SALT Report: September 2015

September 2, 2015

Each month, our State & Local Tax team will provide highlights of recent state tax law changes that may affect you. Updates are sorted by state so that you can easily view the changes that impact the state(s) in which you are doing business.

Contact any member of our State & Local Tax team for specific guidance.

Illinois

New sales tax rates effective January 1, 2016:

  • Cook County, retailers’ occupation (sales) and service occupation tax rate 1.75% (Total Cook County rate will be 10.25%)

Deduction available for taxes that have become bad debts, effective July 1, 2015:

  • A retailer is not liable for Illinois sales tax due and payable if the tax has become a bad debt and three conditions are met, effective July 1, 2015.
    • The tax is represented by amounts that are found to be worthless or uncollectible.
    • The tax has been charged off as bad debt on the retailer's books and records.
    • The tax has been claimed on the retailer’s federal income tax return as a bad debt deduction.
  • Separate rules apply for credit card purchases. When taxes were paid with a credit card purchase, for example, a deduction is available only for debts written off on or after January 1, 2016. If a retailer deducts a bad debt but later collects the tax due, the retailer must include the tax in the retailer’s next return and remit the tax. The Department of Revenue will issue rules for taking a bad sales tax debt deduction.

Indiana

August 2015 Gasoline Use Tax Rate Announced

  • The Indiana gasoline use tax rate for August 2015 is 15.9 cents per gallon.
  • The July 2015 rate is 15.8 cents per gallon.

New sales tax rates effective July 1, 2014:

  • Posey County, innkeeper’s tax rate 5%

New sales tax rates effective July 1, 2015:

  • Orange County (Historical Hotels Supp.), innkeeper’s tax rate 2%

Streamlined Sales and Use Tax Taxability Matrix updated, with changes effective August 3, 2015.

  • Prepared food options definitions are updated, and the definition of “drugs” is clarified.

Iowa

The Iowa Department of Revenue indicates that while federal due dates for some corporation and partnership returns are changing, there is no change to the dues dates for Iowa returns, which remain due by the last day of the fourth month following the end of the tax year. For calendar year returns, the due date is April 30.

Michigan

Prepaid Fuel Rates Announced for September 1 – 15, 2015:

  • The prepaid sales tax rate for gasoline decreases from 15.0 cents per gallon to 14.6 cents per gallon.
  • The prepaid rate for diesel fuel decreases from 15.4 cents per gallon to 15.1 cents per gallon.

Minnesota

New sales tax rates effective October 1, 2015:

  • Lyon County, local transit sales and use tax rate 0.5%
  • Scott County, local transit sales and use tax rate 0.5%; local vehicle excise tax rate $20

Local Sales and Use Taxes Fact Sheet updated, reflecting local tax rates as of October 1, 2015

Wisconsin

Reminder: Brown County Football Stadium District Sales Tax ends September 30, 2015.

Swimming pool cleaning and maintenance services are taxable

New Matching Program for Returning Unclaimed Property to its Owner

Credit for taxes paid to Illinois

Caution: The answer in this article reflects the position of the Wisconsin Department of Revenue of laws enacted by the Wisconsin Legislature as of the date of this bulletin. It may be subject to change based on laws enacted after that date, new administrative rules and court decisions.

As amended by Illinois House Bill 3157, the Illinois Income Tax Act provides that a nonresident of Illinois who has had Illinois income tax withheld by a partnership or Subchapter S corporation is not required to file an Illinois income tax return if the nonresident's income tax liability is paid in full after taking into account the withholding. Although the individual is not required to file an Illinois income tax return, the individual may file such return with Illinois.

  • How should a Wisconsin resident document tax paid to Illinois for purposes of the credit for taxes paid to other states if the individual is not required to file an Illinois nonresident or composite income tax re-turn?

As the pass-through withholding payments paid by a partnership or tax-option S corporation on its Illinois replacement tax return is the total of each nonresident partner's or shareholder's income tax on their proportionate share of Illinois income, the return filed by the partnership or tax-option S corporation is considered a combined or composite return filed on behalf of its nonresident partners or shareholders. Therefore, a Wisconsin resident must attach a copy of the 3K-1 or 5K-1 on which is shown the share of tax paid to Illinois.