Mazzeffi & Company

Tax Alerts

Tax Briefing(s)

2016 Post-Filing Season Update Fiscal Year (FY) 2017 Budget Proposals 2015 Tax Year-In-Review Protecting Americans From Tax Hikes Act Of 2015 2015 Year-End Tax Planning

GSA announces per diem rates for federal employee travel in fiscal year 2017
The General Services Administration (GSA) has announced its fiscal year (FY) 2017 Continental U.S. (CONUS) per diem reimbursement rates. The GSA is often a predictor of the per diem rates that wi...

IRS allows double mortgage interest deduction limit to unmarried homeowners
The IRS has announced that it will not dispute the holding of in a federal appeals court decision regarding the limit on mortgage interest deductions under Code Sec. 163 (Voss, CA-9, 2015-2 ustc ¶...

New scams target taxpayers and tax professionals
The IRS has warned taxpayers of automated phone scam telephone calls and new tactics used by scammers demanding tax payments on gift cards. This summer has seen a significant increase in the frequency...

No deduction for "general knowledge" expenses; but executive MBA was deductible
A married couple, a college professor and a librarian, failed to persuade the Tax Court that their deductions for home internet service, cell phones, satellite television, and other items were deducti...

Tax Court gives expansive interpretation of "collected proceeds" for whistleblower awards
The Tax Court has held that under Code sec. 7623(b), criminal fines and civil forfeitures are “collected proceeds” for calculating whistleblower awards. In so doing, the court rejected the...

NTA cautions that IRS “Future State” leaves out many taxpayers
National Taxpayer Advocate Nina Olson, in her mid-year report to Congress, expressed her continuing concerns about the IRS’s “Future State” initiative (IR-2016-97). In addition, she ...

Tax Court allows patent attorney to take business deductions for car restoration
The Tax Court has found that a taxpayer, a patent attorney by trade, was entitled to substantiated business expense deductions stemming from his automobile restoration business, as he intended to make...

IRS regulations clarify individual shared responsibility rules, premium assistance tax credit
The IRS continues to offer guidance to flesh out the specifics of the individual shared responsibility requirement and the premium assistance tax credit under the Affordable Care Act. The IRS has issu...

Couple allowed homesale exclusion following birth of second child
The IRS determined that a married couple could take advantage of the reduced maximum exclusion of gain from the sale of their home after the birth of their second child (LTR 201628002). Unforeseen cir...

IRS outlines new measures to curb tax-related identity theft
The IRS, in conjunction with states and stakeholders in the tax preparation and software industry, intends to take additional steps to protect taxpayers from tax-related identity theft, the agency ann...

IRS may prioritize cases for private tax collection
The IRS retains discretion to prioritize cases for assignment to private collection agencies, IRS Chief Counsel has explained in new program manager technical advice (PMTA). The IRS is also expected t...

IRS enhances Get Transcript app to protect taxpayers from fraud
The IRS has upgraded its authentication processes for the popular Get Transcript app. The app had been breached by cybercriminals last year. In response, the IRS has strengthened the app’s secur...

Chief Counsel rules that fine paid to FINRA are not deductible
IRS Chief Counsel has determined that the Financial Industry Regulatory Authority (FINRA) is an entity serving as an agency or instrumentality of the government of the United States. As such, fines pa...

IRS notifies taxpayers of special procedures permitting return of seized assets
The IRS began notifying impacted taxpayers of special procedures permitting the return of seized assets. To be eligible for a return of the assets, taxpayers must show that the underlying funds came f...

IRS issues guidance on wrongful incarceration exclusion claims
The IRS has provided guidance on how wrongfully-incarcerated individuals are to make claims for a retroactive exclusion from income for any civil damages, restitution or other monetary award received ...

AL - Untimely appeal dismissed
The Alabama Tax Tribunal held that an appeal filed by a limited liability company (LLC) and its sole member challenging a final assessment of sales tax was properly dismissed because the Department of...

AK - Governor’s efforts to get personal income tax enacted fail
Alaska Gov. Bill Walker’s efforts to get a personal income tax enacted during the General Assembly’s 2016 regular and five special sessions ended without any legislative action on his prop...

AZ - Credit for qualifying charitable and foster care charitable organizations discussed
The Arizona Department of Revenue has revised its publication providing general information about the credit available for personal income taxpayers who make contributions to qualifying charitable org...

AR - Health care services not taxable
The services provided by a health center licensed by the Arkansas State Health Department are not subject to Arkansas sales and use tax since the health center is not licensed as one of the agencies, ...

CA - 2016 Tax rate schedules, filing thresholds, other adjusted figures released
The California Franchise Tax Board has adjusted the California personal income tax rate schedules, return filing thresholds, personal exemption amounts, standard deduction amounts, itemized deduction ...

CO - Supreme court asked to review decision regarding Colorado notice and reporting obligations
The U.S. Supreme Court has been asked to review an appellate decision that held a Colorado law imposing notice and reporting obligations only on retailers that do not collect Colorado sales tax does n...

