On Wednesday, March 24, the Texas Comptroller’s Office announced several important measures in response to the current conditions caused by COVID-19. The Comptroller’s Office has been preparing these measures for several weeks, particularly after Governor Abbott declared a state of disaster, applicable to all 254 counties, on March 13. These updated measures include:
States continue to provide relief in response to the spread of the COVID-19 virus. This week, numerous states responded to the federal income tax filing extension, and we expect additional states to respond in the coming days. Some states are also offering relief for non-income business taxes, and much of the relief is limited to small- to mid-size businesses. Furthermore, COVID-19 is causing complications in property tax assessments, payments, and appeals.
With the 2017 Tax Cuts and Jobs Act (“Tax Reform”) fully enacted, taxpayers and practitioners are racing to find last-minute planning opportunities prior to the new year, and states are looking for ways to assist their residents prospectively. The most talked about planning opportunity, currently, is prepaying property taxes for 2018 to create a 2017 tax benefit around Section 11042(a)(6), which limits the state and local tax deduction to $10,000 beginning in 2018. However, imprecise wording contained within Section 11042(a)(6) could feasibly be interpreted to permit a deduction for state and local income taxes as well – depending on how you read the provision.
The California real estate transfer tax landscape experienced a seismic shift when the Supreme Court of California upheld the imposition of Los Angeles County’s Documentary Transfer Tax (“L.A. Transfer Tax”) on the transfer of a controlling interest in a partnership that indirectly owned Los Angeles real estate through an LLC. 926 North Ardmore Avenue, LLC v. County of Los Angeles, 219 Cal. Rptr. 3d 695 (Cal. June 29, 2017). Specifically, the Court held “that the tax may be imposed if the document reflects a sale: that is, an actual transfer of legal beneficial ownership made for consideration.”