WHAT'S NEW: SMALL BUSINESS TAX/LEGAL
AND REGULATORY DEVELOPMENTS -- JULY, 2017



New Federal and State Developments

This is where we announce recent tax, legal, and regulatory news developments that may be of major importance to your small business. If you've visited us before or own one of our state-by-state "Starting and Operating a Business in ..." (CA, NY, etc.) business guidebooks, and want to know what has changed lately, take a look here first. The "Starting and Operating in ..." books have all been updated regularly for all subsequent federal and state legislation since the the book series was re-introduced in e-book format in 2005, including:

  • The 2013 "fiscal cliff" tax legislation (American Taxpayer Relief Act of 2012), which extended most, but not all, of the "Bush tax cuts".
  • Recent (2014) adminstrative changes by the IRS and other federal agencies, that have modified or delayed implementation of some of the provisions of the Patient Protection and Affordable Care Act (ObamaCare).
  • Tax law changes regarding drastically increased information return penalties for non-filing, in the Trade Preferences Extension Act of 2015.
  • Changes in century-old filing date requirements for both C corporation and partnership tax returns, in tax provisions that were included in the Surface Transportation and Veterans Health Care Choice Improvements Act of 2015.
  • Numerous sweeping federal tax changes included in the Consolidated Appropriations Act of 2016, which retroactively restored a number of expired tax incentives and made some of them permanent, while extending others for several more years.
  • Permanent limitations on the power of states to tax Internet access, enacted by Congress in the Trade Facilitation and Trade Enforcement Act of 2015, which was signed into law by the President on February 24, 2016.
  • Dozens of inflation-adjusted tax items announced by the I.R.S. in late 2016, including 2017 income tax rates, credits, and tax brackets, 2017 estate and gift tax exemption amounts, 2017 pension plan and fringe benefit limitations, and the 2017 taxable wage base for FICA and self-employment tax purposes.
  • Hundreds of recent (2015 through 2017) changes in state taxes, labor laws and other laws and regulations affecting small businesses, as reported in the state-by-state editions of our "Starting and Operating a Business" e-book series, some of the most important of which developments are briefly highlighted below, on this news page.

FLASH! The 33 state and D.C. editions of the "Starting and Operating a Business in ...(state)" e-book series (for Kindle) are being updated in 2016 for the Protecting Americans from Tax Hikes Act, part of the Consolidated Appropriations Act of 2016. In this massive new tax law, Congress has extended, changed, or made permanent dozens of important tax provisions, many of which were tax incentives that had expired after 2014, but have been retroactively revived, through the] end of 2016 or longer. We are incorporating these numerous important small business tax changes in all of our Kindle e-book editions during the year, in each 2016 Kindle edition. All of our 2015 editions will soon be updated to include these 2016 law changes.


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Listed below are highlights of recent significant federal and state tax, legal and other developments, each of which is excerpted from one of the 33 various editions of the "Starting and Operating a Business in the U.S." book series. (All such excerpts are from "generic versions" of the books, which have not been customized for a particular user -- the Small Business Advisor software that installs the books for you will create either a generic version or a customized version, at the user's option. All of the 33 state ebook editions included with the Small Business Advisor software are fully updated for all the items noted on this web page.)

NOTE: Starting and Operating a Business in Alabama, November, 2015 Edition, is now available as a Kindle book, as are editions for 31 other states and the District of Columbia.


FEDERAL/NATIONAL DEVELOPMENTS:

ALL CHAPTERS OF THE "STARTING AND OPERATING A BUSINESS" EDITIONS FOR EACH STATE. In late 2015 and early 2016, the IRS released updated tax brackets, tax rates, and various deduction, exclusion and other limitations, as indexed for inflation, that are in effect in 2016. The 2016 changes are being reflected in the 33 Kindle editions as each is revised in 2016. (The 2017 IRS inflation adjustments are included in all Kindle editions updated after October, 2016.)

FROM CHAPTER 2 (IN ALL S&O EDITIONS). Individual tax rate schedules in Section 2.2 of Chapter 2 have been updated for the 2017 inflation adjustments, as announced by the I.R.S. on October 25, 2016.

FROM CHAPTER 2 (IN ALL S&O EDITIONS). Under new IRS regulations, an LLC that makes an S corporation election by filing Form 2553 will now automatically be considered a corporation. Previously, it was necessary for an LLC that wished to be taxed as an S corporation to first file a Form 8832 to elect to be re-classified as a corporation for tax purposes, before it could then file an S corporation election on Form 2553.

FROM CHAPTER 2 (IN ALL S&O EDITIONS). As a general rule, only individuals may own stock in an S corporation, with a few special exceptions. Otherwise, if another corporation or an LLC or partnership becomes an S corporation shareholder, the S corporation will lose its "S" status. However, in 3 recent Private Letter Rulings (#200816002, #200816003, and #200816004), the IRS has ruled that a single-member LLC may own stock in an S corporation, provided that the LLC owner is an individual and the LLC is a "disregarded entity" (i.e., it has not elected corporation tax status). The IRS reached this conclusion because the LLC was disregarded as an entity separate from its individual owner. While Private Letter Rulings cannot be relied on as legal authority in a tax controversy, they do give a good idea of what the IRS position is regarding an issue, and these rulings also seem to make good sense with respect to this particular issue.

FROM CHAPTER 2 (IN ALL S&O EDITIONS). Chapter 2 now discusses the possible downside of operating as a single-member LLC, if your business goes bankrupt in this harsh economic climate, while owing unpaid federal payroll taxes. You may not be insulated from liability by having such an LLC, after all.

FROM CHAPTER 3 (IN ALL S&O EDITIONS). Under the Protecting Americans from Tax Hikes Act of 2015, the former 10% withholding rate when you sell U.S. real property or real property interests to nonresident aliens or foreign entities is generally increased to 15% after February 16, 2016. The withholding rate remains at 10% if the property you are acquiring is to be your personal residence and the purchase price is between $300,000 and $1,000,000. A resident alien is not considered a "foreign person" for purposes of the withholding requirement.

FROM CHAPTER 5 (IN ALL S&O EDITIONS). A new segment has been added in Section 5.12 of Chapter 5 on the new SEC regulations on "crowdfunding" -- the new way many budding entrepreneurs are funding their business startups by soliciting contributions or issuing stock on the Internet, which was previously not possible under SEC rules. The newly adopted rules, issued under the Jumpstart Our Business Startups (JOBS) Act of 2012, went into effect on June 19, 2015.

FROM CHAPTER 5 (IN ALL S&O EDITIONS). Also added in Section 5.12 of Chapter 5 is a discussion of proposed SEC amendments to Rule 147, easing the restrictions under the various "presence tests,"; an increase in the size limit of offerings under Rule 504, from $1 million at present to $5 million; and repealing the Rule 505 exemption.