CT - Q&A publication on business entity tax updated
The Connecticut Department of Revenue Services has updated a publication that answers frequently asked questions about the Connecticut business entity tax (BET). Among other things, the publication pr...

DE - Delaware enacts employer tax credit for hiring individuals with disabilities
Legislation has been enacted that creates a tax credit for Delaware employer’s that hire individuals with disabilities. The credit may be claimed against an employer’s liability for Delawa...

DC - Launch of MyTax.DC.gov announced
The District of Columbia Office of Tax and Revenue has announced that MyTax.DC.gov, an enhanced portal for corporate and personal income tax purposes, will be launched in November 2016 as part of effo...

FL - Additional payments by lessee taxable
A lessee’s payments to a lessor, in addition to the rental payment, were subject to Florida sales tax because those payments were a part of the total rental consideration for the right to occupy...

GA - Local rate change for manufacturers energy purchases announced
The Georgia Department of Revenue has issued an updated list of county sales and use tax rates for energy sold to manufacturers. The list is effective for the quarter beginning October 1, 2016, and re...

HI - OTCs subject to general excise tax on rental car transactions
In a news release, the Hawaii Attorney General announced that a state circuit court held that online travel companies (OTCs) such as Travelocity, Expedia, Priceline, Orbitz, Hotwire, and others must p...

ID - Short term room rentals in private home taxable
Idaho residents who rented out a room in their Boise home for short term lodging using an online reservation platform were liable for 6% sales tax, 2% travel and convention tax, and 5% Greater Boise A...

IL - Guidance on exemption for feminine hygiene products issued
An Illinois bulletin reminds taxpayers that tampons, menstrual pads, and menstrual cups are exempt from Illinois sales and use tax, effective January 1, 2017. Other feminine hygiene products will not ...

IN - Transfer pricing study erroneously rejected
The Indiana Department of Revenue’s adjustment of a corporate income taxpayer’s gross operating margin between itself and a related entity was erroneous because the department failed to sh...

IA - Income derived from illegal activities taxable
For personal income tax purposes, an Iowa Administrative Law Judge (ALJ) held that money/funds stolen by taxpayers must be considered income for the purpose of assessing tax, penalty, and interest by ...

KS - Interest rates and penalties for 2017 announced
The Kansas Department of Revenue has announced penalty and interest rates for the underpayment of various tax types for the period January 1, 2017, to December 31, 2017. The interest rate is set at 5%...

KY - Retroactive amendment of Kentucky vendor compensation statute upheld as constitutional
The Kentucky Court of Appeals has affirmed a Franklin Circuit Court decision which held constitutional (1) the Kentucky Legislature’s 2009 Act (H.B. 429, Laws 2009) that amended KRS Sec. 139.570...

LA - Medical tests performed in Texas not sourced to Louisiana for apportionment purposes
The Louisiana Court of Appeal, First Circuit, held that income derived from the diagnostic testing of Louisiana patient medical specimens performed in Texas should be sourced to Texas for corporate in...

ME - NOL guidance documents updated
Maine Revenue Services has issued revised guidance documents providing examples of the proper treatment of net operating losses (NOLs) in the computation of Maine corporate and personal income taxes. ...

MD - Heritage structure rehabilitation regulations issued
The Maryland Department of Planning has repealed and replaced its regulations concerning the heritage structure rehabilitation tax credit (previously named the sustainable communities tax credit) avai...

MA - 2015 thresholds for filing form SBC 355 discussed
The Massachusetts Department of Revenue has issued a news release discussing the thresholds for filing 2015 corporate excise returns on Form SBC 355. Small businesses may file using Form SBC 355 if: g...

MI - Appeal denied in challenge to retroactive repeal of the MTC
The Michigan Supreme Court denied leave to appeal in fifteen appeals arising from one of the Michigan Court of Appeal’s decisions that rejected challenges to the retroactive repeal of the Multis...

MN - Evidence unrelated to the issue properly dismissed
The Minnesota Tax Court did not abuse its discretion by disregarding evidence of a computational error in calculating taxpayers’ personal income tax liability because the evidence was not releva...

MS - Jobs tax credit regulations updated
The Mississippi Department of Revenue has issued revised regulations for the jobs tax credit available against the corporate income tax. Effective retroactive to June 1, 2016, the regulations are upda...

MO - Board had to comply with notice, meetings requirements
A county board of equalization that heard Missouri property tax matters was a public governmental body subject to the state Sunshine Act and, therefore, had to post notice and comply with open meeting...

MT - Newsletter discusses upcoming deadline for extended due dates and revised forms
The Montana Department of Revenue has released its Tax News You Can Use newsletter reminding income taxpayers regarding the due date of partnership and S corporation returns filed on extension, as wel...

NE - Prepaid wireless surcharge rate unchanged
The Nebraska Department of Revenue has announced that the prepaid wireless surcharge rate will remain 1% from January 1, 2017 through December 31, 2017. The surcharge applies to retail sales of prepai...

