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
Temporary Suspension of IRP and IFTA Requirements: The Alabama Department of Revenue (Department) published an Order entered January 15, 2024, declaring that because there is a state of emergency resulting from the winter weather event, there is a temporary suspension of the requirements associated with the International Registration Plan and International Fuel Tax Agreement for any motor vehicle engaged in interstate disaster relief efforts which will be traveling through Alabama as part of the disaster relief. The Department states that nothing in the Order shall be construed to allow any vehicle to operate in Alabama without a valid registration and insurance from its base state, nor shall anything in the Order be construed to allow any vehicle to exceed weight limits posted for bridges and like structures, among other requirements which are not altered by the Order. This Order is effective until 30 days after the signing of the Order. More information can be found here.
District of Columbia
Credits Emphasized for 2024 Tax Season: On January 23, 2024, the Office of Tax and Revenue (OTR) published an announcement by Mayor Bowser encouraging residents to explore available credits, incentives, and resources ahead of the 2024 tax season which begins January 29 and ends April 15, 2024. The OTR in this announcement specifically references and provides information regarding the Federal Earned Income Tax Credit, the District's Income Tax Credit, the District's Keep Child Care Affordable Tax Credit, and the District's Disabled or Senior Citizen Property Tax Relief. The OTR also references and provides information in this announcement regarding the free tax preparation locations and financial assistance that may be available to its residents. More information can be found here.
Florida
2024 Governmental Leasehold Intangible Tax Valuation Table: On January 12, 2024, the Florida Department of Revenue (Department) published Tax Information Publication No: 24C02-01 which includes the 2024 governmental leasehold intangible tax valuation factor table. In this Publication, the Department states that Florida law requires that all leasehold estates or related possessory interest in property of the United States, the State of Florida, or any of its political subdivisions or other governmental units are taxed as intangible personal property under certain circumstances. The Department further states in this Publication that these leaseholds are taxed as intangible personal property if the leased property is undeveloped or predominantly used for residential or commercial purposes and rental payments are due in consideration of the leasehold estate or possessory interest. Further, the Department states that unless the leasehold estate qualifies for specific exemptions, lessees of governmentally owned property are required to file an annual intangible tax return. The Department also states in this Publication that the just value of a lessee's leasehold estate or possessory interest reported on the tax return is determined by the rent payments for the remaining term of the lease, at the Federal Reserve-Atlanta-discount rate on the last business day of the previous year, plus one percent. This Publication also includes contact information for the purposes of submitting questions to the Department. More information can be found here.
Georgia
Proposed Rule Amendment Regarding Consolidated Returns: On January 16, 2024, the Georgia Department of Revenue (Department) published Notice IT-2024-1 which gives notice that the Department intends to amend Rule 560-7-3-.13 which provides guidance concerning the filing of consolidated corporate income tax returns. The Department states in this Notice that the proposed amendment will be considered at a regulation hearing to be held on February 20, 2024, at the time and address set forth in the Notice. Further, the Department states that all comments regarding this proposed amendment must be received no later than the time set forth in the Notice, with electronic comments being sent to the email address set forth in that Notice. According to the synopsis of the proposed amendment, which is attached to the Notice, the purpose of the amendment is to bring the Rule into conformity with current Georgia law and to clarify certain provisions of the Rule, including incorporation of certain provisions that were enacted during the 2021-2022 Session of the General Assembly. More information can be found here.
Louisiana
Guidelines for Ending PTE: Louisiana law allows entities taxed as S corporations or partnerships for federal income tax purposes (PTEs) to elect to be taxed as if they were C corporations for state income tax purposes. Ending that election is the subject of recently introduced guidelines by the Louisiana Department of Revenue (Department), as reported in the Louisiana Register December 2023 issue. These changes follow the implementation of Act 450, effective from August 1, 2023, which presents an alternative method for PTEs to retract their decision to be taxed at the entity level. Under the previous regulations, a PTE's revocation of its election required a formal written request to the Department, supported by the consent of a minimum of 50 percent of its owners. The newly proposed regulations suggest a streamlined termination procedure via Form R-6983, Termination of the Pass-Through Entity Tax Election, allowing an individual representing the entity to file for termination. This process necessitates either the written consent of owners representing at least half of the entity's capital account balances or a significant alteration in circumstances, excluding tax increases resulting directly from the election. Post-termination, the entity, or any successor, is barred from reapplying for the election for a period of five tax years. Furthermore, Act 450 extends the passthrough income exclusion to include estates and trusts that are PTE shareholders, permitting individual beneficiaries to omit this income on their state income tax returns in Louisiana. More information can be found here.
Maryland
Legal Division Now Accepting Petitions for PLRs: On January 9, 2024, the Comptroller of Maryland (Comptroller) issued a News Release stating that Private Letter Ruling (PLR) petitions are being accepted. As referenced in this Release, as well as in the Comptroller's Technical Bulletin No. 44 (see our January SALT Select edition), PLRs are an important tool for taxpayers seeking certainty for tax treatment when they have a certain fact situation that is not addressed in other guidance. Further, the Comptroller states in this Release that because a PLR is binding on the Comptroller, the taxpayer has financial certainty regarding the transaction that is subject to the PLR, which reduces financial risk. The Comptroller states that a PLR is binding on the Comptroller for seven years unless revoked, modified, or voided. More information regarding a PLR, together with and in regard to a request for PLR, can be found here.
