George Rendziperis, J.D. | TaxConnections

12 May 2021

SALT Alert: Texas Margin Tax Update Paycheck Protection Program(PPP) Update

On May 5, 2021, Texas Governor Greg Abbot signed into law House Bill 1195, which excludes federal PPP loans forgiveness as revenue for Texas Margin Tax (the “Margin Tax”).

In response to the COVID-19 pandemic, the U.S. Congress enacted legislation providing economic relief to businesses through the paycheck protection program, which allowed businesses to secure forgivable loans and grants in order to continue paying employees while operations were impacted due to the pandemic. While PPP loans may be forgiven under the program, the business receiving the PPP loans or grants would still be taxed on the amount of money received as part of its total revenue subject to the Margin Tax.

Written by George Rendziperis, J.D. | Posted in Paycheck Protection Program

14 Apr 2021

SALT Alert: Florida Adopts Economic Nexus Rules For Sales And Use Taxes

On April 8, 2021, the Florida legislature passed economic nexus and marketplace facilitator legislation, which the governor has indicated that he will sign the bill into law. Florida’s economic nexus law becomes effective July 1, 2021. If you are selling to customers in Florida, then you must be aware of the new nexus standards in Florida.

Highlights of the law are as follows:

The threshold of economic nexus will be $100,000 of sales during the previous calendar year (with 2020 as the initial threshold year). The law DOES NOT adopt a transaction threshold.
The law applies to sales made after July 1, 2021. However, to determine whether a seller has met the threshold on July 1, 2021, the seller’s non-marketplace sales during 2020 are compared against the $100,000 threshold.
Sales made through and taxed by a Marketplace Provider do not count towards the $100,000 economic nexus threshold and should not be reported as sales by the remote seller.
A “Marketplace Provider” is subject to the sales tax collection and remittance requirements imposed on dealers in Florida.
A Marketplace Provider is defined:

Written by George Rendziperis, J.D. | Posted in Economic Nexus • Florida Sales And Use

18 Mar 2021

Texas Margin Tax: Preparing Your Margin Tax Report

The Texas Comptroller has extended the filing deadline for the 2021 Texas Margin Report (the “Margin Report”) from May 15, 2021 until June 15, 2021. This extension aligns with the extension by the IRS which extended the federal tax deadline to June 15, 2021 for all Texas residents and businesses.

Texas imposes a tax based on taxable margin (the “Margin Tax”). The Margin Tax is imposed on the taxable margin of each taxable entity that does business in Texas or that is chartered or organized under Texas law. Almost all legal entities with limited liability protection are considered taxable entities under the Margin Tax regime, including state law limited partnerships and business trusts. However, certain legal entities are specifically excluded from the definition of a taxable entity and thus are not subject to the Margin Tax.

Written by George Rendziperis, J.D. | Posted in Texas Margin Tax • Waters-Edge Unitary Combined Basis

23 Feb 2021

How Will States Deal With Budgetary Issues?

As we begin a new year, new issues arise for states. As states are dealing with budgets for the year, spending has increased and tax revenue have decreased. The COVID-19 pandemic has changed our lives, the way we work, shop and interact with others.

A few states are seeing their residents, like California, New York and New Jersey, all high tax jurisdictions, moving to and becoming permeant residents of Florida, Texas, and Nevada, all states with low taxes or no state tax on companies or individuals.

How will states deal with these budgetary issues? Decrease spending? Increase tax rates? Expand the tax base? Tax out-of-state companies and Individuals? Increase tax credits and incentives, to attract investment? My guess, all the above, except for decreases to spending.

Written by George Rendziperis, J.D. | Posted in Freeman Law • State Budgets

17 Feb 2021

State And Local Tax: Controlling Interest Transfer Tax

Do you own an entity that holds real estate? Are you thinking about selling real estate? Are you considering selling the real estate asset or selling the entity that owns the real estate?

Generally, a real estate transfer tax is imposed on documents that convey an interest in real estate from one person to another person. The transfer tax, generally, is imposed on the recordation of a deed and is based on the consideration paid or the fair market value of the property (the “Real Estate Transfer Tax”).

Taxpayers utilized loopholes to avoid paying the Real Estate Transfer Tax, by selling the entity that owns the real estate instead of selling the real estate itself. Approximately 17 states have closed such loopholes.

Written by George Rendziperis, J.D. | Posted in Freeman Law • State And Local Tax

12 Feb 2021

Why State And Local Tax Due Diligence Is Important

Why is State and Local Tax (SALT) due diligence important in mergers and acquisitions? Someone else’s issues may be your headache and cost you a lot of money!

What is due diligence? Due diligence is the process of identifying and analyzing the risk associated with acquiring a business or selling a business. Tax risk, particularly state and local tax, is a key part of that analysis.

There are many different types of taxes that businesses should take into consideration when doing due diligence, such as property taxes; sales and use taxes; gross receipts taxes; income taxes; and franchise taxes. Each of these tax types have unique rules and implications, and state and local jurisdictions apply those taxes in different ways. It can get complex quickly based on where a company is doing business.