NV - Treatment of employee leasing companies discussed
The Nevada Department of Taxation has issued a bulletin discussing the modified business tax treatment of employee leasing companies. Because of changes enacted by Ch. 458 (A.B. 389), Laws 2015, the c...

NH - Interest rates increased for 2017
The interest rates for the underpayment and overpayment of New Hampshire taxes administered by the Department of Revenue Administration have increased for calendar year 2017. The rates will be 6% (for...

NJ -Qualified residential, university infrastructure and mixed-use parking projects credit limit increased
The overall amount of the New Jersey Economic Redevelopment and Growth Grant (ERG) program corporate income tax credit or grant provided to developers of certain qualified residential, university infr...

NM - Property used in building fire station was taxable
A construction contractor was not entitled to a refund of New Mexico gross receipts tax on purchases of depreciable property used in building a local government fire station because all of the depreci...

NY - QEZE credit did not require employee to work in zone
In a New York personal income tax case, taxpayers were entitled to the qualified empire zone enterprise (QEZE) real property tax credit, despite the Division of Taxation’s assertion that their e...

NC - Income tax withholding regulation for supplemental wage payments amended
The North Carolina Department of Revenue has amended a regulation on personal income tax withholding for supplemental wage payments. The amendment provides that if the employer has withheld tax on reg...

ND - SST recertification letter issued
The North Dakota Office of State Tax Commissioner has issued a letter to the Streamlined Sales Tax Governing Board, Inc. certifying that the state is in substantial compliance with the terms of the St...

OH - DOT announces mailing of CP2000 notice
The Ohio Department of Taxation (DOT) has announced that it has begun mailing CP2000 billing notices for the tax years 2012, 2013, and 2014 to taxpayers that have not filed an amended Ohio Individual ...

OK - Taxability of transactions involving mobile Point-of-Sale devices discussed
The Oklahoma Tax Commission has issued a letter ruling discussing the taxability of transactions involving mobile point-of-sale devices that a restaurant used to help customers order food, make paymen...

OR - DOR’s assessment proper and taxpayers not subject to double taxation
For personal income tax purposes, the Oregon Department of Revenue’s (DOR) notice of deficiency assessment against a couple (taxpayers) was upheld because the taxpayers failed to prove that adju...

PA - Appeal denied for failure to appear at hearing
A taxpayer’s property tax appeals were denied because it had failed to appear at the scheduled hearing before the Philadelphia Tax Review Board (TRB). Although the taxpayer, as per records, had ...

RI - Legislation creates process to potentially reduce premium tax rate
Rhode Island has enacted legislation that sets forth a process to consider a reduction of the premium tax rate for qualifying insurers that have added new, full-time qualifying jobs in the state. The ...

SC - Donations to exceptional SC scholarship fund and due dates discussed
The South Carolina Department of Revenue (DOR) has released the latest issue of ReveNews for corporate and personal income tax purposes, which contains filing reminders due for September 15, 2016, and...

SD - Historical site tax moratorium reminder issued
The South Dakota Historical Society reminds property owners that November 1, 2016, is the deadline to apply for the state property tax moratorium, which would apply to restoration and rehabilitation w...

TN - Guidance regarding research and development issued
The Tennessee Department of Revenue has issued a sales and use tax notice providing information regarding the exemption for research and development machinery and equipment. Effective July 1 2015, sal...

TX - Comptroller clarifies apportionment of receipts from LNG sales
The Texas Comptroller of Public Accounts has issued a private letter ruling addressing a taxpayer’s franchise tax questions as to the apportionment of liquefied natural gas (LNG) sales receipts....

UT - Debris removal services were cleaning and washing services
The Utah State Tax Commission upheld the auditor’s determination that a crude oil refiner was liable for sales and use tax on purchases of services performed on outdoor equipment and areas and s...

VT - Determined value based on county’s appraisal evidence supported by market data
The property tax value of a Vermont hydroelectric facility was held to be properly determined on the basis of the evidence presented by the county’s appraisal expert because the taxpayer failed ...

VA - Tax practitioners warned against new email phishing scam
The Virginia Department of Taxation has shared a new release issued by the IRS alerting tax professionals to a phishing scam that pretends to be from tax software providers and tries to trick recipien...

WA - Swap meet space rental taxable
Income from renting space to vendors at a swap meet was subject to Washington business and occupation (B&O) tax because the vendors were granted a license to use the space and did not have exclusi...

WV - B&O returns, rates updated
The city of Beckley, West Virginia, has updated its business and occupation (B&O) tax return to reflect the following changes effective for July 1, 2016:Amusement - $0.35 per $100 (previously, $0....

WI - Homestead credit fact sheet updated
The Wisconsin Department of Revenue has updated its personal income tax fact sheet regarding the homestead credit to revise the discussion about taxpayers who may be able to file Schedule H-EZ. For ex...

WY - SST certificate of compliance, taxability matrix updated
The Wyoming Department of Revenue has submitted the state's Streamlined Sales and Use Tax (SST) 2016 certificate of compliance and the 2016 taxability matrix, both effective August 1, 2016. The certif...