue (OTR) has announced that the District is participating in the IRS Combined Federal/State Filing program starting with filings in 2024 for tax year 2023. However, OTR also said that the District will require a separate filing for tax year 2023 via bulk upload or online data entry on OTR's tax portal, MyTax.DC.gov, even when the taxpayer is an approved filer in the Combined Federal/State Filing program. Information on filing on MyTax.DC.gov is set forth in this announcement. More information can be found here.

Florida

Farm Tax Exempt Agricultural Materials (TEAM) Card Program: On February 10, 2024, the Florida Department of Revenue (Department) issued Tax Information Publication No.: 24A01-01 addressing the new TEAM Program, which is effective January 1, 2024. As the Department noted in this Publication, the Department has begun issuing TEAM Cards to farmers who applied to and were approved by the Department. The Department further noted that those TEAM Cards provide a different method for qualifying farmers to claim certain sales tax exemptions provided under Florida law on items purchased for agricultural use. Farmers who have been issued a TEAM Card can present the plastic, wallet-sized card to selling dealers instead of preparing a paper exemption certificate for each purchase. The Department noted that farmers who do not qualify for a TEAM Card or do not wish to obtain a TEAM Card may continue to provide an exemption certificate to purchase items for agricultural purposes tax-exempt; and the exemption certificate must contain the purchaser's name and address, the reason the item qualifies for exemption, and the signature of the purchaser or an authorized representative of the purchaser. The Department also noted in this Publication that selling dealers are required to document the exempt nature of their tax-exempt sale, and dealers who make a tax-exempt sale to a qualified farmer who presents a TEAM Card are required to obtain a copy of the farmer's TEAM Card for purposes of documenting exempt sales to the farmer during the effective period of the Card. The Department also noted in this Publication that a selling dealer who accepts the TEAM Card in good faith will not be liable for any tax due on sales made to a farmer during the effective period indicated on the Card. Further, instead of obtaining a copy of the farmer's TEAM Card, a selling dealer, according to the Department, may document the exempt sale by requesting a transaction authorization number, valid for a single transaction only, from the Department prior to the time of sale. Additionally, with respect to selling dealers who make sales to a purchaser who presented an exemption certificate for items purchased for agricultural use, the Department noted in this Publication that the dealer only is required to obtain one certificate for sales made for the purposes indicated on the certificate, and that selling dealers are not required to obtain an exemption certificate for subsequent sales made to the same purchaser for the exempt purposes indicated on that certificate. Contact information is provided in this Publication for questions. More information can be found here.

Georgia

Revised Employer's Withholding Tax Guide for 2024: The Georgia Department of Revenue (Department) recently published an updated version of the Employer's Withholding Tax Guide for 2024. This Guide contains answers to frequently asked questions, electronic filing information, withholding tax tables, and general withholding tax information. The Department has included within this Guide contact information for assistance with information within the Guide. More information can be found here.

Louisiana

Partnership Filing Requirements for 2023: On February 6, 2024, the Louisiana Department of Revenue (Department) issued Revenue Information Bulletin No. 24-008 regarding the partnership filing requirements for the 2023 tax year, and in particular to address the administrative filing relief for eligible partnerships pending finalization of the rulemaking process. As stated by the Department in this Bulletin, partnerships are required to file an informal return with the Department using Form IT-565, and include all required schedules and attachments. The Department then noted that except as provided otherwise in the Bulletin, a return is required for all partnerships doing business in Louisiana or any partnership deriving any income from Louisiana sources. As also noted by the Department in this Bulletin, an eligible partnership is exempt from filing an estate partnership return if one or more of the following provisions apply: (i) the partnership's gross receipts were less than $250,000 and the partnership's total assets at the end of the tax year were less than $1,000,000; (ii) the partnership is not required to file IRS Form 1065 with the Internal Revenue Service; and (iii) the partnership elected to be taxed as a corporation with the IRS and files Form CIFT-620 with the Department. Nevertheless, and regardless of the foregoing exceptions, the following two types of partnerships are required to file with the Department: (x) partnerships that are required to attach Schedule 6922, Louisiana Composite Partnership to the IT-565; and (y) partnerships that have any partners or related parties with an approved pass-through entity election on file with the Department. More information can be found here.

Maryland

Employer Withholding Guide Updated for 2024: The Comptroller of Maryland (Comptroller) recently issued the Employer Withholding Guide as revised December 2023. The Comptroller in the Guide states that the Guide is effective January 2024 and includes local income tax rates that were current at the time the Guide was developed but cautioned that the Maryland Legislature may change these tax rates when in session. The Comptroller states that changes can be found at the Comptroller's website at www.marylandtaxes.gov. Additionally, the Comptroller states that the instructions in this Guide include percentage formulas to determine the amount of income tax to be withheld from employees' wages. Further, the Comptroller states that additional assistance can be found at the contact information set forth in this Guide. More information can be found here.

Mississippi

Updated Electing Pass-Through Entity FAQs: As reported in our September 6, 2023, Newsletter, the Mississippi Department of Revenue (Department) issued frequently asked questions (FAQs) regarding the amended laws pertaining to the election of pass-through entity status for Mississippi income tax purposes. On March 4, 2024, the Department published updated FAQs regarding the election to be treated as an electing pass-through entity. These updated FAQs cover a wide range of issues, including what type of entity can elect to be treated as an electing pass-through entity; how does a pass-through entity make such elections; when is the pass-through entity election required to be made; the impact of the election with respect to multiple layers of ownership; are electing pass-through entities required to make estimated tax payments; how is the tax credit for taxes paid on the electing pass-through entity calculated; and does a non-resident partner have to file a Mississippi Non-Resident Individual Income Tax Return if his/her only income in Mississippi is from the electing pass-through entity? More information can be found here.

