Weekly Round-Up: IRS Earnings-Stripping Rules Under Fire; IBM’s MTC Battle Continues


Highlights from the 7/15/16 issue of the Weekly State Tax Report :

  • Debt-Equity Rules Could Face Legal Challenges: Witness
    Controversial earnings-stripping rules go well beyond the government's authority and could be challenged on legal grounds, a tax attorney said at a packed IRS hearing where most of the 18 speakers had one overarching message on the regulations: Yank them.
  • IBM Not Ceding to Michigan Repeal of Multistate Tax Compact
    On the heels of the Michigan Supreme Court denying 50 consolidated appeals over the state's retroactive repeal of the Multistate Tax Compact, IBM is continuing its fight to preserve the high court's earlier decision favoring its use of the compact's apportionment formula.
  • Bank of America Subject to Trust Tax: Massachusetts Court
    Bank of America, in its capacity as a corporate trustee of several inter vivos trusts, qualifies as an inhabitant of Massachusetts and is subject to the state's fiduciary income tax, according to the top state court.
  • Alabama Receives Extension in Newegg Online Sales Tax Suit
    Alabama's revenue department received a deadline extension for responding to Newegg's state tax tribunal appeal—one of several cases challenging states’ efforts to impose sales tax duties on e-retailers and other out-of-state companies.
  • N.Y. Tax Incentive Programs Ineffective, Lack Verification
    Two New York tax incentive programs have recently come under widespread criticism, one labeled as a failure and the other unable to verify that companies like Chobani in the program are eligible for the incentive.

Some notable developments from the State Tax Developments Tracker –Bloomberg BNA’s tool for monitoring important developments in all the states:

  • Maine Revenue Services Issues Maine Tax Alert for Tax Professionals on Tax Law Changes, IRS Update, and Staff Changes
  • Hawaii Legislature Enacts Law Regarding Administration and Taxation of Medical Marijuana
  • Oregon Tax Court Holds Deductions Disallowed to Extent Losses Exceed Gains, as Baseball Card Endeavor not Operated with Profit Objective
  • Florida District Court of Appeal Reverses Trial Court's Dismissal of Taxpayer's Complaint, Finds Property Appraiser Does Not Fulfill Tax Lien Notice Requirements
  • Louisiana Department of Revenue Publishes Revenue Information Bulletin Stating that Polyroll Tubing Does Not Qualify as Farm Equipment Pursuant to the State Law
  • Idaho State Tax Commission Affirms Notice of Deficiency Determination as Taxpayer Fails to File Corporate Income Tax Returns

For more information about this and other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library.

In other developments…

District of Columbia – Administrative law judge abused discretion in asserting estoppel against the District in transfer pricing methodology case by PricewaterhouseCoopers LLP

Compiled by Lauren Colandreo