Texas | TaxConnections

24 Nov 2020

Sales And Use Tax Refund Opportunities For Energy Companies

Due to the drop in demand for oil and gas attributable to the COVID-19 pandemic and the decline in oil prices, cash flow generation is crucial to energy companies. To enhance cash flow, energy companies should review their sales and use tax procedures to determine if sales and use taxes for certain purchases of services or assets were paid in error. If sales or use taxes were paid in error, there may be an opportunity to obtain a cash refund of such taxes.

States have granted certain sales tax exemptions that are applicable to oil and gas exploration and production companies for certain purchases of assets, equipment or services (i.e., production equipment, chemicals and utilities). Such exemptions can be complicated, vary from state to state and are subject to change over time. Further, record keeping for oil and gas companies with numerous vendors can be challenging.

Written by TaxConnections Admin | Posted in Energy Companies • Sales And Use Tax Refunds • Texas

11 Nov 2020

Freeman Law: Tax Court In Brief

The Tax Court in Brief

Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

For a link to our podcast covering the Tax Court in Brief, download here or check out other episodes of The Freeman Law Project.

The Week of October 31 – November 6, 2020

Glade Creek Partners, LLC, Sequatchie Holdings, LLC, TMP v. Comm’r, T.C. Memo. 2020-148 | November 2, 2020 | Goeke, J. | Dkt. No. 22272-17

Opinion

Short Summary: In 2012, Glade Creek Partners, LLC (Glade Creek) donated a conservation easement on 1,313 acres of undeveloped real estate in Bledsoe County, Tennessee. It claimed a $17.5 million charitable contribution deduction for its 2012 short tax year period. The IRS challenged the charitable contribution deduction and sought penalties.

Key Issue: Whether Glade Creek is entitled to the charitable contribution deduction under the technical requirements of Section 170 and whether Glade Creek is liable for a 40% gross valuation misstatement penalty under Section 6662(e) and (h) or alternatively the 20% valuation penalty under Section 6662(b)(3).

Primary Holdings:

Glade Creed is not entitled to a full conservation easement deduction because the easement’s conservation purposes are not protected in perpetuity. However, Glade Creek is entitled to a cash charitable contribution deduction of $35,077. In addition, Glade Creek is liable for a 20% accuracy-related penalty for a substantial valuation misstatement for any claimed charitable contribution deduction in excess of $8,876,771.

Key Points of Law:

Written by TaxConnections Admin | Posted in Texas

14 Oct 2020

Personal Liability Exposure For Business’ State Taxes – Boo!

Personal Liability Exposure for Your Business’ State Taxes

Halloween is just around the corner, and if you thought this year could not get any scarier, think again. Failure to remit your business’ taxes to the state may result in a personal visit by the Office of the Texas Comptroller or Texas Attorney General. Several provisions of the Texas Tax Code impose personal liability on individuals associated with a business. Those individuals are typically (although not always) people with authority and power to make decisions related to a business’ operations, finances, and/or tax obligations. The following is a list of key tax provisions demanding personal liability:

Generally

(a) Any person who receives or collects a tax or any money represented to be a tax from another person holds the amount so collected in trust for the benefit of the state and is liable to the state for the full amount collected plus any accrued penalties and interest on the amount collected. . . .

(b) With respect to tax or other money subject to the provisions of Subsection (a) or (a-2), an individual who controls or supervises the collection of tax or money from another person, or an individual who controls or supervises the accounting for and paying over of the tax or money, and who wilfully fails to pay or cause to be paid the tax or money is liable as a responsible individual for an amount equal to the tax or money not paid or caused to be paid. The liability imposed by this subsection is in addition to any other penalty provided by law. The dissolution of a corporation, association, limited liability company, or partnership does not affect a responsible individual’s liability under this subsection.[1]

Franchise Taxes

(a) If the corporate privileges of a corporation are forfeited for the failure to file a report or pay a tax or penalty, each director or officer of the corporation is liable for each debt of the corporation that is created or incurred in this state after the date on which the report, tax, or penalty is due and before the corporate privileges are revived. The liability includes liability for any tax or penalty imposed by this chapter on the corporation that becomes due and payable after the date of the forfeiture.[2]

Fraudulent Tax Evasion