Tax News

CCH (cch.taxgroup.com) reports:

  Rhode Island Gov. Donald J. Carcieri has submitted a supplemental budget for 2009 to the General Assembly, which includes various proposals and tax increases that affect personal income tax, corporate income tax, cigarette tax, motor vehicle fees, and gross premiums tax.

 

CCH (cch.taxgroup.com) reports:

  A company's charges for access to its software that allows a customer to upload an image onto the company's servers and manipulate the image to show various colors and views is subject to New York state and local sales when accessed by a customer located in New York because it is prewritten computer software. When the company's customers access the software, it constitutes a transfer of possession of the software because the customer gains constructive possession of the software, and gains the "right to use, control or direct the use" of the software. This is true even if no "copy" of the software is transferred to the customer. Thus, the sale of a license to use the software to a customer in New York is taxable.

  The situs of the sale for purposes of determining the proper local tax rate and jurisdiction is the location associated with the license to use (i.e., the location of the customer's employees that use the software). If the customer's employees that use the software are located both in and out of New York, the company should collect tax based on the portion of the receipt attributable to the employee users located in New York.

TSB-A-08(62)S , New York Commissioner of Taxation and Finance, November 24, 2008, released January 2009, ¶406-277

  Other References:

  Explanations at ¶60-310

CCH (cch.taxgroup.com) reports:

  In his biennial budget proposal for fiscal years 2010-11, Maine Gov. John E. Baldacci did not propose increasing Maine income or sales taxes. Instead, Gov. Baldacci proposed equalizing the taxes on smokeless tobacco, a change in business taxes that benefits Maine-based companies, and a continuation of the estate tax. Regarding Maine-based companies, the budget would remove from the apportionment calculation the sales of tangible personal property by businesses operating in more than one state, if the sales are delivered to a state where the taxpayer is not subject to tax. In addition, the sales other than those of tangible personal property would be removed from Maine sales in the apportionment calculation, if the sales are delivered from Maine to a state where the taxpayer is not subject to tax.

  The governor's budget proposal can be viewed at
http://www.maine.gov/budget/.

Press Release and 2010-2011 Biennial Budget , Gov. John E. Baldacci, January 9, 2009
 

CCH (cch.taxgroup.com) reports:

  The IRS has modified the rules for financial institutions reporting required minimum distributions from retirement plans in light of the waiver on minimum distributions during 2009 that was included in the Worker, Retiree, and Employer Recovery Act of 2008 (P.L. 110-458). Under the recently enacted legislation, required minimum distributions from individual retirement accounts (IRAs) and retirement plans that maintain participant benefits in individual accounts are waived for 2009. Issuers of the 2008 Form 5498, IRA Contribution Information, should not put a check in Box 11 of the form. However, if a financial institution issues a 2008 Form 5498 with a check in Box 11, the IRS will not consider the form as being issued incorrectly if the financial institution notifies the individual retirement account owner by March 31, 2009, that no required minimum distribution is required for 2009. Further, financial institutions need not send the required minimum distribution information required under Notice 2002-27, 2002-1 CB 814, to IRA owners for 2009. If the institution sends a separate required minimum distribution statement to an IRA owner, the financial institution must show that the required minimum distribution for 2009 is zero or include a statement showing what the required minimum distribution would have been if the 2009 waiver hadn't occurred accompanied by an explanation of the waiver for 2009. Notice 2002-27, 2002-1 CB 814, is modified.

Notice 2009-9,
2009FED ¶46,240

Other References:

 
Code Sec. 401

  CCH Reference - 2009FED ¶17,726.25

  CCH Reference - 2009FED ¶17,726.26

 
Code Sec. 403

  CCH Reference - 2009FED ¶18,282.11

 
Code Sec. 408

  CCH Reference - 2009FED ¶18,922.0759

  CCH Reference - 2009FED ¶18,922.1066

  Tax Research Consultant

  CCH Reference - TRC PLANIND: 15,054.10

  CCH Reference - TRC PLANRET: 12,052.30

  CCH Reference - TRC RETIRE: 42,750

  CCH Reference - TRC RETIRE: 66,456

  CCH Reference - TRC RETIRE: 66,466

CCH (cch.taxgroup.com) reports:

  For pension plan years beginning in January 2009, the IRS has released the corporate bond weighted average interest rate, the permissible range of interest rates used to calculate current plan liability and to determine the required contribution under Code Sec. 412(l) for plan years through 2009, and the current corporate bond yield curve and related segment rates for the purpose of establishing a plan's funding target under
Code Sec. 430(h)(2).

  The corporate bond weighted average interest rate for plan years beginning in January 2009 is 6.29 percent; and the 90-percent to 100-percent permissible range is 5.67 percent to 6.29 percent. The annual rate of interest on 30-year Treasury securities for December 2008, used to determine the minimum present value of a participant's benefit under Code Sec. 417(e)(1) and (2), is 2.87 percent.