FROM CHAPTER 5 (IN ALL S&O EDITIONS). For the first time in nearly a century, the filing date for corporate income tax returns has been changed, under tax provisions included in the Surface Transportation and Veterans Health Care Choice Improvements Act, for taxable years beginning after December 31, 2015. Under this law change, most C corporations will not be required to file Form 1120 until the 15th day of the fourth month after the end of their taxable year (April 15th for a calendar year corporation). However, under an odd quirk in the new law, C corporations whose taxable year ends on June 30 will continue to have a due date of September 15th (as at present) until taxable years that begin after December 31, 2025.

S corporation returns (Form 1120S) will continue to be due by the 15th day of the third month after the end of the S corporation's taxable year.

The new law also changes the due date for partnership income tax information returns (Form 1065), by requiring that they file a month earlier than the requirement that has applied for the better part of a century. Thus, instead of filing by the 15th day of the fourth month after the end of their taxable year (April 15th, generally), partnerships will be required to file by the 15th day of the third month after their year-end (March 15th, generally), for taxable years beginning after December 31, 2015.

In short, the filing dates for partnership returns and C corporation returns (except for C corporations that have June 30 year-ends, for the next 10 years) will have swapped places, for tax years beginning after 2015.

FROM CHAPTER 5 (IN ALL S&O EDITIONS). The Trade Preferences Extension Act of 2015 enacted by Congress quietly added new tax provisions that sharply increased the IRS penalties for failure to file 1099 forms or provide a 1099 information form to the recipient of the income that is to be reported on the 1099. Penalties were more than doubled in some cases, from the basic $100 per 1099 penalty ($200 if you both failed to file, and failed to provide a copy to the income recipient, under prior law). The $100 per failure penalty had already been doubled from $50 per item in 2011 tax legislation. The new penalties go into effect for 1099 information returns that are due to be filed after December 31, 2015. See any of our Kindle e-book editions released after July 26, 2015 for details of the increased penalty provisions.

FROM CHAPTER 5 (IN ALL S&O EDITIONS). A new segment has been added on how to compute the extremely complex penalties under the individual mandate provisions of the Patient Protection and Affordable Care Act ("ObamaCare"), for individuals or households that fail to obtain the required health insurance coverage in 2014 or later years.

FROM CHAPTER 5 (IN ALL S&O EDITIONS). Chapter 5 covers the provisions of the JOBS Act of 2012 (Jumpstart Our Business Startups Act), which liberalized various securities regulations, including the onerous Sarbanes-Oxley requirements, for many new startup businesses, as is now discussed in all "Starting and Operating a Business in... (State)" editions. The S.E.C. issued final regulations to implement the JOBS Act in late 2015, which are analyzed in recent S&O Editions. See ordering information at www.roninsoft.com/sbzorder.htm.

FROM CHAPTER 5 (IN ALL S&O EDITIONS). The IRS has announced the 2017 taxable wage base for the OASDI portion of the self-employment tax and FICA tax, which is $127,200, up sharpley from $118,500 in 2016. This is the amount of earned income for an individual on which the full 15.3% self-employment tax must be paid and on which the full FICA (Social Security) taxes on wages must be paid. Only the 2.9% Medicare portion of the 15.3% tax applies to income in excess of the taxable wage base amount.

FROM CHAPTER 6 (IN ALL S&O EDITIONS). New segment added to this chapter, on the importance of making sure all withheld employee income and FICA taxes are paid to the I.R.S. If your business goes bankrupt, and even if you go through personal bankruptcy, you may be able to eliminate most of your debts, including taxes, but not any such withheld taxes that didn't get paid. See Chapter 6 of all our editions, for discussion of fines and even criminal penalties for non-payment of such "trust fund" taxes and how to avoid such liability, if you are the "responsible person" who should make sure all such withholding tax gets paid to the I.R.S. as required.

FROM CHAPTER 6 (IN ALL S&O EDITIONS). In March, 2015, Wisconsin enacted a right-to-work for private employees. (A similar law for state government employees was enacted in 2011, freeing them from the requirement to belong to a public employees' union in order to work for the government, and the requirement that the government withhold union dues from their paychecks.) This Wisconsin legislation follows on the heels of similar right-to-work enactments in two other Midwestern states in 2013, Indiana and Michigan.

FROM CHAPTER 6 (IN ALL S&O EDITIONS). Under new U.S. Department of Labor Regulations, which go into effect on December 1, 2016, the current overtime exemption regulations are amended to (generally) include an overtime pay requirement for white collar employees, such as store managers, for any full-time employees who earn less than $47,476 per year ($913 per week). This will vastly expand the reach of overtime pay requirements, increasing the number of employees in the U.S. who must be compensated for working overtime by an estimated 4.6 million workers in 2017.

The existing overtime regulations, adopted in 2004 during the Bush Administration, provide essentially the same "white collar" exemptions as the new regulations, including a general exemption for many full-time executive, administrative, or professional employees, but they apply to such workers earning over $23,660 a year ($455 a week). Thus, the threshold salary level for exempting such white collar employees will more than double under the revised Labor regulations once they go into effect. Details of the new overtime regulations are covered in Chapter 6, Section 6.6, of the Small Business Advisor software/ebook.

FROM CHAPTER 6 (IN ALL S&O EDITIONS). Beginning in 2013, the new health care reform law ("ObamaCare") imposed an additional FICA tax of 0.9% on employees (but not on the employer) where the employee's wages exceed $200,000 ($250,000 if married filing joint, $125,000 if married filing separate). Since the employer may not know and is not required to determine the amount of wages being paid to an employee's spouse, an employer will only have to withhold the additional tax on wages in excess of $200,000 paid to an employee and any additional tax owed will have to be paid by the employee on his or her return or on a joint return.

Self-employed individuals with self-employment income that exceeds the above amounts (based on filing status) will also be subject to an additional 0.9% tax, as part of their self-employment tax.

In addition, a new tax of 3.8% of the lesser of net investment income or the excess over certain threshold levels of modified adjusted gross income went into effect in 2013 to help fund the new health care ("ObamaCare") reforms.

Individuals who fail to obtain required health care coverage are subject to a penalty in 2016 that is the greater of $695 or 2.5% of income, and the same penalty rates apply in 2017.

A whole new section has been added to Chapter 6 of our e-books, on the effects of the new health care reform law on small businesses, as the law phases in over the period from 2010 through 2018.

FROM CHAPTER 6 (IN ALL S&O EDITIONS). Effective July 24, 2009, the federal minimum wage was increased from $6.55 an hour to $7.25 an hour, where it remains in 2016.

