One of the most important cases to have come out of South Carolina is Media General, Milton Kimpson, General Counsel to the South Carolina Department of Revenue, explains in this installment of Crowell's Conversations. It is second only to, if at all, the Geoffrey case, Kimpson told Walt Nagel, Don Griswold, and Jeremy Abrams, all with Crowell and Moring's state tax team. Kimpson's comments were part of a larger interview in which he spoke candidly about current tax issues facing the state, including recent cyber attacks at the department. [full text of interview available here].
In the Media General case, the Department argued that it lacked the authority to grant combination to a taxpayer who requested it, he explained. "We believed it to be right because we were, what we would refer to as a separate entity state. That's what we had done, that's what we believed the law said."
"Now, that doesn't mean that we are unhappy with the result because sometimes you need a court to clarify what the law is," Kimpson explained. "In this case, the court clarified that yes, Department, you have the ability to go to an alternate apportionment method to include combined reporting," he said. Although we lost, the Media General decision opens an ability to get to a fairer result, he said.
"When you think about it, that's all the tax agency, any taxing agency, should really want, to get to the fairest result," he said.
Kimpson explained that in the course of an audit and proposed assessment, the department may find that a combined approach may be the better route and they may eventually resolve the case based on that. "I don't know that I can say from my standpoint whether taxpayers have requested combinations and we have then granted it on the audit level," he said, indicating that it is possible. "Certainly from what I have been seeing, we have considered combinations in some of the existing audits and said, well, you know, this makes sense for everybody, let's do this," Kimpson explained. So, as a taxpayer, if you come in with a good faith belief that the standard apportionment formula does not work in your case, we will consider it, he said.
In other developments…
States weighing considerations for continued Multistate Tax Compact membership , according to a new PwC Alert.
New Tax Court Decision Highlights Need for Construction Contractors to Consider Expanded IRS Voluntary Worker Classification Settlement Program , a new Federal & State Tax Alert, by Bradley Arant Boult Cummings LLP.
State Taxes on Inherited Wealth Remain Common: 21 States Levy an Estate or Inheritance Tax , by Elizabeth McNichol of the Center on Budget and Policy Priorities.
Proposed Recommended Amendments Multistate Tax Compact Article IV , by the Multistate Tax Commission.
Public Disclosure of Tax Delinquency Letters , a new bulletin by the California Franchise Tax Board.
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