News For Your Week Ahead: July 15, 2022

Registration and pricing details coming soon. RSVP here to get on the waitlist — limited spots are available.

SDAT Raises Business Personal Property Exemption From $2,500 TO $20,000 

The Maryland State Department of Assessments and Taxation (SDAT) announced that HB268, which raises the exemption from personal property assessment for all Maryland businesses from $2,500 to $20,000, has taken effect. This legislation will save 14,217 businesses from paying taxes on $44.2 million in assessment, and is an extension of HB90, which SDAT sponsored in 2018 and exempted 28,493 businesses from $10.8 million in assessment.

HB268 took effect on June 1, 2022, and is effective for tax years starting after June 30, 2022, and includes annual filings submitted as early as January 2022. SDAT will automatically adjust assessments of filings that were submitted between January 1, 2022, and June 30, 2022 so that reported business personal property less than $20,000 is not assessed.

Late filing penalties previously billed on 2022 business personal property returns reporting less than $20,000 have been abated and filers who have already paid a late filing penalty billed on a return filing reporting less than $20,000 are being mailed a refund check for the penalty paid.

Beginning in 2023, filers with a total original cost of personal property less than $20,000 will also be able to self-attest on their Annual Report that their personal property falls within the exemption range and will no longer be required to submit a return detailing their personal property.

Here’s What Taxpayers Need to Know About Business-Related Travel Deductions | IRS Tax Tip 2022-104

Business travel deductions are available when employees must travel away from their tax home or main place of work for business reasons. The travel period must be substantially longer than an ordinary day’s work and a need for sleep or rest to meet the demands the work while away.

Travel expenses must be ordinary and necessary. They can’t be lavish, extravagant or for personal purposes.

Employers can deduct travel expenses paid or incurred during a temporary work assignment if the assignment length does not exceed one year.

Travel expenses for conventions are deductible if attendance benefits the business and there are special rules for conventions held outside North America.

For information about deductible travel expenses while away from home, click here.

VIRGINIA — New Electronic Payment Requirement for Some Individual Income Taxpayers | Virginia Department of Taxation

A recent legislative change requires taxpayers to submit all of their income tax payments electronically if:

• Any estimated tax payment exceeds $1,500; or
• Any extension payment exceeds $1,500; or
• The total anticipated income tax liability in any taxable year exceeds $6,000.

Individual taxpayers should start making all of their payments electronically if any of the above conditions apply to them. This includes all payments for estimated taxes, extension payments, and any other amounts due when a taxpayer files a return.

We’re sending letters to taxpayers who may meet this requirement with their estimated tax payment, which is due September 15.

Visit the Virginia Tax website for more information on individual income tax payment options.

Simplified DSUE Portability Election | via NATP

Rev. Proc. 2022-31 provides a simplified method for some estates to obtain an extension of time to make the portability of the deceased spousal unused election (DSUE) amount pursuant to §2010(c)(5)(A). This revenue procedure applies to estates that are not normally required to file an estate tax return because the value of the gross estate and adjusted taxable gifts is under the filing threshold in §6018(a). In addition, the election must be filed on or before the fifth annual anniversary of the decedent’s date of death.

To make the election, the executor filing Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, on behalf of the decedent’s estate must state at the top of the form that the return is “Filed pursuant to Rev. Proc. 2022-32 to elect portability under §2010(c)(5)(A).”

Rev. Proc. 2022-32 supersedes Rev. Proc. 2017-34.

Pennsylvania—Corporate Income Tax: Rate Reduction, Market Based Sourcing for Intangibles Enacted | via Wolters Kluwer IntelliConnect

Pennsylvania has enacted legislation:

• to reduce the corporate income tax over a series of years;
• to require market based sourcing for the sales of intangibles; and
• codify the existing economic nexus rules currently in place as tax policy issued in Corporation Tax Bulletin 2019-04.

What are the reduced corporate income tax rates?

The corporate income tax rate will be reduced as follows:

• 9.99% through December 31, 2022;
• 8.99%, January 1, 2023 through December 31, 2023;
• 8.49%, January 1, 2024 through December 31, 2024;
• 7.99%, January 1, 2025 through December 31, 2025;
• 7.49%, January 1, 2026 through December 31, 2026;
• 6.99%, January 1, 2027 through December 31, 2027;
• 6.49%, January 1, 2028 through December 31, 2028;
• 5.99%, January 1, 2029 through December 31, 2029;
• 5.49%, January 1, 2030 through December 31, 2030; and
• 4.99%, January 1, 2031 and each taxable year after.

What will market based sourcing of intangibles mean?

The sales factor used for apportioning the income of multi-state corporations will be determined using market-based sourcing rules for intangible related receipts. Currently, corporations source those receipts using costs of performance. The change will apply to tax years beginning after December 31, 2022.

Sales of intangibles will be sourced to Pennsylvania if the gross receipt are:

• from the lease or license of intangible property, including a sale or exchange of property where the receipts from the sale or exchange derive from payments that are contingent on the productivity, use or disposition of the property, if and to the extend the property is used in Pennsylvania;
• from when the property sold is a contract right, government license or similar property that authorizes the holder to conduct a business activity in a specific geographic areas, if and to the extent the property is use in or associated with Pennsylvania;
• from the sale, redemption, maturity or exchange of securities, held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business, if the customers are in Pennsylvania;
• received by a corporation that regularly lends fund to unaffiliated entities or to individuals from interest, fees and penalties imposed in connection with loans secured by real property;
• received by a corporation that regularly lends funds to unaffiliated entities or to individuals from interest, fees, and penalties imposed in connection with loans not described above, if the borrower is in Pennsylvania;
• received from interest, fees and penalties in the nature of interest from credit card receivables and gross receipts from fees charged to cardholders, such as annual fees, if the billing address of the cardholder is in Pennsylvania;
• received from interest, not described above, is included in the numerator of the sales factor if the lender’s commercial domicile is in Pennsylvania; and
• received from intangible property, not described above, will be excluded from the numerator and the denominator of the sales factor.

What are the nexus rules being codified?

Corporations, with no physical presence, and sales of $500,000 or more per year sourced to Pennsylvania are deemed to have nexus in Pennsylvania. The change applies to tax years beginning after December 31, 2022.