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Recent developments in state tax laws include a non-titled
tangible personal property use tax in Cook County, Illinois, that
is effective on April 1, 2013; and an income tax increase on
individuals, estates and trusts in California that is retroactive
to January 1, 2012.
Cook County, Illinois: Effective April 1, 2013,
Cook County will impose a non-titled tangible personal property use
tax on tangible personal property used in Cook County that was
purchased outside of Cook County (e.g., computers,
furniture, pencils, construction materials, equipment, etc.). The
tax rate is 1.25 percent of the property's value when first
used in the county, which will likely be determined by its purchase
price. No credit for other state or local taxes paid is allowed
under the county tax. The purchaser is required to pay the tax
monthly to the Cook County Department of Revenue. The first $3,500
in value of annual purchases (basically a $43.75 tax credit) is not
subject to tax. Certain other exemptions also apply. While
businesses doing business in Cook County must register for the tax,
both businesses and individuals are liable for the tax and must
file returns if tax is due.
There are significant questions about the legality of the tax,
but until the tax is enjoined or struck down by the courts,
businesses in Cook County should be aware of its provisions and
this new tax filing obligation.
California: Retroactive to January 1, 2012, the
state of California has increased its income tax on individuals,
estates and trusts to a maximum of 13.3 percent from 10.3 percent
of taxable income. The rate increases start at $250,000 for
individuals where the rate increases from 9.3 percent to 10.3
percent, then at $300,000 from 10.3 percent to 11.3 percent, then
at $500,000 from 11.3 percent to 12.3 percent, then at $1,000,000
from 10.3 percent to 13.3 percent. The tax rate on corporations was
not changed. Because this was a retroactive tax rate increase,
persons should be aware that when they file their California
returns for 2012, their tax liability will be higher, possibly
resulting in a tax payment due.
It is important to note that California also increased its
statewide sales/use tax to 7.5 percent from 7.25 percent, starting
on January 1, 2013. This is in addition to the local sales/use
taxes.
If you would like more information about this Alert,
please contact Stanley R. Kaminski, any other member of the State
and Local Tax Practice Group or the lawyer in the firm with whom
you are regularly in contact.
This article is for general information and does not include
full legal analysis of the matters presented. It should not be
construed or relied upon as legal advice or legal opinion on any
specific facts or circumstances. The description of the results of
any specific case or transaction contained herein does not mean or
suggest that similar results can or could be obtained in any other
matter. Each legal matter should be considered to be unique and
subject to varying results. The invitation to contact the authors
or attorneys in our firm is not a solicitation to provide
professional services and should not be construed as a statement as
to any availability to perform legal services in any jurisdiction
in which such attorney is not permitted to practice.
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The Internal Revenue Service has recently published an IRS Large Business & International Directive, which updates an earlier directive to field agents addressing the examination of capitalization and repair costs issues.
A state cannot include income in the apportionable base and then exclude the receipts and related factors that generated that very same income from the apportionment formula.
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