News and miscellaneous legal topics - current

Listed below are various legal items, with emphasis on Missouri and federal taxes. You can access these items as an RSS ("rich site summary" or "really simple syndication") feed by pointing your RSS reader to (copy this link and paste it as the RSS feed in your news/RSS reader) http://www.carnahanlaw.com/rss/rss.xml

I re-started limited posts after stopping posting new items on June 10, 2007. 11/2/08

Bank Economic Presence Creates Nexus - A national bank which solicited business and received significant gross receipts from interest and fees paid by Indiana customers had a substantial nexus with the state subjecting it to the Indiana financial institutions tax (FIT). The bank argued physical presence was required under the Commerce Clause, but, the Indiana Tax Court found that the U.S. Supreme Court has not extended the physical presence requirement beyond the realm of sales and use taxes. MBNA America Bank v. Indiana Department of State Revenue, Indiana Tax Court, No. 49T10-0506-TA-53, October 20, 2008. 11/2/08

The IRS Chief Counsel recently determined the reduction in state franchise tax attributable to the New York Qualified Empire Zone Enterprise (QEZE) Credit for real property taxes is generally deductible under Code Sec. 164, but receipt of a payment attributable to the refundable credit would be included in federal gross income and treated as a recover of property tax. CCA 200842002 10/30/08

Previously, a disregarded entity could pay employment taxes under either its name and own EIN, or the disregarded entity owner's name and EIN. Now, disregarded entities paying wages on or after January 1, 2009 must have their own tax ID number. The new regulations only apply to employment taxes, and a disregarded entity continues to be disregarded for other Federal tax purposes. Reg. §301.7701-2(c)(2)(iv). See 72 Fed. Reg. 45,891 (Aug. 16, 2007). 10/30/08

The Ninth Circuit Court of Appeals declined to review arguments not raised before the District Court by the owner of a disregarded single-member LLC fighting personal liability for the entity's unpaid employment tax liabilities that the IRS's check-the-box regs are unreasonable and invalid. The court also found that the recent decision by the IRS to adopt new regulations regarding the taxation of sole member LLCs does not change the result here. Kandi, 06-35209, 2008-2 USTC ¶50,599 (9th Cir, September 25, 2008). 10/30/08

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