FROM CHAPTER 8 (IN ALL S&O EDITIONS). A new segment has been added on the benefits and downsides of using Bitcoin or other "digital currencies," and how to (safely) accept Bitcoin payments for products or services you sell and increase your profits. (Added in all June, 2014 and later Kindle editions of this e-book series.)

FROM CHAPTER 8 (IN ALL S&O EDITIONS). A segment has been added in Section 8.2 of Chapter 8, regarding the use of QR Codes (Quick Response Codes) on merchandise, which can be read by customers' "smart phones," giving them access instantly to information about the product on the Internet. QR Codes can be placed on everything from advertisements to business cards to product packaging to commercial vehicles, to instantly direct mobile device users to your web pages for product information or ordering.

This new section of the "Starting and Operating a Business in ..." book series (in all recent editions) includes links to a web site that will allow you to quickly create QR Codes, free of charge.

FROM CHAPTER 8 (IN ALL S&O EDITIONS). A new segment has been added in Section 8.6 of Chapter 8 analyzing new efforts by some states like New York, New Jersey, and Pennsylvania, to tax all of the wage or salary income of employees who live in another state and telecommute, plus a discussion of how to avoid such "long-armed" state income taxation. For details, see ordering information for the Small Business Advisor, at www.roninsoft.com/sbzorder.htm.

FROM CHAPTER 8 (IN ALL S&O EDITIONS). The Internet Tax Freedom Act, a federal law which initially imposed a three-year moratorium on taxation of Internet access by the states, starting in 1998, has been extended eight times since by Congress. The moratorium was finally made permanent by legislation enacted by Congress in 2016, although some states that had been "grandfathered" under the original law are allowed to continue to impose their sales taxes or excise taxes on Internet access through June 30, 2020.

FROM CHAPTER 8 (IN ALL S&O EDITIONS). In 2014, the Republic of South Africa enacted a VAT tax on sales of digital products or services to residents of South Africa. Foreign sellers of such items to persons in South Africa are required to register for and collect the VAT (value added tax) on such digital transactions, although some small volume sellers are exempted. See Chapter 8 of books in the Starting and Operating a Business series for details on similar taxes imposed by other countries on sales of digital products and services.

FROM CHAPTER 8 (IN ALL S&O EDITIONS). In 2015, Japan and South Korea both enacted tax laws that will affect American and other foreign companies who sell certain electronic goods (such as software) and services to residents of those two countries. Thus, if your business sells electronic goods or services to those countries via the Internet, you may be required to begin collecting the VAT or VAT-like taxes imposed by Japan and South Korea and remitting the tax to the appropriate tax authorities in Japan or South Korea.

FROM CHAPTER 8 (IN ALL S&O EDITIONS). Effective as of October 1, 2016, New Zealand has enacted a new General Sales Tax law that will require foreign sellers (such as American firms) that sell digital products or services to persons in New Zealand to register for and collect the New Zealand Tax. See Chapter 8 of our "Starting and Operating a Business" books published after August, 2016 for details on this tax, including the tax rate and the annual minimum sales level that requires a business to register for and collect the tax.

FROM CHAPTER 9 (IN ALL S&O EDITIONS). In 2005, the U.S. Supreme Court ruled that IRA's are retirement funds that are exempt from the claims of creditors under the federal Bankruptcy Act, in the case of Rousey v. Jacoway. However, in a 2014 decision, Clark v. Rameker, U.S. Supreme Court Case No. 13-299 (June 12, 2014), the court denied such protection to inherited IRA's, noting that such accounts are no longer "retirement funds" when they are inherited from the person who had set such funds aside for his or her own retirement.

FROM CHAPTER 11 (IN ALL S&O EDITIONS). On November 24, 2015, the IRS announced in Notice 2015-82 that the former "safe harbor" for expensing, rather having to capitalize and depreciate, the cost of tangible items is increased from $500 per item to $2,500 per item, effective January 1, 2016. This means that a small business can now purchase an item, such as a piece of machinery or furniture, costing up to $2,500 and can immediately write off the cost, without having to meet the requirements of Section 179 expensing. However, the safe harbor applies to the amount of a single invoice, so if you buy low cost items in bulk, such as 10 $300 items, you will not be able to expense them under this new tax regulation, although you may be able to expense such items under other parts of the tax law, such as Internal Revenue Code Section 179.

FROM CHAPTER 11 (IN ALL S&O EDITIONS). In the late summer of 2013, the IRS issued new regulations on whether expenditures made to restore, maintain, or improve real property can be expensed, or must be capitalized and depreciated over 39 years (or 27.5 years, in the case of residential rental property). The new regulations offer a very beneficial new "safe harbor" for many small businesses, allowing a full immediate write-off of such expenses if various conditions are met. The details are described in all of our "Starting and Operating a Business" e-books published after October 1, 2013.

FROM CHAPTER 11 (IN ALL S&O EDITIONS). The LIFO accounting method may soon become a thing of the past. While LIFO accounting for inventories is permitted under Generally Accepted Accounting Principles ("GAAP") in the United States, it is not allowed under international financial accounting standards, and it appears that in the very near future, U.S. accounting methods (GAAP) will be replaced by the international standards, so that companies will no longer be able to use LIFO for financial accounting purposes. Since the tax law only allows companies to use the LIFO method for tax purposes if they also use it for financial statement purposes, the upshot of the coming change is that once companies are forced to comply with international accounting standards and quit using LIFO, they will no longer qualify to use LIFO for income tax purposes.

FROM CHAPTER 11 (IN ALL S&O EDITIONS). Under the Small Business and Work Opportunity Tax Act of 2007, enacted by Congress in May, 2007, the $100,000 first-year expensing deduction for certain depreciable property was increased to a $125,000 deduction in 2007, indexed for inflation in subsequent years ($139,000 in 2012,). Also, the amount of such property that may be acquired before that deduction begins to phase out was increased from the previous level of $400,000 to $500,000 in 2007, also indexed for future inflation (to $560,000 for 2012). In addition, the date on which this increased deduction was to revert back to the old (pre-2003) level of $25,000 was postponed several times, through the end of 2014. Finally, in December, 2015, Congress made the annual $500,000 deduction limit (indexed for inflation) permanent, along with the $2 million phase-out point. For 2017, the indexed limit is $510,000, with phase-out beginning at $2,030,000.

Also, for tax years beginning in 2008-2014 only, purchases of off-the-shelf computer software qualified for Section 179 expensing, under prior law, but has now been made eligible for expensing, permanently, retroactive to January 1, 2015.

100% bonus depreciation was allowed in 2011 for certain types of depreciable property. This provision expired at the end of 2011, but 50% bonus depreciation was allowed in 2012. After 2012, bonus depreciation was no longer to be allowed, but Congress changed the law again in early 2013, extending 50% bonus depreciation through the end of 2013. In late 2014, Congress extended it again through the end of 2014.

