Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...
Corporate taxpayers trying to get a bead on potential state responses to the federal tax overhaul should examine models enacted recently in Georgia, Idaho, Virginia, and West Virginia, tax practitioners said March 15.
In addition, taxpayers should pay close attention to quick-moving legislation and guidance coming out of Connecticut, Illinois, New York, and Oregon. The enacted laws and pending bills tell the story of each state’s strategy for conformity to the Internal Revenue Code as modified last year under the the 2017 federal tax act ( Pub. L. No. 115-97), tax attorneys from McDermott Will & Emery said during a presentation in Chicago for women tax professionals.
“It’s been decided at the federal level—the tax base rules—and now all the action moves to the state folks,” said Catherine A. Battin, a partner in McDermott’s Chicago office.
Battin said the state conformity debates all would flow through three essential features of state tax law:
Battin, speaking together with McDermott tax counsel Diann Smith and tax partner Alysse McLoughlin, said taxpayers should pay special attention to eight states:
Whether or not states adjust their conformity statutes this year, Smith said revenue agencies will need to at least modify their instructions to taxpayers. Such updates could prove challenging without legislative guidance, but she said the agencies have a duty to help taxpayers comply with their state codes.
“States really need to go back and look at the instructions for their returns,” Smith said. “We depend on the instructions so often because state statutes can be sparse. Now the states are going to have to figure out federal reform—that they in many cases don’t understand—and then translate that into their own return instructions. It’s a huge lift right now.”
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