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KPMG reports: Illinois, New York State, Pennsylvania, Utah

Illinois, New York State, Pennsylvania, Utah

KPMG’s This Week in State Tax—produced weekly by KPMG’s State and Local Tax practice—focuses on recent state and local tax developments.

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  • Illinois: The governor’s FY 2022 budget outlines a proposal to cut spending and to close $932 million worth of corporate “loopholes.” Revenue raising measures that could affect corporate income taxpayers include limiting corporate net operating losses (NOLs) to $100,000 per year, decoupling from the federal 100% bonus depreciation, and aligning the state’s treatment of foreign-source dividends to its treatment of domestic-source dividends. Read a February 2021 report
  • New York State: An administrative law judge concluded that a taxpayer owed sales tax on property and equipment it acquired under the terms of a limited liability company (LLC) purchase agreement. The taxpayer argued that the acquisition was merely a transfer of the intangible equity interests in the LLC. The administrative law judge, however, found that the taxpayer acquired taxable tangible assets in the transaction, but also concluded that certain of the tangible personal property acquired qualified for sales and use tax exemptions. Therefore, the assessment was reduced to capture only the taxable transactions. Read a February 2021 report
  • Pennsylvania: The Department of Revenue announced a new voluntary compliance effort aimed at retailers that had inventory or other property stored in Pennsylvania but had not filed the appropriate returns. The program runs through May 8, 2021, and offers penalty relief for past due tax returns that were not filed and taxes that were not paid. It does not appear that interest will be abated. For participating businesses, the lookback period is limited to January 1, 2019, and taxpayers that participate in the program will not be liable for taxes prior to that date. Read a February 2021 report
  • Utah: House Bill 39, which passed both the House and Senate, retroactively clarifies the state’s tax treatment of IRC section 965 income, global intangible low-taxed income (GILTI), and foreign-derived intangible income (FDII). Specifically, amounts included in income under IRC sections 965(a) and 951A are eligible for the state’s 50% dividends-received deduction. Further, the bill clarifies that Utah is a “Line 28 state,” that the deduction for FDII is not allowed, and that the 50% dividends-received deduction applies to the gross amount of GILTI and IRC section 965 income included in the tax base. Read a February 2021 report

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