Further legislation in late 2015 has extended 50% bonus depreciation from January 1, 2015 through December 31, 2017, with 40% bonus depreciation allowable in 2018 and 30% in 2019, expiring after 2019.

FROM CHAPTER 12 (IN ALL S&O EDITIONS). On December 13, 2016, Congress enacted the 21st Century Cures Act which, beginning in 2017, allows small employers that do not have to (and do not choose to) provide full health care insurance plans for employees to instead establish QSEHRA plans (medical reimbursement plans) to provide some limited medical benefits to their workers. Previously, under ObamaCare, there were massive tax penalties that made it impossible for employers to continue to have or to start limited medical reimbursement plans.

FROM CHAPTER 12 (IN ALL S&O EDITIONS). President Obama announced in July, 2013 that the Employer Shared Responsibility ("employer mandate") provisions of the Patient Protection and Affordable Care Act would not go into effect in 2014 as the Act required, but would be postponed until 2015, which the IRS has made official in Notice 2013-45. However, it is not clear that the President or IRS has any constitutional authority to ignore an act of Congress, as the U.S. Constitution requires the President to enforce all acts of Congress, not just selected ones. This may have to be worked out in the courts, but at this time, in 2016, it appears that "Applicable Large Employers" will not be held subject to the mandate tax/penalty for 2014 for having failed to provide medical insurance to employees and that fact will not be changed retroactively.

In addition, Notice 2013-45 stated that employer reporting with regard to such mandated health care coverage would also be postponed for a year, since no such coverage was required in 2014.

In Treasury Decision 9655, in February, 2014, the I.R.S. further delayed mandated employer coverage for another year for firms with 50 to 99 employees, so that they were not required to provide coverage until 2016. To be eligible for the delay, employers must not reduce their workforce or hours of service to qualify and must maintain their previously offered health coverage, if any. While no delay beyond 2014 was granted for larger employers (with 100 or more full-time employees), they will only be required to cover 70% of full-time workers in 2015 (95% in 2016 and thereafter).

FROM CHAPTER 12 (IN ALL S&O EDITIONS). A massive new trap for small employers who are exempt from providing employee health care under the Affordable Care Care has been identified. Small business with under 50 full-time equivalent employees are not required to provide health insurance for employees, but if they voluntarily do so with medical reimbursement plans, the plans are to subject the employers to massive IRS penalties of $100 per day, PER EMPLOYEE. For details, see Chapter 12 of the Starting and Operating a Business e-book series (for Kindle).

FROM CHAPTER 12 (IN ALL S&O EDITIONS). The IRS has released Proposed Regulations under ObamaCare, regarding the mandate that "applicable large employers" provide health care coverage for their employees. A new section on planning for employers under the Obamacare rules that went into effect in 2014 has been added to Chapter 12 of all of our e-book editions for Kindle that have been published after June, 10, 2013.

FROM CHAPTER 12 (IN ALL S&O EDITIONS). The IRS has announced various inflation adjustments to pension plans and IRA's for 2017. Thus, the maximum deductible contribution for an individual participant increases to $54,000 in 2017, up from $53,000 in 2016 for a defined contribution pension or profit sharing plan. Also, the maximum annual benefit that may be actuarially funded in a defined benefit pension plan increased from $210,000 in 2016 to $215,000 in 2017. The maximum amount of compensation on which pension or profit sharing plan contributions can be computed increased from $265,000 in 2015 and 2016 to $270,000 in 2017. These updated amounts, as well as the 2017 amounts for other retirement plan limitations, such as for IRA and 401K deductions, are covered in Section 12.2 of Chapter 12 of all editions of "Starting and Operating a Business in (state)" published after October, 2016. See the ordering information and release dates for our state-by-state Kindle e-books at www.roninsoft.com/kindle.htm.

FROM CHAPTER 12 (IN ALL S&O EDITIONS). A new Section 12.6 has been added to Chapter 12 of all editions, on the use of "restricted stock" plans as a way of compensating key employees.

FROM CHAPTER 13 (IN ALL S&O EDITIONS). Section 13.8 has been updated with a summary of federal tax changes that went into effect in 2015 and 2016, including a new section on how the R & D tax credit has been made much more easy to benefit from, for small and startup business that do research and development that qualifies for the credit.

FROM CHAPTER 13 (IN ALL S&O EDITIONS). In 2015, the standard mileage allowance for the business use of a car was 57.5 cents a mile, which decreased to 54 cents per mile in 2016 and to 53.5 cents a mile for 2017.

FROM CHAPTER 13 (IN ALL S&O EDITIONS). Cell phones are no longer defined as "listed property" for tax purposes. Under the Small Business Jobs and Credit Act, cellphones are thus no longer subject to the strict "listed property" substantiation requirements in order to be depreciated and cell phones and other similar devices provided to an employee predominantly for business purposes will now be excludible from the employee's gross income. However, the IRS has described the various circumstances in which providing a cell phone to an employee will still be taxable.

FROM CHAPTER 13 (IN ALL S&O EDITIONS). As noted in the preceding paragraph, under the Small Business Jobs and Credit Act, Congress removed cellphones from the definition of "listed property" (such as automobiles and personal computers), to which very strict business use substantiation rules applied. However, since its enactment, the IRS has reminded us in an IRS Notice that cellphones provided by employers to their employees remain subject to the general tax rules regarding substantiation when determining whether and to what extent the value of such cellphones must be included in the taxable income of the employee. The IRS Notice also spells out the IRS position as to when employer-provided cellphones can, in general, be excluded from the employee's income under the exception for "working condition fringes" and when any personal use of a cellphone by the employee is exempt from recordkeeping and substantiation requirements under the "de minimis fringe benefit" exception of the tax law.

Fortunately for businesses and employees, the IRS has taken a very liberal and generous position with regard to the tax treatment of employer-provided cellphones under the recent (2010) law.

FROM CHAPTER 13 (IN ALL S&O EDITIONS). In May, 2007, Congress enacted the Small Business and Work Opportunity Tax Act of 2007, which extended the Work Opportunity Tax Credit another year, due to expire on December 31, 2007, to a new expiration date of August 31, 2011. It was later extended to December 31, 2011, but has expired twice and been renewed again since then. It remains in effect in 2016, and was extended through the end of 2019.

FROM CHAPTER 14 (IN ALL S&O EDITIONS). If a C corporation converts to S corporation status, any "built-in gains" on assets it owned at the time of the conversion will not only be taxable to the shareholders but will also be subject to a corporate level tax if the assets are sold within ten years after the company converted to S corporation status. This ten year waiting period was reduced to seven years, if a C corporation converted to S status in the years 2009 or 2010, under the American Recovery and Reinvestment Act of 2009.

