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State and Local Taxes Newsletter

State and Local Tax Update – November

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Indiana Offers Guidance on Opening and Closing a Business

The Indiana Department of Revenue (DOR) recently offered guidance on “How to Open and Close a Business” with the state.  Specific guidelines included:

  1. Determining when registration with the DOR is required,
  2. Links to the Secretary of State’s INBiz website and topics of interest to new business owners,
  3. Steps to close business tax accounts with the DOR, and
  4. Contact information should taxpayers have questions.

The specific guidance is outlined below.

In addition, the DOR recently implemented a new Customer Service Division wherein representatives have executed a new enhanced training program and adopted new quality control measures.  Additional information on the new Division will be made available by the DOR in the coming months.

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How to Open and Close a Business

Opening a Business

When opening a new business in Indiana, it’s important to determine whether you need to register your business with the Indiana Department of Revenue.

You will need to register your business if you:

  • Will be selling products or tangible items
  • Have employees
  • Sell food and beverages
  • Rent accommodations for less than 30 days
  • Rent motor vehicles
  • Sell tires
  • Sell fireworks
  • Sell prepaid wireless cards

To register your business with the Department of Revenue, start by registering through the Secretary of State’s INBiz website.  INBiz is a cooperative effort among several agencies to provide a one-stop source for business owners.

The department understands that business owners are experts in their trade but don’t necessarily have an interest in, or extensive knowledge, of taxes. To help businesses start strong, the department offers a number of resources from specialized presentations to online resources by business type.

Closing a Business

If you close your business, you’ll need to close your business tax accounts with the department. To do so, complete a Business Tax Closure Request (BC-100). You must complete a BC-100 for each location to be closed.

To verify the business closure, you must include one or more of the following:

  • Minutes of the final board of directors meeting
  • Records of bank accounts closed
  • Articles of dissolution
  • Notarized statement of dissolution from an officer of the business
  • Final utility bills
  • Proof of dissolution filed with the Internal Revenue Service
  • Books and records
  • Other pertinent information

Completed forms and documentation should be faxed to 317.232.1021 or mailed to:

Indiana Department of Revenue
Tax Administration Processing
P.O. Box 6197
Indianapolis, IN 46206-6197

Your Somerset Advisor is here to help you with this process.  Should you have any questions, do not hesitate to contact us at info@somersetcpas.com.


Multistate Tax Commission Announces Voluntary Disclosure Program for Online Marketplace Sellers

Do you participate in the Fulfillment by Amazon (FBA) process?  If so, you may have uncollected / unpaid sales tax liabilities.

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If you  have inventory sitting in an Amazon warehouse waiting to be shipped, then you have sales tax nexus in that warehouse jurisdiction.  Many amateur on line sellers do not know the hidden sales tax responsibilities that are inherit with storing their inventory in an Amazon fulfillment facility.

The Multistate Tax Commission (MTC) recently announced a voluntary disclosure program.  The program encourages remote sellers to voluntarily register to collect sales tax. Within this program sales tax, penalties and interest may be forgiven.

There are currently 25 states and districts participating in the MTC Online Marketplace Seller Voluntary Disclosure Initiatives: Alabama, Arkansas, Colorado, Connecticut, District of Columbia, Florida, Idaho, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Minnesota, Missouri, Nebraska, New Jersey, North Carolina, Oklahoma, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, and Wisconsin

Eligibility requirements within this program are:

  1. you cannot  currently be registered to collect and remit sales tax within that state,
  2. you have not previously been notified that you have an outstanding tax liability in that state,
  3. you have no physical presence in that state other than inventory stored at a third-party fulfillment center,
  4. must timely complete and file the application for Voluntary Disclosure Agreement document.

Program Benefits include the possibility of waiving all prior uncollected sales tax, penalties and interest. Each state’s benefits will vary.

Application Process: To participate, the application must be completed and submitted to the MTC no later than October 17, 2017. The application must indicate the specific state in which VDA is being sought and provide complete and accurate disclosure of estimated taxes uncollected.


Disaster Tax Relief Available

Tax relief is available for taxpayers in federally declared disaster areas or areas designated by the Federal Emergency Management Agency (FEMA).  They are:

  • Extension of time for filing tax returns and paying taxes.
  • Favorable rules for hardship distributions/loans from retirement plans.
  • Casualty loss deductions available on 2016 returns or 2017 returns allowing taxpayer the option to claim the deduction in the year that offers the most tax savings.
  • Special rules for determining earned income for purposes of the earned income tax credit and refundable portion of the child tax credit.
  • Suspension of limits for certain charitable contributions for the period August 23, 2017, through December 31, 2017.
  • New “Employee Retention Credit” for businesses that were rendered inoperable by hurricanes but retained their employees.
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Extended time for filing tax returns includes not only business and personal tax returns but also October 31st quarterly payroll filings and excise tax returns.

Hardship loans from 401(k)s and similar employer-sponsored retirement plans are available to qualified victims of the recent hurricanes, as well as their families who can use the proceeds to assist families with immediate needs including food and shelter.  Hardship loans can remain tax-free if they are repaid over a six-year period (rather than a five-year period.) Hardship/hurricane distributions are not subject to 10% early withdrawal penalty but have dollar limits on the amount exempted from the penalty.  Hardship distributions must still be claimed as income but can be stretched over a three-year period or claimed in the year of the distribution.

Uncompensated losses on personal-use property related to the hurricanes can be deducted to the extent that the amount of each loss exceeds $500.

Numerous states have also passed legislation allowing for disaster tax relief.

Please see your Somerset advisor if you or a family member has been affected by the recent disasters and would like guidance navigating through the applicable tax relief and qualifications.