Companies incorporated in Delaware have until June 30 to enter into Delaware’s recent Voluntary Disclosure Agreement (VDA) program and become compliant with their unclaimed property reporting obligations. Under Delaware law, holders of unclaimed property are subject to audit for all open periods: over 30 years! However, holders that enroll in the Secretary of State’s VDA program by June 30 will be subject to a “limited” lookback period that goes back to 1996 and will be relieved of interest and penalties. By contrast, companies that are audited by the Department of Finance are subject to liability, including interest and penalties, for years dating back as far as 1981. Companies incorporated in Delaware ought to consider the VDA program regardless of where they do business. Moreover, Delaware escheat law is so broad that it potentially covers companies that are incorporated anywhere in the U.S. if the owners of the unclaimed property have certain connections with Delaware.
Don Griswold is a Tax Group partner in Crowell & Moring's Washington, D.C. office. He serves as a trusted counselor to corporate tax executives regarding state and local tax issues. Don's record of success litigating and settling tough tax controversies includes obtaining tens of millions of dollars in state tax refunds based on novel legal and constitutional issues and achieving even larger reductions of tax assessments. He represents Fortune 500 companies before administrative agencies, state and federal courts, and legislative bodies around the country – but achieves most of his greatest successes for clients in confidential negotiated settlements far away from the media spotlight. His advice is particularly valued by clients seeking to reevaluate and improve the quality and viability of their forward-looking state tax planning.
Legislation passed by the U.S. Senate on May 6, 2013 would impose sales tax collection obligations on retailers with no physical presence in a state but would not provide a needed income tax safe harbor.
In what may prove to be one of its most bi-partisan moments in recent years, the U.S. Senate passed S. 743 (The Marketplace Fairness Act of 2013) by a large margin: 69 – 27. The Bill would require remote sellers with more than $1 million in total sales to collect sales taxes in states that adopt sales tax simplification measures. These simplification measures require one-stop tax compliance, one-stop auditing, standardization of what is subject to tax, and 90-day notice of rate changes.
Logic tells us that virtually every state will adopt these sales tax simplification measures, at least for remote sellers. This is a development that over time may lead to sales tax simplification for all sellers. Continue Reading Marketplace Fairness Act of 2013: Where Is The Income Tax Safe Harbor?
Many businesses became subject to new payment card reporting requirements (Form 1099-K) in early 2012 for payments made in 2011. Starting on January 1, 2013, those businesses will become subject to new backup withholding requirements and potential penalties for incorrect filing of Forms 1099-K.
The purpose of the new rules was to improve tax compliance among merchants that accept payment through payment cards (such as credit cards) and third party settlement organizations (such as PayPal or Google Wallet). These rules impact both the merchants that receive the Forms 1099-K as well as the payors (including merchant banks and settlement organizations) that have to issue the Forms 1099-K.