Under the Small Business Jobs and Credit Act of 2010, the waiting period was reduced further, to five years for dispositions that occurred in a taxable year that began in 2011, if the fifth year of the holding period was a preceding taxable year. The ten-year waiting period was due to once again be in effect for S corporation elections in 2012 or later, but Congress in 2013 extended the five-year waiting period for two more years, 2012 and 2013. The 10-year waiting period was to go back into effect on January 1, 2014, but Congress has now made the 5-year waiting period permanent, in 2015 legislation.

FROM CHAPTER 14 (IN ALL S&O EDITIONS). A new section (Section 14.12) has been added, regarding a little known and rarely used provision in the federal tax law that allows some taxpayers to escape tax penalties for late payment or late filing of income taxes, or failure to make electronic payroll tax deposits, for which there are generally no "reasonable cause" exceptions. Most taxpayers (and preparers) are unaware that a waiver of such penalties can generally be obtained if the taxpayer is a "first-time offender." This new section of Chapter 14 spells out the requirements for obtaining such penalty waivers from the IRS, and the types of situations and filings that qualify.

FROM CHAPTER 15 (IN ALL S&O EDITIONS). The IRS has announced various inflation adjustments that are relevant to estate planners for 2016. The $12,000 annual gift tax exclusion that was in effect in recent years increased to $13,000 in 2009 and remained at that level in 2010 through 2012. However, this exclusion increased to $14,000 in 2013, where it has remained in 2013 through 2017.

FROM CHAPTER 15 (IN ALL S&O EDITIONS). The Taxpayer Relief Act of 2012 (actually signed into law on January 2, 2013) extended the $5,000,000 estate and gift tax exemption, with indexing, indefinitely, but raised the estate and gift tax rate to 40%, beginning in 2013. The lifetime estate and gift tax exemption, as indexed for inflation, was $5,250,000 for gifts or deaths occurring in 2013, $5,340,000 in 2014. For 2015, the exemption was $5,430,000, and is $5,450,000 in 2016 and $5,490,000 for deaths occurring in 2017.

STATE DEVELOPMENTS:

The following state-by-state small business news items are excerpted from the state information sections of each of the 33 state and D.C. editions of the Starting and Operating a Business in ... (CA, NY, PA, etc.) series of e-books, each of which is available in the Kindle Store on Amazon.com.

NOTE THAT WE ARE NO LONGER UPDATING THE STATE INFORMATION FOR 18 STATE EDITIONS SINCE LATE 2013: ID, IL, IN, IA, KS, KY, LA, MD, MS, MT, OH, OK, OR, RI, TN, UT, VA, AND WI AND HAVE CEASED PUBLICATION OF THOSE STATE EDITIONS. FOR DETAILS, CLICK HERE.

ALABAMA EDITION. The new employer tax rate for Alabama unemployment tax purposes in 2015 was 2.7% on the first $8,000 of covered wages, unchanged from 2014.

ALABAMA EDITION. Alabama has enacted a new set of statutes governing LLC's. The Alabama Limited Liability Company Act of 2014 replaces the former LLC law, beginning January 1, 2017. The old law remains in effect, generally, for LLC's that were formed before January 1, 2015.

ALABAMA EDITION. Under 2014 property tax legislation, small businesses in Alabama with less than $10,000 (cost) of personal property may now simply file a short form, Form ADV-40S, on which they simply agree to have their personal property assessed at a value of $10,000, rather than completing a Personal Property Tax Return (Form ADV-40).

ALABAMA EDITION. Until recently, businesses collecting $1,000 or more of Alabama sales tax per month, on average, were required to make monthly estimated sales tax prepayments with each monthly sales tax return. However, the Alabama legislature has enacted the Small Business Tax Relief Act of 2014, so that as of August 1, 2014, businesses that collect less than $2,500 per month of sales tax no longer are required to make estimated sales tax payments.

ALABAMA EDITION. Beginning July 1, 2009, contractors doing construction in Alabama, other than home builders, first became subject to a new Construction Employer Fee on wages paid to all construction laborers below the foreman level. The fee was .09% of the covered wages, initially. Effective for returns due on or after January 31, 2011, the fee increased to .15% of covered wages. Thus, for example, an employer with $100,000 in covered wages would pay a fee of $150. The law implementing this fee was scheduled to expire on May 13, 2013, but remains in effect at present (late 2015).

ALABAMA EDITION. Alabama has repealed the Alabama Limited Partnership Act of 1997 and enacted the Alabama Uniform Limited Partnership Act of 2010, which goes into effect on January 1, 2010. The new law provides for limited liability limited partnerships (LLLP's), which are limited partnerships that elect LLP status, providing liability protection for their general partners. The new act also increases the filing fee for foreign limited partnerships from $75 to $150. Domestic limited partnerships pay a fee of $100 to the Alabama Secretary of State when formed, plus a fee (that varies by county) to the Judge of Probate of county where the limited partnership is located.

ALABAMA EDITION. Effective in 2011, under the recently-enacted (2009) Alabama Business and Nonprofit Entity Code, all domestically formed entities (corporations, LLC's, LLP's, and limited partnerships) now pay the same $100 formation fee to the Secretary of State, and a $50 filing fee to the county probate judge. The Secretary of State's registration fee for all foreign business entities is $150, with no filing with a probate judge required. Thus the total filing fees for formation or registration for any of the above-listed entities is now $150.

ALASKA EDITION. The Alaska Permanent Fund Dividend, paid by the state to all eligible residents each year, was $2,072 in 2015. The 2016 dividend amount is expected to be roughly the same as the 2015 payment.

ALASKA EDITION. The Alaska business license fee is generally $50 a year for businesses, but has been reduced to $25 a year for businesses owned by senior citizens 65 or older and for disabled veterans.

ALASKA EDITION. The Alaska minimum wage is $9.75 an hour in 2016.

ALASKA EDITION. The standard Alaska unemployment tax rate for 2016 is 2.6% of taxable wages, down from 3.02% in 2015 and 3.59% in 2014. In addition, the employee's share of the unemployment tax decreased to 0.5% of the taxable wage base in 2016, down from 0.57% in 2015 and 0.62% in 2014. However, the taxable wage base per employee, on which tax can be imposed, increased from $38,700 in 2015 to $39,700 in 2016. (It was $37,400 in 2014.) The amount of wages on which Alaska unemployment taxes can be imposed has increased each year since 1999, when the limit was $24,500 per employee.

ARIZONA EDITION. Beginning July 1, 2017, employers in Arizona will have to begin accruing one hour of paid sick leave for every 30 hours worked by an employee, which can be used as sick leave for the employee or for family members who are ill, or in various other situations, such as when an employee or family member has been victimized by domestic violence or stalking. See details in the 2017 edition of "Starting and Operating a Business in Arizona," a Kindle e-book.