Mississippi
Fair Market Value for Cannabis Excise Tax: On January 1, 2024, the Mississippi Department of Revenue (Department) issued Notice 72-24-01 addressing the fair market values for cannabis excise tax beginning January 1 through July 1, 2024. The Department states in this Notice that a five percent excise tax is applied to the sales price of a cultivation facility's first sale or transfer of cannabis flower or cannabis trim to a medical cannabis establishment with no common ownership; and that a five percent excise tax is calculated using the fair market value of the cannabis flower or cannabis trim on the first sale or transfer of the cannabis flower or cannabis trim to a medical cannabis establishment having common ownership with the cultivator. The Department states in this Notice that the fair market value is only used when the cultivator shares common ownership with the medical cannabis establishment. The Department also sets forth in the Notice the fair market value of cannabis flower and trim sold to a common interest establishment effective on January 1, 2024. The Department notes in this Notice that the fair market value of cannabis flower and cannabis trim will be recalculated and adjusted twice per calendar year on January 1 and July 1. More information can be found here.
North Carolina
2024 Excise Tax Rate for Motor Fuels: The North Carolina Department of Revenue (Department) recently released a Memorandum setting the excise tax rate for motor fuels and alternative fuels for the period of January 1, 2024, through December 1, 2024. The Department states in this Memorandum that the excise tax rate for such fuels will decrease from 40.5 cents to 40.4 cents per gallon or gallon equivalent. The Department states that the inspection tax will remain at .0025 cents per gallon or gallon equivalent. Contact information is included in this Memorandum for any questions. More information can be found here.
South Carolina
Deed Recording Fee Manual Update: On January 9, 2024, the South Carolina Department of Revenue (Department) issued Revenue Ruling #24-1 addressing the South Carolina deed recording fee. The Department states in this Ruling that South Carolina imposes a deed recording fee for the privilege of recording a deed in which land and improvements on the land, tenements, or other realty is transferred to another person, with the fee being $1.85 for each $500, or fractional part of $500, of the realty's value as determined under South Carolina law. The Department notes in this Ruling that the grantor is liable for the payment of the fee, or if there is more than one grantor, the grantors are jointly and severally liable for the payment of the fee, with the grantee being secondarily liable for the payment of the fee. The Ruling further notes that a variety of advisory opinions have been issued concerning the deed recording fee since it was enacted in 1996 and that the Deed Recording Fee Manual has not been updated since 2018. As a result, the Department has worked to consolidate the information of the relevant advisory opinions into an updated Deed Recording Fee Manual. The Department states in this Ruling that the January 2024 Deed Recording Fee Manual will serve all purposes that a Revenue Ruling would serve on all topics addressed in this Manual. More information can be found here.
Tennessee
Natural Disaster Tax Relief Notice: The Tennessee Department of Revenue (Department) recently posted Notice #24-01 addressing tax relief which is the result of December 2023 severe storms and tornados in Tennessee. The Department states in this Notice that consistent with the Internal Revenue Service’s decision to extend federal deadlines for those businesses located in designated disaster areas relating to the December 9 storms, the Department has extended the franchise and excise tax filing and payment deadlines to June 17, 2024. This extension, according to the Department, applies to all taxpayers located in any disaster area designated by the Federal Emergency Management Agency, and currently, such disaster area includes Davidson, Dickson, Montgomery, and Sumner counties – but taxpayers located in areas later designated as disaster areas will automatically receive the same filing and payment extension. The Department notes that this tax relief postpones the franchise and excise and payment deadlines that occur starting December 9, 2023; and that affected businesses and individuals will have until June 17, 2024, to file such returns and to make payments (including quarterly estimated payments) originally due during this period. Further, the Department notes that although these extensions cannot be applied automatically, the Department will approve on a case-by-case basis, the extension requests from taxpayers with respect to sales and use tax, business tax, and other taxes impacted by the December storms. More information can be found here.
Texas
Increase to the No Franchise Tax Due Threshold: The Comptroller's Office published a reminder for reports originally due on or after January 1, 2024, that recently enacted legislation increases the no tax due revenue threshold to $2.47 million and prohibits the Comptroller's Office from requiring taxable entities whose annualized taxable revenue is at or below the revenue threshold to file a No Tax Due Report. The Comptroller also noted in this reminder that the enacted legislation also repealed the requirement that a new veteran-owned business file a No Tax Due Report during its initial five-year exemption period. Further, the Comptroller noted in this reminder that because taxable entities whose annualized total revenue is at or below the no-tax revenue threshold, and qualifying new veteran-owned businesses are no longer required to file the No Tax Due Report, the Comptroller is discontinuing the No Tax Due Report for the 2024 report year and beyond. This reminder then reviews how various types of entities will report (or not report) beginning with the 2024 report. More information can be found here.
