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Duly Noted

An Earlier Deadline For Information Returns. American businesses have been enlisted in the fight against fraudulent tax filings, and it will require them to be on their toes after the year-end holidays. Businesses now are required to send W-2 forms reporting employee earnings and Forms 1099 showing payments to nonemployee contractors to the Internal Revenue Service by January 31. In the past, such forms needed to go to taxpayers by that date, but businesses had more time to file them with the IRS. The change will allow the IRS to verify compensation claims and tax withholding before issuing refunds claimed on returns filed early in the tax season. P.L. 114-113.

Domicile Fights Not Just A Coastal Thing. Large urban states such as New York and California are renowned for aggressively challenging claims by would-be former residents who say they now live elsewhere. But they know how to play hardball in Iowa, too, notwithstanding the state’s self-image as a particularly friendly state. Clifford Wendt discovered the limits of “Iowa nice” when he claimed nonresident status on his 2010 tax return, a year in which he worked and dwelled in South Dakota while separated from his wife. The Iowa Department of Revenue claimed jurisdiction to tax Wendt as a domiciled resident because he retained co-ownership and was registered for a homestead credit on his Iowa house, failed to change his voter registration to South Dakota and had not changed his driver’s license because — as they say in the colloquial way in the region — he was waiting until it “needed renewed.” Re Clifford W. Wendt, 2016 STT 111-12.

New York Won’t Tax Nonresident’s ‘Top Hat’ Plan. A high-level employee who worked for a New York firm but lived elsewhere is not subject to New York tax on a lumpsum distribution from a so-called “top hat” plan. The plan provided deferred compensation benefits to employees whose income exceeded the ceiling for coverage under qualified retirement plans. The employee, whose name was not released, sought technical advice from the New York Department of Taxation and Finance. The department confirmed that under federal law, top hat plans are exempt from taxation by nonresident states if they only supplement qualified plans for employees whose compensation exceeds the limits. 2016 STT 111-23.

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