ARIZONA EDITION. Beginning with 2017 tax return filings for the 2016 income tax year, for most corporations and all partnerships, the federal tax return due dates for those business entities have changed, as noted above on this page. For some such entities, the Arizona due dates have also changed, and will be on the same dates as the federal returns are due, but not in all cases. For details on the new filing dates for both federal and Arizona business income tax returns, see the 2017 edition of "Starting and Operating a Business in Arizona," a Kindle e-book.

ARIZONA EDITION. The Arizona Constitution has long provided for a $50,000 personal property tax exemption for business personal property, which is indexed for inflation each year. For the 2018 tax year, the exemption increased to $159,498.

ARIZONA EDITION. One complicated fact of life for retailers doing business in multiple locations in Arizona is the slightly crazy sales and use tax system, in which each city and county imposes its own tax rate, in addition to the state tax rate. While many smaller cities let the state Department of Revenue collect and administer their local sales tax, most of the larger cities, including Phoenix and Tucson, do not. The cities with self-administered sales taxes require businesses to file a separate registration and make sales tax returns and payments directly to them, adding massively to a retailer's paperwork burden, if it has locations throughout the state.

Fortunately (and long overdue), the legislature finally simplified this system (somewhat), so that beginning January 1, 2015, all county sales and use taxes are now collected by and administered by the Arizona Department of Revenue, as well as many city sales and use taxes. See details in the 2017 edition of "Starting and Operating a Business in Arizona," a Kindle e-book.

However, for "non-program" cities like Phoenix, Tucson, and Flagstaff, that still administered their local sales tax programs, it was still necessary to file two sales tax returns for each such license -- one with the state, and one with the city.

Under further legislation, effective in 2017, it is now no longer necessary for businesses to file separate sales and use tax (Transaction Privilege Tax, or TPT) returns with such non-program cities.

ARIZONA EDITION. For 2017, the new employer tax rate for Arizona unemployment tax is 2.0%, on a taxable wage base of $7,000 per employee.

ARIZONA EDITION. In the November, 2006 election, Arizona voters passed an initiative (Proposition 202) to institute a state minimum wage of $6.75 an hour, beginning January 1, 2007, and indexed for inflation in each subsequent year. The 2009 and 2010 minimum wage was $7.25, increased to $7.35 in 2011 and $7.65 in 2012. The state minimum wage has since increased to $7.80 in 2013 and $7.90 in 2014. It increased further to $8.05 an hour in 2015 and 2016 and to $8.50 in 2017.

Arizona previously did not have a state minimum wage law.

ARIZONA EDITION. The Arizona corporation income tax rate, which was 6.5% in 2014, decreased to 6.0% in 2015, with a further cut to 5.5% in 2016, and the tax rate was finally reduced to 4.9% in 2017. Stay tuned.

ARIZONA EDITION. Arizona law requires publication in a newspaper of the filing of various documents, such as articles of incorporation, articles of organization for an LLC, LLP registrations, and registration by foreign corporations or LLC's, and until recently the law also required affidavits to be filed with the Corporation Commission or Secretary of State as proof of such publication. However, under Senate Bill 1410, enacted in 2008, the filing of such affidavits has been eliminated, though it is still optional in some cases, such as for foreign corporations or for formation of an LLC. (However, even in those cases, publication is still generally required, except for foreign LLC's.)

Beginning January 1, 2017, the Arizona Corporation Commission (ACC) will automatically publish the formation documents of some new corporations and LLCs (or registration applications of some foreign corporations or foreign LLCs) on the ACC website. In such cases, the company will not be required to publish the documents in a local newspaper. See the 2017 edition of "Starting and Operating a Business in Arizona" for details as to which corporations and LLCs are no longer required to do a newspaper publication.

ARKANSAS EDITION. The recently adopted state minimum wage in Arkansas went into effect at $7.50 an hour in 2015, increased to $8.00 in 2016, and increases to $8.50 in 2017.

ARKANSAS EDITION. The top Arkansas individual income tax rate bracket, which was 7% in 2014 on income over $35,100, was to decrease by 0.1%, to 6.9% in 2015, and other tax brackets were also to decrease by 0.1%. However, in February, 2015, the legislature canceled those scheduled tax reductions, except on income under $21,000, retroactive to January 1, 2015, but provided a "middle-class tax cut" by reducing the tax rate on income over $35,100 (which had been the top bracket) to 6% in 2015, on taxable income of up to $75,000. In 2016, however, the top rate has now been reduced to 6.9% on income over $75,000.

ARKANSAS EDITION. The taxable wage base for the Arkansas unemployment tax remains unchanged, at $12,000 per employee, in 2016. The new employer unemployment tax rate for 2016 is 2.9%, plus a 0.4% stabilization tax that applies to all employers, for a total tax rate of 3.3% of taxable wages.

CALIFORNIA EDITION. On September 14, 2016, Governor Brown signed A.B. 1775 into law, conforming the tax return due dates under California law to the upcoming changes in the due dates for federal tax returns of partnerships and C corporations, which go into effect for tax years that begin in 2016 or later. For example, partnership returns for the 2016 tax year will be due a month earlier than in the past. For details of the new federal filing deadlines, see Section 5.5 of Chapter 5 of the Kindle e-book, "Starting and Operating a Business in California" (2016 Edition).

CALIFORNIA EDITION. In response to the recent Gonzalez v. Downtown Motors and Bluford v. Safeway Stores court cases, the California Legislature in A.B. 1513 has enacted legislation, effective January 1, 2016, that requires employers to begin paying piece rate workers for rest and recovery periods and certain other nonproductive time in 2016. Procedures are also established for employers who want immunity from similar lawsuits to pay such employees for uncompensated down time back to July 1, 2012, plus interest, by December 15, 2016, and to report their election to do so to the Labor Commissioner by July 1, 2016. Employers who do so will have an affirmative defense to any further lawsuits seeking damages for such failure to pay piece workers for down time for periods before 2016. Those who do not will be fair game for class-action lawyers. For details, see Chapter 6, Section 6.18 of "Starting and Operating a Business in California" (for Kindle).

CALIFORNIA EDITION. Employers in California are now required to provide paid sick leave to employees at the rate of one hour of sick leave earned for every 30 hours worked. This requirement, which applies to even the smallest employers, will apply to employment on or after July 1, 2015. Employers will be allowed to limit the amount of sick leave that can be taken in one year per employee to 24 hours and are not required to pay employees whose employment terminates for any accrued but unused paid sick leave.

CALIFORNIA EDITION. The California minimum wage increased from $7.50 an hour to $8.00 an hour on January 1, 2008, and remains at that rate in 2009-2013. Under new legislation enacted in September, 2013, the state minimum wage increased to $9.00 on July 1, 2014 and to $10.00 an hour on January 1, 2016. On January 1, 2017, the minimum wage for employers with more than 25 employees increased to $10.50 an hour.

