![]() 18, 2022, New Jersey adopted final regulations reflecting law changes originally enacted in 2018, including mandatory unitary combined reporting. New Jersey adopts combined reporting regulations The rate change is related to legislation enacted in March of 2022 ( House File 2317), which provides for annual rate decreases over several years, contingent on certain revenue goals. The Order provides that the top two corporate income tax brackets should be reduced to 8.4% from 9.8% and 9.0% for 2023 and beyond. 27, 2022, the Iowa Department of Revenue issued Order 2022-03, which updates the corporate income tax rate applicable to tax years beginning after Jan. For more information, please read our alert: “ Illinois adopts changes to throwback/throw-out rules for foreign sales.” Iowa releases guidance on reduced corporate income tax rate The amendments are effective for tax years ending on or after Dec. Under the amended rules, to the extent a taxpayer’s activities in the foreign jurisdiction create taxable presence but are exempted from income taxation under treaty, the taxpayer will be considered to be subject to tax in the foreign jurisdiction, and no throw-back or throw-out will be required. ![]() Previous versions of the rule provided that a taxpayer selling into a foreign country would be subject to throw-back/throw-out to the extent an income tax treaty exempted the taxpayer’s activities from taxation in the destination jurisdiction. 9, 2022, update the state’s sales throw-back and throw-out rule. Illinois updates sales throwback ruleĪmendments published in the Illinois Register on Sept. 1, 2022, Idaho enacted House Bill 1, reducing the corporate tax rate from 6.0% to 5.8%, effective Jan. 11, 2022, Arkansas enacted Senate Bill 1, lowering the highest marginal corporate tax rate from 5.9% to 5.3% for tax years beginning on or after Jan. For additional information, please read our alert: “ Alabama tax tribunal rules taxpayer entitled to interest deduction.” Arkansas lowers corporate income tax rate Taxpayers currently adding back intercompany expenses for Alabama purposes under similar fact patterns should carefully review the decision to determine if those addbacks are appropriate. Although the taxpayer’s Ireland affiliate was seemingly serving as a conduit or pass-through for intercompany interest expense in the back-to-back transactions described by the facts, the tax tribunal held that the transaction between the taxpayer and the Ireland affiliate as well as the affiliate’s treatment of the transaction for tax purposes satisfied the specific requirements of the subject-to-tax exception in the state’s intercompany addback rules. The interest income was included in the affiliate’s Ireland return but was fully offset by a deduction for interest expense paid to an affiliate in Luxembourg. The taxpayer in the case filed Alabama returns claiming a deduction for intercompany interest expense paid to an Ireland affiliate. 31, 2022, the Alabama tax tribunal issued a taxpayer-favorable verdict that provides clarity on how the intercompany interest addback and associated subject-to-tax exception provisions should apply. State specific updates Alabama clarifies subject to tax exception to intercompany addback For questions about these quarterly updates or other recent legislative and regulatory developments, please reach out to your tax adviser for more information. ![]() This information summarizes the listed developments and may not provide additional nuanced considerations that may be relevant for provision purposes. The following state tax developments were enacted during the third quarter of 2022 and should be considered in determining a company’s current and deferred tax provision pursuant to ASC 740, Income Taxes, for the quarter ended Sept.
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