The following were originally printed in the Weekly State Tax Report, part of the State Tax Library.

Weekly State Tax Report

Volume 2008 Number 43
Friday, October 24, 2008

New York Proposes to Delete Temporary Stay Exception From Residency Determination
The New York Department of Taxation and Finance proposes rule amendments that would remove the "temporary stay" exception from the definition of permanent place of abode used to determine if an individual is a resident for personal income tax. The elimination of the exception, which does not appear in state law, provides better interpretation of the tax law, the department explains.

Iowa Holds Direct Use of Color-Matching Machine Exempt From Tax
A company that combines base and colorant to create color is a manufacturer exempt from tax because it adds value to the materials for sale, the Iowa Court of Appeals holds in The Sherwin-Williams Co. v. Iowa Dept. of Rev. The fact that the final step in the manufacturing process of combining base and colorant is done in retail stores does not make the final step any less necessary to the manufacturing process, the court says.

Auto Parts Manufacturer Prevails in Dispute Over Application of Indiana's Throwback Rule
A company's sales from shipping parts to independent repair shops outside the state are not subject to Indiana's throwback rule, the Indiana Department of Revenue advises. The throwback rule does not apply because the taxpayer achieved taxable nexus in the other jurisdictions as a result of its dealings with the repair shops, the department explains.

New Jersey Governor Proposes Business Tax Incentives to Ease, Shorten Economic Turmoil
In an effort to cushion the impact of the recession on state's economy and position the state for a more rapid recovery, New Jersey Gov. Jon S. Corzine (D) proposes a stimulus plan that includes business tax incentives to reward job creation and investment in the state. Corzine backs both a pending legislative initiative allowing businesses to carry forward net operating losses for 20 years, and a proposal to repeal the throwout rule.

Perspective: Federal Bailout Poses Potential Complications for States Faced With Revenue Impacts
The federal bailout bill and U.S. Treasury notices aimed at providing tax relief contain provisions with potential revenue impacts for states. In this article, BNA looks at the challenges faced by the states in considering to conform to these federal changes in the face of massive budget shortfalls as well as the potential fallout from the federal government's effort to bail out the financial services industry.

Perspective: California's New Mandatory Underreporting Penalty Raises Due Process Concerns
California enacted legislation imposing a mandatory 20 percent penalty for corporations that underreport their tax liabilities by $1 million or more. In this interview, Michele Borens, of Sutherland, talks to BNA about the new penalty and her concerns that it may violate the Due Process Clause.