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KPMG reports: Iowa, Mississippi, New Jersey, Washington

KPMG reports: Iowa, Mississippi, New Jersey, Washington

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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  • Iowa: The Department of Revenue issued a declaratory order that addresses an important question for many service providers—how to determine where the benefit of a service is received. In this situation, the taxpayer was a “transportation brokerage specialist” that connected clients needing to transport goods with transportation service providers (trucking companies). The taxpayer did not transport the goods itself and did not hold title to the goods. Because the company did not actually transport goods, it was found not to qualify as a transportation service company that would apportion its income using the specific rules applicable to such companies (miles in the state over miles everywhere).
  • Mississippi: The Department of Revenue issued revised guidance concerning the state tax treatment of “global intangible low taxed income” (GILTI), a provision under the U.S. federal tax law. The revised guidance explains that IRC section 951A requires GILTI to be included in a U.S. shareholder’s current taxable income, but does not state that Mississippi will not follow the GILTI provision (rather, the revised notice simply states that “Mississippi considers foreign sourced income to be non-business income”).
  • New Jersey: The state’s tax court addressed whether a corporate business taxpayer filing a separate New Jersey return was required to add back amounts paid to its parent corporation under a tax-sharing agreement. The court determined the income tax addback must be calculated based on the taxpayer’s liability as calculated by its pro rata share of the parent’s total tax obligation in the non-separate reporting states. Because the parent had added back all of the state income taxes it paid to the non-separate reporting states, the tax court found that equity demanded that the taxpayer’s corporation business tax liability be reduced by any overpayment of this tax made by the parent on the taxpayer’s behalf.
  • Washington State: A state appellate court held that a taxpayer that sold meals to colleges (which in turn sold the meals to students) did not qualify as a wholesaler subject to the wholesaling B&O rate (0.484%) but was a food service management operator subject to B&O tax under the “services and other business activities” classification at the services rate of 1.5%. The Department of Revenue successfully argued that, based on the taxpayer’s contracts, it was not reselling meals but was being compensated for the service of assisting the schools with operating and managing their meal plans.  


Read more at KPMG's This Week in State Tax

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