  For plans electing not to use the transitional rule under Code Sec. 430(h)(2)(G), or for plans whose first year begins after 2009, the 24-month average segment rates for January 2009 are: 5.32 for the first segment; 6.45 for the second segment; and 6.69 for the third segment.

  For plan years beginning in 2009, the funding transitional segment rates for January 2009 are: 5.64 for the first segment; 6.40 for the second segment; and 6.56 for the third segment.

  For plan years beginning in 2009, the minimum present value transitional segment rates for January 2009 are: 4.41 for the first segment; 4.57 for the second segment; and 4.27 for the third segment.

Notice 2009-2,
2009FED ¶46,239

Other References:

 
Code Sec. 401

  CCH Reference - 2009FED ¶17,730.40

 
Code Sec. 412

  CCH Reference - 2009FED ¶19,125.505

 
Code Sec. 417

 
Code Sec. 430

  CCH Reference - 2009FED ¶20,161.30

  Tax Research Consultant

  CCH Reference - TRC RETIRE: 15,304.05
CCH Reference - TRC RETIRE: 15,304.10
CCH Reference - TRC RETIRE: 30,556
 

CCH (cch.taxgroup.com) reports:

  The IRS has updated procedures regarding the request, issuance and appeal of determination letters and rulings on the exempt status of organizations under Code Secs. 501 and 521. These procedures apply to exempt organizations other than those relating to pension, profit-sharing, stock bonus, annuity and employee stock ownership plans.

  The updated procedures provide guidance on requesting determination letters, the steps taken in issuing determination letters, appealing determination letters, revoking determination letters and when an organization will have sufficiently exhausted administrative remedies allowing for a declaratory judgment proceeding under Code Sec. 7428. Included in the guidance is the new central address for the processing of exempt status applications, replacing the former system of district offices. However, some applications may be processed in other exempt organization (EO) offices or referred to EO Technical. Rev. Proc. 2008-9, I.R.B. 2008-2, 258, is updated and superseded, and Rev. Proc. 76-34, 1976-2 CB 656, is supplemented.

Rev. Proc. 2009-9, 2009FED ¶46,238

Other References:

 
Code Sec. 501

  CCH Reference - 2009FED ¶22,604.10

  CCH Reference - 2009FED ¶22,660.10

 
Code Sec. 507

  CCH Reference - 2009FED ¶22,780.15

 
Code Sec. 511

  CCH Reference - 2009FED ¶22,825.101

 
Code Sec. 521

  CCH Reference - 2009FED ¶22,882.112

 
Code Sec. 527

  CCH Reference - 2009FED ¶22,911.10

 
Code Sec. 4947

  CCH Reference - 2009FED ¶34,143.35

 
Code Sec. 7428

  CCH Reference - 2009FED ¶41,723.18

 
Statement of Procedural Rules Sec. 601.201

  CCH Reference - 2009FED ¶43,360.172

  CCH Reference - 2009FED ¶43,360.173

  Tax Research Consultant

  CCH Reference - TRC EXEMPT: 12,052.05

  CCH Reference - TRC EXEMPT: 12,054

  CCH Reference - TRC EXEMPT: 12,056

  CCH Reference - TRC EXEMPT: 12,102

  CCH Reference - TRC EXEMPT: 12,102.05

  CCH Reference - TRC EXEMPT: 12,102.10

  CCH Reference - TRC EXEMPT: 12,104

  CCH Reference - TRC EXEMPT: 12,104.05

  CCH Reference - TRC EXEMPT: 12,104.10

  CCH Reference - TRC EXEMPT: 12,156

  CCH Reference - TRC EXEMPT: 12,202

CCH (cch.taxgroup.com) reports:

  President-elect Obama signaled he is flexible about the size of the forthcoming economic recovery plan and the tax-cut provisions in it. He also maintained that Congress must take urgent action on a package because of rapidly deteriorating economic conditions. The president-elect's advisors in recent days indicated that the plan could cost as much as $775 billion, an amount that has been criticized in some quarters for having either too large or too small a spending portion.

  At a news conference on January 9, Obama noted that 524,000 jobs were lost in December and nearly 2.6 million were eliminated in the past year. The Bureau of Labor Statistics on January 9 reported the unemployment rate jumped from 6.8 percent in November to 7.2 percent in December 2008.

  In meetings with congressional leaders, Obama's economic advisors have met some resistance to the president-elect's spending and tax-cut priorities. Obama made clear that he welcomes any proposals that are designed to jump start the economy. "If somebody has an idea for a tax cut that is better than a tax cut we've proposed, we will embrace it," he asserted. The new administration also will support spending projects identified by Congress if they create jobs, are good for the economy and do not hamper control of the federal deficit in the long run.

  By Paula Cruickshank, CCH News Staff

Tax Analysts report: