Included in the Pennsylvania 2009/2010 budget proposals is the elimination of the 1% prompt payment sales tax discount available for businesses that file their sales tax returns and pay the full amount of taxes on or before the due date. No other prompt payment discounts exist for any other business tax, so perhaps the state feels that the sales tax discount is somehow unfair. The sales tax prompt payment discount costs the state $72.3 million in lost tax revenue in fiscal year 2008/2009 so this could be way for the state to help address its budgetary woes.
Pennsylvania to Eliminate Discount for Taxpayers who File and Pay Early?
February 26, 2009
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California Sales and Use Tax Rate Increase
February 26, 2009The CA state rate will increase from 7.25% to 8.25% effective 4/1/09. The 1% increase will cease to be operative on July 1, 2011 or one year later, on July 1, 2012, if voters approve the Budget Stabilization amendment.
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Limited Amnesty Program for Individual Taxpayers in Massachusetts
February 26, 2009
To encourage the payment of delinquent tax obligations to Massachusetts, the Commissioner has established a two month amnesty period beginning on March 1, 2009 and concluding on April 30, 2009. The amnesty is limited to individuals with existing personal income, use, and cigarette excise tax liabilities and applies to tax years ending on or before December 31, 2007. Only those taxpayers who are notified are eligible to participate.
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Up to One Year Delay in Processing Illinois Amended Returns
February 5, 2009States processing amended returns has always been a lengthy process, but a delay in Illinois has made processing them an even longer process, up to one year… When following up with Illinois recently to see if an amended return had been processed, we got the response, “we are running about one year behind in processing amended returns”. Why so long…?
A little background. At the beginning of 2008, Illinois changed their internal computer processing systems from DOS-based to Windows-based. In March they expected an amended return to be processed in about 2 to 3 months. However, they have been struggling to get everyone trained on the new system and this is delaying the processing time for amended returns.
I have spoken to various tax department heads in Illinois and they are not in a position to prioritize processing amended returns. Their most recent estimate for processing amended returns is at least one year from the date they receive them.
So what are the consequences? I have been assured that if an amended return is filed, they will tag the notice and further notices should not be generated. However there is an exception, if you have other outstanding notices that have not been responded to, you will continue to get notices and possibly final demand notices. The outstanding notices include not only sales tax but withholding tax as well. If you have amended returns attached to notices, Illinois has stated that no further action will be pursued until the amended return is processed. With that being said, that is no guarantee. One option is to go ahead and pay the balance owed and wait for the amended return to be processed and then file a request for a refund. Or you can wait out the process….
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Handling Negative (Credit) Amounts on Returns
February 13, 2009A common question we hear is “how do we handle negative (credit) amounts on returns?” There is a lot of confusion on the best way to handle these because the rules can vary by state. To help clear the fog, I have written some general guidelines that should help you easily deal with this issue. First an example:
You have $2,000 in taxable purchases in January, $1,000 in taxable purchases in February, and $500 in taxable purchases in March. However in March, you had a customer who returned items totaling $1,200. How should you report March since it would show negative taxable sales of $700?
Well, some states will let you take the credit of $700 as a line item on the return but if you tried the same tactic for other states, they would disallow it and add the $700 back to taxable sales and charge you the tax on the $700 with penalty and interest. So, what states are more credit line item friendly?
The following states generally have more friendly rules on using negative line items: CA, ID, KS, NC, NY, OH, OK, TN, UT, and WA. However, keep in mind this list is always changing so you should frequently check with the jurisdiction.
The following states do not accept negative line items: Alatax, AL, AZ, FL, GA, LA Parishes, MA, MN, MO, NM, NV, PA, RI, SC, TX, VA, and WI. Again, these states can change their rulings at anytime so periodically check with the jurisdiction.
For the states that do not accept negative line items, you are able to take a partial credit until you use up that credit. So on the situation listed above, you would take the $500 in taxable sales and subtract $500 and report $0 taxable sales on March’s return. Then on April’s return, you would carry forward the additional $200 ($700 – $500).