The Delaware Secretary of State recently finalized its estimation regulations without any substantive change to Delaware’s proposed estimation practices. The final version of these regulations, which became effective July 11, 2017, acknowledges that the state received numerous public comments criticizing the proposed regulations, including the state’s practice of extrapolating unclaimed property liability to Delaware based on all unclaimed property reported in the base period, including property that was escheatable to other states. However, as anticipated, the Secretary of State “decided to not make [any] suggested changes”. The Secretary of State’s finalized estimation regulations can be viewed here: Abandoned or Unclaimed Property Voluntary Disclosure Agreement Program.
Governor Andrew Cuomo’s 2017-2018 New York State Executive Budget Bill (“FY 2018 Budget Bill”), proposes several tax-related changes, including changes to various tax credits, the real estate transfer tax, and the state sales and use tax. This post summarizes the FY 2018 Budget Bill’s key sales and use tax proposals, which are similar to proposals made in the Governor’s 2015-2016 New York State Executive Budget Bill (“FY 2016 Budget Bill”).
The recent Harley-Davidson opinion from the Superior Court of California, County of San Diego is an alarming example of why it is important to apply the appropriate constitutional standard in state tax cases. In a Commerce Clause challenge, where the taxpayer argued a California statute discriminated against interstate commerce, both the California Appellate Court and the trial court applied Equal Protection standards in their Commerce Clause analyses. In doing so, the courts upheld an otherwise discriminatory tax scheme on the grounds that it furthered the state’s legitimate interests in generating revenue and ensuring income is fairly apportioned among the several states. Such a holding effectively guts the protections offered under the dormant Commerce Clause and highlights the analytical differences between discrimination under the Commerce Clause and discrimination under the Equal Protection Clause.
Occasionally, a non-US corporation’s expansion of its business into the United States has unforeseen or unintended state income tax consequences. While federal income taxation is generally a matter of primary concern when a non-US corporation starts conducting business in the United States, the conclusions reached on federal income taxation do not necessarily carry over for state income tax purposes. For example, many companies are surprised to learn that a lack of federal income tax jurisdiction does not necessarily equate to a lack of state tax jurisdiction and that a lack of federal taxable income does not necessarily equate to a lack of state taxable income. In this article, we discuss some of the main differences between the federal income taxation and state income taxation of non-US corporations.