Colorado Reportable and Listed Transaction Disclosure

In today's Blog, I address the timing of taxpayer disclosure, highlighting the upcoming July 1, 2010 deadline for tax returns filed after June 1, 2009.


Overview

On April 2, 2009, Colorado adopted House Bill 09-1093, which require taxpayers to disclose participation in "reportable' and "listed transactions'. taxpayers subject to these disclosure provisions include corporations, individuals, estates, trusts, partnerships, S Corporations and other entities required to file an income tax return under Col. Rev. Sta. Sec. 39-22-601.

The new law also requires "material ad visors" to disclose reportable and listed transactions and maintain a list of persons advised with respect to such transactions. Significant taxpayers and material advisor penalties are imposed for failure to comply with these requirements.

Definition

Colorado Listed Transaction

For Colorado purposes a "listed transactions" also includes a "transaction" between a captive real estate investment trust and its more than 50% beneficial owner, and a transaction between a captive regulated investment company and its more than 50% beneficial owner. Pursuant to Colo. Code Reg. sec. 39-22-652(2)(b), these transactions are referred to as "Colorado Listed Transactions' where the relevant tax returns "reflect a Colorado tax benefit".

Taxpayer Disclosure Requirement
Disclosure Timing

Under the general rule, for each tax period in which a taxpayer participates in a Federal Transaction or a Colorado Listed Transactions, including participation for any prior period that is still open for assessment under the statute of limitations, the taxpayer is required to disclose that participation with its next filed tax return. For any return filed after June 1, 2009, a taxpayer should disclose with its return participation in any Federal Transaction or a Colorado Listed Transaction, including any participation for prior periods still open for assessment. For any return made after June 1, 2009, disclosure will be considered timely so long as that disclosure is made by July 1, 2010.

Taxpayer Penalties

A taxpayer who fails to disclose a reportable transaction is subject to a penlaty of up to $15,000. A taxpayer who failes to disclsoe a listed transaction is subject toa penalty of up to $50,000. these penalties are in additin to any other penalties that may be imposed, but may be wavied, reduced or compromised by the Colorado Department of Revneu upon showing of reasonable cause.

Kansas: Amnesty Program Enacted

Kansas: Amnesty Program Enacted

TIME PERIOD

Legislation (Senate Bill 572, signed May 27, 2010) establishes a tax amnesty program to be held from September 1, 2010, through October 15, 2010.

APPLIES TO WHICH TAXES

The program applies to a myriad of Kansas taxes, including sales and use, income, and withholding taxes.

Amnesty is available for tax liabilities due and unpaid for tax periods ending on or before December 31, 2008.

TAXES NOT ELIGIBLE

Amnesty is not available for (1) taxes resulting from an audit if the taxpayer received notification as to the starting date of the audit prior to September 1, 2010, or (2) taxes due as a result of an audit that is underway as of September 1, 2010.

Also not eligible are taxes for which an assessment or proposed assessment has been issued as of September 1, 2010, or assessments that are being appealed administratively or judicially as of that date.

PROCEDURE

Eligible taxpayers that file all required returns and pay all taxes due by the close of the amnesty program will receive a waiver of all penalties and interest otherwise due.

Taxpayers should be aware that participation in the amnesty program constitutes relinquishment of all administrative and judicial rights of appeal with respect to taxes eligible for amnesty. In addition, no tax payments received as a result of the amnesty program are eligible for refunds or credits.

Georgia & Oklahoma Decouple From IRC Sec. 108(1)

State Tax Update - Income/Franchise Tax:

The States have spent their portion of the stimulus money and they are looking for new ways to get money. Georgia and Oklahoma recently passed legislation decoupling from select provisions of the federal American Recovery and Reinvestment Act of 2009 (ARRA) for state corporate and personal income tax purposes (i.e. ,deferral of recognition of income from discharge of certain business indebtedness under IRC Sec. 108(i)).The following summarizes the new laws:

Georgia:
Although Georgia’s legislation was signed into law on June 3, 2010, the new law applies to tax years beginning on Jan 1, 2009.
For taxable years beginning on or after January 1, 2009, the law specifically decouples from select provisions of the federal American Recovery and Reinvestment Act of 2009 (ARRA) for state corporate and personal income tax purposes, including the:
• Deferral of recognition of income from discharge of certain business indebtedness under IRC Sec. 108(i), and
• Expanded carry back period for net operating losses (NOLs) of certain small businesses under IRC Sec. 172(b)(1)(H).
Additionally, with respect to stock purchases and sales occurring on or after June 3, 2010, the new law also requires that all IRC Sec. 338 elections apply for purposes of calculating a corporation’s Georgia taxable net income.

Oklahoma:

Applicable for taxable years beginning on or after January 1, 2010, new law requires Oklahoma corporate and personal income taxpayers to add to their Oklahoma taxable income an amount equal to the amount of deferred income not included in such taxable income pursuant to Internal Revenue Code (IRC) Sec. 108(i)(1), as amended by Section 1231 of the American Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).
The new law correspondingly requires a subtraction from Oklahoma taxable income for the amount of deferred income included in their taxable income pursuant to IRC Sec. 108(i)(1), as amended by Section 1231 of the American Recovery and Reinvestment Act of 2009 (P.L. No. 111-5).

Florida Enacts Amnesty Program

The Governor of Florida signed H5801 into law on May 28, 2010 which created an Amnesty Program.

The amnesty program runs from July 1, 2010 to September 30, 2010. Under the program, eligible taxpayers may satisfy their state tax liabilities and avoid criminal prosecution and penalties. In addition, interest may be decreased up to 50% in certain cases.

Eligible Taxes

The taxes eligible under the program are: sales tax, fuel tax, corporate income tax, communications services tax, gross receipts tax, and Florida intangible tax.

Taxpayers Under Audit

Taxpayers who are currently under audit or have been contacted for audit, may still apply for amnesty; however, taxpayers will be required to pay the tax and 75% of the interest due.

Taxpayers Who Have Not Been Contacted

Taxpayers who have not been contacted by the state of Florida and come forward during the amnesty period, will be required to pay the tax and 50% of the interest due.