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
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.
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On May 5, 2016, the U.S. Treasury Department announced several actions intended to strengthen financial transparency, including the issuance of proposed regulations that significantly increase the reporting and record maintenance requirements of U.S. disregarded entities owned by foreign persons.
The IRS has released temporary and proposed regulations clarifying that partners in a partnership that owns a disregarded entity (DRE) may not be treated as "employees" of the DRE (T.D. 9766; REG-114307-15).
Public comments on the proposed regulations may be submitted through August 8, 2016. If approved, the proposed regulations will become effective twelve months after they are published as final in the Federal Register.
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