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Income Tax

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Passing-through the SALT Deduction Cap: New Jersey Edition

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In response to the federal $10,000 cap on the state and local tax deduction, New Jersey recently enacted an elective pass-through entity tax. By taxing pass-through entities, the law shifts the tax burden from individuals subject to the federal deduction limitation to entities that are not subject to the limitation, which deduction then flows through to the pass-through entities’ owners without limitation. While uncertainty remains about the federal deductibility of such state pass-through entity taxes by individual owners, New Jersey joins a growing number of states to pass similar legislation in the wake of the SALT deduction cap, including Connecticut, Louisiana, Oklahoma, Rhode Island, and Wisconsin.

The Hits Keep Rolling: NY Proposes Unapportioned Data Tax

by , and 3 Mins Read

Continuing the unpleasant theme of aggressive state tax proposals, a bill has surfaced in the New York Assembly (following a companion bill that was introduced in the New York Senate last Spring) that seeks to impose a five percent tax on the “gross income . . . [from] every corporation that derives income from the data individuals of this state share with such corporations.” The new data tax is being proposed for inclusion in Section…

The Next Online Attack: Digital Advertising?

by , and 5 Mins Read

In an era of ever-expanding state tax bases, there are two new legislative proposals in Maryland (SB 2) and Nebraska (LB 989) that seek to either extend a current tax base (in the case of Nebraska, the sales tax base) or create a new tax (in the case of Maryland) to capture digital advertising revenues. The Maryland tax also signals a continued trend toward nuanced gross-receipts-type taxes. If a tax targeting digital advertising services sounds familiar, that is because the Ohio Department of Taxation attempted to extend the Ohio sales tax to digital advertising services in 2016 (though this extension was rejected by the Ohio Legislature’s enactment of an exemption from the sales tax for digital advertising services later that same year).

Massachusetts Issues Business Activity Tax Nexus Guidance, Signaling Continued Trend

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Massachusetts recently joined a handful of other states (read: States over the Edge and Testing Boundaries with Business Activity Tax Nexus) by issuing a final revised regulation adopting a bright-line, $500,000, nexus threshold for its corporate excise tax. See generally 830 CMR 63.39.1. Echoing the language of the Wayfair decision, the state’s revised nexus regulation provides that “the Commissioner will presume that a general business corporation’s virtual and economic contacts subject the corporation to the tax jurisdiction of Massachusetts under M.G.L. c. 63, § 39, where the volume of the corporation’s Massachusetts sales for the taxable year exceeds five hundred thousand dollars.” 830 CMR 63.39.1(3)(d).

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