KPMG reports - Kentucky (tax reform); New Jersey (corporate business tax); Ohio (call centers); Ohio (professional athletes) 

February 10:  KPMG’s This Week in State Tax—produced weekly by KPMG’s State and Local Tax practice—focuses on recent state and local tax developments and features a series of short podcasts presented by KPMG tax professionals. Text of the podcasts is also available.

This week’s edition includes the following topics (listen to the podcasts; to read text, click on the links below).

  • Kentucky - The governor’s proposed tax reform plan contains the recommendations of a “blue ribbon” tax commission including proposals to: reduce individual (personal) income tax rates; reduce the current corporate income tax rate from 6% to 5.9%; move to a single-sales factor apportionment, adopt market-based sourcing rules for other-than-tangible personal property; exempt certain inventory from property tax; and expand credits to include a research and development (R&D) credit.

  • New Jersey - In an unpublished opinion, the Tax Court amplified a bench ruling in which it granted a taxpayer’s claim for refund of corporation business tax (CBT). Here, the taxpayer was a Delaware corporation headquartered in California that paid royalties to an affiliate for use of trademarks and trade names, and the affiliate did not file a CBT return in New Jersey because it lacked physical presence. The court held the CBT refund claim was timely filed.

  • Ohio - The Board of Tax Appeals denied the taxpayer’s claim for a sales tax exemption for telecommunication services provided at its call center. To qualify for the sales tax exemption for telecommunication services, the taxpayer must employ at least 50 individuals engaged in “call center activities” on a full-time basis, and the Board of Tax Appeals read this requirement narrowly and rejected the taxpayer’s attempts to include employees that were providing support for the call center workers.

  • Ohio - The Board of Tax Appeals determined that a professional athlete (a football player for the Indianapolis Colts) was subject to Cleveland’s municipal income tax despite not having traveled to or played in any games occurring in Cleveland during the 2008 tax year. The taxpayer was sidelined by an injury in 2008, when the Colts played the Cleveland Browns and did not travel to Cleveland for the game.

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