CALIFORNIA EDITION. In the November, 2012 election, California voters approved a temporary (four year) 0.25% increase in the state sales and use tax rate, which increased the statewide tax rate from 7.25% to 7.5% on January 1, 2013. This tax rate reverted back to 7.25% on January 1, 2017. However, combined state and local rates are still near 10% in a number of cities in California.

CALIFORNIA EDITION. The State Board of Equalization (SBE) has been reminding sellers of medical marijuana that their retail sales in-state are generally subject to sales tax and that they are required to hold a seller's permit. Anyone who does not hold a seller's permit prior to the date that their first sales tax return is due is subject to penalty and interest charges.

CALIFORNIA EDITION. The California Environmental Fee, paid by all but businesses with under 50 employees, increased by 2.1% in 2017, based on inflation indexing. The fee varies based on the number of employees, as discussed in Chapter 15, Section 15.3 of the 2017 edition of Starting and Operating a Business in California (a Kindle e-book).

COLORADO EDITION. For 2013 and 2014, Colorado exempted up to $7,000 of personal property from the personal property tax, increased from $5,000 the previous two years. After 2014, the $7,000 exemption amount is indexed for inflation every two years and is $7,400 in 2017 and 2018.

COLORADO EDITION. On January 1, 2014, Colorado became the first state to legalize marijuana. It simultaneously imposed a 15% excise tax on the first sale of unprocessed marijuana and a 10% sales tax on retail sales of processed marijuana or marijuana products. The retail sales tax on marijuana is due to be reduced to 8% on July 1, 2017. For details, see Chapter 5, Section 5.8 (Colorado Sales Tax) and Chapter 15, Section 5.3, (Colorado Excise Taxes) in "Starting and Operating a Business in Colorado," June, 2017 Edition.

COLORADO EDITION. On January 1, 2015, the state minimum wage in Colorado increased to $8.31 an hour in 2016, up from $8.23 in 2015. It increased to $9.30 an hour on January 1, 2017. A lower rate applies for tipped employees.

COLORADO EDITION. Effective for sales and use tax returns filed on or after July 1, 2009, Colorado temporarily suspended the service fee that vendors are normally allowed to retain (3.33% of the tax) to reimburse them for their administrative costs in collecting sales and use taxes. The suspension applied only to the state portion of the sales and use taxes and was in effect until June 30, 2011. After that date, the service fee was allowed again, but at a reduced rate of 2.22% until July 1, 2014, and 3.33% since then. No service fee is allowed to vendors with respect to the 10% Marijuana Sales tax.

COLORADO EDITION. The Colorado unemployment tax for new employers (other than in construction industries) decreased slightly, from 2.12% of the taxable wage base in 2016 to 2.11% in 2017. However, the taxable wage base increased, from $12,200 in 2016 to $12,500 in 2017.

CONNECTICUT EDITION. Beginning January 1, 2014, Connecticut taxpayers are required to file all withholding, sales tax, room occupancy tax, admission and dues tax, corporation business tax, and composite income tax forms electronically and remit all such tax payments electronically.

CONNECTICUT EDITION. Connecticut's legislature has extended the 20% corporate income tax surcharge, which was supposed to expire after December 31, 2013, for two more years, through 2014 and 2015.

For details of all of the foregoing major Connecticut tax law changes, see the current edition of "Starting and Operating a Business in Connecticut," (2014 Kindle edition) available for sale on Amazon.com.

CONNECTICUT EDITION. The Connecticut minimum wage increased to $7.65 an hour on January 1, 2007, and increased further to $8.00 an hour on January 1, 2009, and increased further to $8.25 in 2010. It increased again to $8.70 on January 1, 2014, $9.15 in 2015, and $9.60 in 2016. [CONN. GEN. STAT. § 31-58(j)]

CONNECTICUT EDITION. For tax years beginning on or after January 1, 2013, the $250 annual tax on S corporations, limited liability companies, limited partnerships, and limited liability partnerships is changed, to be imposed only every other year, rather than every year.

CONNECTICUT EDITION. Under new Connecticut legislation that went into effect on January 1, 2012, employers are now required to provide PAID sick leave benefits to employees, up to 40 hours per year, earned at the rate of one hour of paid sick leave for each 40 hours worked by a service worker. The requirement applies to employers with 50 or more employees and an employee becomes eligible after having worked 680 hours for the employer (but is not eligible if he or she did not work an average of at least 10 hours per week for the employer in the most recent complete calendar quarter). [Public Act 11-52]

A service worker make take sick leave for personal illness, injury, or health condition, or diagnosis of same, or for preventative medical care, or may take leave for the same reasons applicable to a child or spouse. Leave may also be taken for medical care or counseling if the service worker is a victim of family violence or a sexual assault.

The new paid leave requirements are in addition to the previously existing unpaid family leave requirements of Connecticut law, generally.

DELAWARE EDITION. Effective on and after December 30, 2015, Delaware's anti-discrimination in employment law has been expanded to protect individuals who are the victims of a sexual offense, domestic violence, or stalking. Employers will be required to make reasonable accommodations at work for such employees.

DELAWARE EDITION. The Delaware bottle recycling fee has expired, as of January 1, 2015.

DELAWARE EDITION. The Delaware minimum wage increased from $7.25 to $7.75 on June 1, 2014, and to $8.25 on June 1, 2015.

DELAWARE EDITION. Beginning January 1, 2014, the annual tax imposed on a limited partnership (other than a limited liability limited partnership, or LLLP) or a limited liability company (LLC) increased from $250 to $300 a year.

DELAWARE EDITION. Delaware was a "credit reduction state" in 2012, for Federal Unemployment Tax (FUTA) purposes. Thus, Delaware employers were only allowed a 5.1% credit against the 6.0% FUTA tax rate, instead of the normal 5.4%, on their 2012 FUTA tax returns (Form 940). Delaware was a credit reduction state in 2013, with the net credit reduced further to 4.8%. However, it was no longer a credit reduction state in 2014 or 2015.

DELAWARE EDITION. Recent tax legislation enacted in Delaware has reduced gross receipts tax rates on businesses, effective January 1, 2012. In addition, the former $80,000 monthly deduction or exclustion for most businesses was increased to $100,000 per month and the $1 million monthly deduction for manufacturers was increased to $1.25 million, so that many more small businesses will not have to pay any Delaware gross receipts tax. Additional across-the-board cuts in the gross receipts tax rates on almost all types of businesses went into effect on January 1, 2014. For details, see the current edition of Starting and Operating a Business in Delaware. (Ordering information for the Kindle e-book 2014 edition can be found at: www.roninsoft.com/kindle.htm.)

