State and Local Tax 360˚

This is a reminder for businesses and tax professionals who file returns for partnerships, estates and trusts.

If you recall, the IRS issued regulations (IR-2008-84; T.D. 9407; NPRM REG-115457-08) reducing the automatic extension period from six months to five months for partnerships filing Form 1065 or Form 8804, and estates and trusts filing Form 1041.

The change applies to returns due on or after January 1, 2009.

FEDERAL Return Impact

According to a press release by the State Controller of California, John Chiang, he has completed “stress testing” the Department of Finance’s cash projections from the State’s newly-revised budget and has determined the new spending plan will provide the State Treasury with enough cash to stop issuing IOUs on September 4, almost one month earlier than expected.

Michael Mazerov at the Center of Budget and Policy Priorities (CBPP) has written an article suggesting (or recommending) that states should expand their sales tax base to include services.

I have not had a chance to analyze the article and 45 page report yet, but I wanted to go ahead and make you aware of it, so you could look it over.

Click on the following link to access the article:

http://www.cbpp.org/cms/index.cfm?fa=view&id=2888

The Governor of North Carolina has signed the budget bill (SB 202) into law.

The bill (SB 202) contains several tax law changes:

1. A surtax (or additional income tax) equal to 2% or 3% of the tax payable by the taxpayer (would apply to corporations and individuals for calendar tax years 2009 and 2010).
2. Sales tax rate would increase from 4.5% to 5.5% from 9/1/09 to 10/1/09.

On July 29, 2009, Governor Schwarzenegger issued Executive Order S-15-09 stating he will call a special session in September 2009 to consider the recommendations made by the Commission on the 21st Century Economy ("Commission") to improve California's state tax system.