North Carolina

Tax Credits Involving Partnership: On March 15, 2024, the North Carolina Department of Revenue (Department) issued an Important Notice addressing tax credits involving partnerships. In that Notice, the Department stated that in September 2018, the Department issued an Important Notice concerning tax credits involving partnerships, but very recently the North Carolina Business Court issued decisions addressing tax credits involving partnerships. Those Business Court decisions, as referenced in this Notice, are McCabe v. N.C. Department of Revenue (April 3, 2023) and N.C. Farm Bureau Mutual Insurance Company v. N.C. Department of Revenue (April 3, 2023). The Department goes on to state in such Notice that considering the Business Court decisions, the 2018 Important Notice is withdrawn, and the Department will administer the law consistent with those decisions. The Department further states that this Notice is effective as of March 14, 2024, and that any questions about this Notice may be e-mailed to the Department at the e-mail address set forth in the Notice. More information can be found here.

South Carolina

Sale/Rental of Digital Textbooks Exempt from Sales/Use Tax: On March 18, 2024, the South Carolina Department of Revenue (Department) issued Private Letter Ruling #24-2 addressing the question of whether sales and rentals of digital textbooks are exempt from the sales and use tax as "textbooks" under South Carolina law. In this Ruling, the Department referred to several provisions of South Carolina sales and use tax laws, including that communication services are subject to sales and use taxes; and that such communication services include the ways or means for the transmission of the voice or messages, including the charges for use of equipment furnished by the seller or supplier of the ways or means for the transmission of the voice or messages. Additionally, the Department noted that one of the several exemptions from the tax includes textbooks, books, magazines, periodicals, newspapers, and access to online information systems used in a course of study in primary and secondary schools and institutions of higher learning. Further, the Department noted that such exemption for textbooks includes such items in any form but does not include the ways or means for the transmission of the voice or messages. Thus, the Department noted in this Ruling that unless textbooks are the ways or means for the transmission of the voice or messages, then textbooks, and online information systems used in the course of a study for and used in institutions of higher learning, are exempt from the tax regardless of the format. After reviewing the true object test, the Department concluded in this Ruling that the digital textbooks sold by the taxpayer in this Ruling are textbooks used in a course of study in institutions of higher learning and are thus exempt from the sales and use taxes. The Department also noted that this advisory opinion is issued to the taxpayer requesting the Ruling based on the assumption that the taxpayer's facts and circumstances, as stated, are correct. More information can be found here.

Tennessee

Select Informal Conference Summaries Published: On February 9, 2024, the Tennessee Department of Revenue (Department) released a summary of certain selected informal conference summaries pertaining to decisions rendered by the Department's Administrative Hearing Office. The tax topics addressed in these summaries include personal liability for taxes; successor liability; lack of records; consumer use tax; sales and use tax; business tax; franchise and excise taxes; and miscellaneous other taxes. These informal conference summaries relate to decisions by the Hearing Office during the State's fiscal year ending June 30, 2023. While the informal conference summaries can offer some insights on particular issues, a conference decision is not to be referenced or cited as precedence in any instance or as guidance unless the guidance has been published or publicized consistent with Tenn. Code Ann. Section 67-1-1438(h). In this regard, Section 67-1-108 defines "published guidance" as meaning tax manuals, important notices, statements presented in a question-and-answer format, or other substantive statements from the Department regarding the taxability of a privilege that are published on the Department's website. More information can be found here.

Texas

Contractor's Use of Exemption Certificate: On December 1, 2023, the Texas Comptroller's Office published Ruling No. PLR20220920115231 (the "Ruling") addressing the question of whether a certain taxpayer can issue an exemption certificate to its contractor so that the contractor may purchase, free from sales tax, tangible personal property incorporated into the realty, qualifying consumable items, and taxable services purchased for the improvement of property leased to the taxpayer. The taxpayer in the Ruling leased certain unimproved land from a tax-exempt Port Authority and was required to construct certain improvements on the property. Pursuant to the terms of the lease, the permitted use of the property was for the development and operation of a depot, which will be used for the evaluation, servicing, storage, and necessary repairs of containers and associated equipment as required by various shipping lines and other customers. The Ruling references the general impact of the sales tax on each sale of taxable items in Texas, but also states that purchases used in performance of a contract to improve realty for an exempt entity are exempt from the tax. The Ruling also mentions that this exemption can apply even when the contract is between a nonexempt entity (like the taxpayer) and a contractor if the contract is an "exempt contract." Pursuant to the Texas Administrative Code, an "exempt contract" is a contract with a nonexempt entity to improve real property for the primary use and benefit of an organization exempt under Texas law. Based upon the facts and circumstances in the Ruling, the Comptroller determined that the contract for the project at issue is an exempt contract because the primary use and benefit of the lease is for the Port Authority; and, as a result, the taxpayer may issue an exemption certificate to its contractor that is constructing the improvements on the property, claiming the exemption for the improvement to realty under an exempt contract. The Ruling also states that the contractor may in turn issue exemption certificates to its suppliers for tangible personal property incorporated into the realty, qualifying consumable items, and for taxable services performed at the jobsite, that are expressly required by the construction contract and are integral to the performance of the contract and used to construct the project as referenced in the Ruling. More information can be found here.