Written by George Rendziperis, J.D. | Posted in Freeman Law • State And Local Tax Due Diligence • Texas

11 Feb 2021

SALT ALERT: Apportionment Rules Change

Texas has updated its rules regarding the sourcing of revenue for apportionment purposes. The Comptroller has indicated that the change in the rules reflects statutory changes, court decisions, current guidance, update definitions and improve readability.

The amendments bring both favorable and adverse changes for taxpayers subject to the Texas Margins Tax, with changes to the sourcing provisions for receipts from services, including advertising services, transportation services and internet hosting, and receipts from sales of computer hardware and digital products, capital assets and investments, interests in single-member limited liability companies (SMLLCs) and sales of securities through an exchange.

Services

Written by George Rendziperis, J.D. | Posted in Apportionment Rules Change • SALT (State And Local Tax)

21 Jan 2021

Salt Alert: Nevada Amnesty Program

The Nevada Legislature has enacted a one-time tax amnesty program for qualified businesses or individuals doing business in Nevada.

Benefits Of Amnesty

The program allows for penalty and interest to be waived on outstanding taxes that were due and payable on or before June 30, 2020, which includes monthly tax returns due on May 31, 2020 or before, and quarterly tax returns due April 30, 2020 or before.

Amnesty Period

The amnesty period is February 1, 2021 – May 1, 2021.

Taxes Covered Under Amnesty Program

The following tax types are eligible for amnesty:

Written by George Rendziperis, J.D. | Posted in Nevada Amnesty Program • Nevada Department Of Taxation

19 Jan 2021

State And Local Tax Audit Process

This article is the third part of a three-part series regarding the State and Local Tax consequences of doing business in multiple states. This article will discuss a State Tax Audit. Part 1 discussed Nexus and Part 2 discussed Voluntary Disclosure.

Questions we get from companies regarding its multistate activities are: “How will states find me?” “How will states enforce these new economic standards for sales and use taxes and income, franchise or gross receipts taxes?” The answer is “do you really want to find out!” The cost of states finding you and then assessing tax, interest, and penalties versus being proactive and compliant with state tax laws, as discussed in Part 1 of this series, can be a lot of money, as tax, interest, and penalties multiply very quickly.

Written by George Rendziperis, J.D. | Posted in State And Local Tax Audit Process

15 Jan 2021

State And Local Tax: Entity Formation For Certain Texas Activity

My colleague, Matthew Roberts, recently posted an article regarding choice-of-entity, “Starting a Business in Texas: Choice of Entity.” The article provided a summary of the tax and non-tax implications of each potential entity type.

We will discuss “passive entities” under Texas law. Please note the definition of a passive entity under Texas law is not the same as the definition under the Internal Revenue Code. Depending on the business being conducted in Texas, a certain type of entity may be more beneficial to reduce or eliminate your Texas Margin Tax (the “Margin Tax”).

Written by George Rendziperis, J.D. | Posted in Margin Tax • Passive Entities • State And Local Tax

14 Jan 2021

On-Line Retailers And Remote Sellers: Sales And Use Taxes

The Supreme Court of the United States’ decision in Wayfair, in June 2018, changed the landscape for sales and use taxes nexus for on-line retailers and remote sellers. Due to budgetary deficits the states are facing due to the downturn in the economy and the Covid-19 Pandemic, states will increase audit activity to raise money. Companies must be prepared and be proactive in order to avoid or reduce any state tax assessments.

The Wayfair decision lowered the bar in which a company has nexus with a state. Prior to Wayfair, a company needed a physical presence in the state to be required to collect and remit sales and use taxes. After Wayfair, states now require an economic presence, generally based on a threshold of sales into the state to create nexus with the state. Please note, even if a company does not meet the economic thresholds for sales or transactions, as the case may be, but has a physical presence in the state, then the company has nexus with the state because of the physical presence and must register for sales and use taxes in such state.

Written by George Rendziperis, J.D. | Posted in Remote Sellers • Sales And Use Taxes

08 Jan 2021

State And Local Voluntary Disclosure

This article is the second of a three-part series regarding the State and Local Tax consequences of doing business in multiple states. This article will discuss Voluntary Disclosure, Part 1 discussed Nexus and Part 3 will discuss the Audit Process.

The Wayfair decision changed the landscape for nexus in the sales and use tax area. It lowered the bar to establish nexus with a state, which gives a state the right to require the collection and remittance of sales and use taxes. The Supreme Court’s decision changed the nexus focus from the existence of a physical presence to an economic presence—which generally may be based on sales into the state themselves. As a result, many taxpayers may have triggered the nexus threshold, especially if a state imposes a factor presence standard for income, franchise or gross receipts taxes.

Written by George Rendziperis, J.D. | Posted in State And Local Tax • Voluntary Disclosure