State Tax Alerts
As of February 2020
- New Jersey – New Jersey created an elective entity-level tax for passthrough entities with an income tax credit for members. This election for the passthrough to be taxed at the entity level is allowed for years beginning on or after January 1, 2020.
- Iowa – For tax years beginning on or after January 1, 2019, Iowa fully conforms with IRC 163(j) that limits business interest expense. The Iowa Department of Revenue issued guidance on calculating the limitation and noted there may be certain circumstances that require an Iowa adjustment such as when business interest expense is limited in 2019 and was also limited in 2018, when Iowa did not conform to the limitation rules.
- Massachusetts – The Massachusetts Department of Revenue also set out guidelines related to IRC 163(j) relating to the business interest expense limitation. The state generally follows federal rules, however there are certain modifications to be aware of when calculating the limitation.
- Oregon – Oregon has implemented a corporate activity tax (CAT) that went into effect for tax years beginning on or after January 1, 2020. The Oregon Department of Revenue has issued guidance and administrative rules to help businesses with questions such as determining if their business activity meets the definition of a commercial activity to making estimated CAT payments.
- Rhode Island – For tax years beginning on or after January 1, 2019, passthrough entities have the option of electing to pay an entity level tax at a tax rate of 5.99%. This annual election can relieve the filing burden for passthrough members as it eliminates the personal tax return filing requirement.
- Texas – The Texas Comptroller of Public Accounts released guidance on calculating the Texas franchise tax. Net losses from the sale of investments or other capital losses should not be included in Texas Gross Receipts as the losses do not reflect the business’ gross receipts.