DELAWARE EDITION. The Delaware estate tax, equal to the federal estate tax credit for state death taxes, was effectively eliminated when federal law phased out that credit after 2001. Under recent legislation, the Delaware estate tax has been reinstated for deaths occurring after June 30, 2009, by making the state's estate tax equal the federal credit for state death taxes as it stood before 2001.

DISTRICT OF COLUMBIA EDITION. The D.C. minimum wage increased to $7.55 an hour on July 24, 2008 and again to $8.25 an hour on July 24, 2009, to $9.50 on July 1, 2014, on July 1, 2015 to $10.50 an hour, and to $11.50 an hour on July 1, 2016. Recently (June, 2016), the City Council adopted a plan to phase in a $15 D.C. minimum wage by 2020.

In addition to the D.C. minimum wage requirements, the D.C. "Living Wage Act of 2006" requires employers who are recipients of $100,000 or more in new government contracts or government assistance (such as grants, loans, or tax increment financing) to pay a "living wage," which was $11.75 an hour from June 9, 2006 until January 1, 2008, then indexed for inflation. Subcontractors of such contractors, who receive more than $15,000 of the funds received by the contractor on government contracts, or subcontractors receiving $50,000 or more from recipients of $100,000 or more of government assistance, are also required to pay the living wage. [D.C. CODE ANN. § 2-220.05]

Exemptions from the Living Wage Act are provided for employees under 22 years of age employed during a school vacation period, or enrolled as a full-time student who works less than 25 hours a week (provided that other employees are not replaced).

The 2016 inflation adjustment to the D.C. living wage increased it to $13.85 an hour, effective January 1, 2016.

DISTRICT OF COLUMBIA EDITION. Effective for the period from October 1, 2009 through September 30, 2012, the D.C. general sales tax rate was increased to 6%. Previously, the tax rate was 5.75%. Further legislation has made the 6% rate permanent.

DISTRICT OF COLUMBIA EDITION. While the maximum individual income tax rate in the District of Columbia was due to be reduced to 8.5% of income several years ago, if certain budget goals were met, the lower tax rate never materialized, and the 8.95% top rate is now remain in effect i 2016. However, beginning in 2016, the 8.95% rate does not kick in until taxable income is over $1 million, rather than at $350,000 in prior years. Instead, an 8.75% rate bracket applies to incomes between $350,000 and $1 million in 2016.

DISTRICT OF COLUMBIA EDITION. The District of Columbia franchise tax rate for both corporations and unincorporated businesses was reduced from 9.4% in 2015 to 9.2% in 2016.

FLORIDA EDITION. The taxable wage base to which the Florida unemployment tax applies was raised from $7,000 per employee to $8,000 from January 1, 2012 to January 1, 2015. Beginning in 2015, the taxable wage base is once again $7,000 per employee.

FLORIDA EDITION. The Florida minimum wage is indexed for inflation and increased to $7.67 an hour in 2012. The Florida minimum wage for tipped employees is $4.65 plus tips. The state minimum wage increased from $7.67 to $7.79 on January 1, 2013, to $7.93 for 2014, and to $8.05 an hour for calendar year 2015, where it remains in 2016.

FLORIDA EDITION. Effective since April 30, 2014, manufacturers (as defined) in Florida are exempted from sales or use tax on their purchases of machinery and equipment used in manufacturing and, in some cases, spare parts for such machinery and equipment. For details, see the July, 2015 Kindle edition of "Starting and Operating a Business in Florida," available for $9.99, at this ordering link.

FLORIDA EDITION. Florida generally imposes a $2 per day surcharge on car rentals. However, the surcharge is reduced for members of a car-sharing service like Uber and Lyft for use of a car for less than 24 hours, if a number of conditions are all satisfied. For details regarding the reduced surcharge, see Section 5.8 of Chapter 5 of Starting and Operating a Business in Florida (2016 Kindle Edition).

GEORGIA EDITION> Georgia was one of the last states to do so, but the Georgia Legislature has repealed the onerous Bulk Sale Law, effective as of July 1, 2015, which previously imposed a number of complex requirements on the buyer of a small business, which usually required the buyer to incur significant legal fees to comply. While all 50 states formerly had bulk sales laws until around 1990, nearly all such laws have now been repealed, except in California, Maryland and the District of Columbia.

GEORGIA EDITION. New employers in Georgia are required to pay unemployment tax at a rate of 2.7% in 2017 on the first $9,500 of wages paid to each employee. The state minimum wage remains at $5.15 per hour, considerably below the $7.25 minimum wage. However, most employers are subject to the higher federal minimum wage.

GEORGIA EDITION. Georgia has generally conformed its filing deadlines for C corporations and partnerships (or LLCs taxable as partnerships) to the changes in the federal filing dates that go into effect for taxable years that begin in 2016 or later. However, Georgia did not copy the federal exception for C corporations that have a June 30th taxable year-end.

HAWAII EDITION. In 2016, the new employer tax rate under the Hawaii state unemployment tax was reduced to 2.4% of covered wages, from 3.0% in 2015 and 4.6% as recently as 2013. The covered wages amount (the taxable wage base) is $42,200 for 2016, up from $40,900 in 2015.

  • Corporate, partnership, and LLC filing fees: All corporation, partnership, and LLC filing fees charged by the Hawaii Department of Commerce and Consumer Affairs for actions such as incorporation, have been reduced substantially, generally by 50%, below the statutory fee amounts, since 2005. On January 1, 2015, all such fees were scheduled to revert back to the higher statutory amounts, but did not, and remain at the reduced levels in 2016.

    HAWAII EDITION. The Hawaii minimum wage increased to $8.50 on January 1, 2016, and will increase further, to $9.25 in 2017 and $10.10 an hour in 2018.

    HAWAII EDITION. The Hawaii Transient Accommodations Tax, which is primarily paid by non-voters (i.e, tourists), was increased from the previous rate of 7.25% to 8.25% on July 1, 2009. It increased again, to 9.25%, on July 1, 2010, and was to remain in effect through June 30, 2015. However, it has now been made permanent. In addition, the 7.25% Transient Accommodations Tax on the fair market rental value of time share occupancy has been increased to 8.25% on January 1, 2016 and will increase to 9.25% on January 1, 2017.

    HAWAII EDITION. Individual taxpayers in Hawaii received a major tax cut in 2016. In 2009 through 2015, the legislature temporarily added 9%, 10%, and 11% tax brackets to the state tax code, for high income individuals (such as unmarried single filers who had over $150,000 of taxable income). These high rate brackets are no longer in effect after 2015, so the top tax rate is once again 8.25% in Hawaii.

    IDAHO EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions. (Of course it would be similar, since the Federal laws are the same in every state. They ignored the fact that the state laws and other state information is different in each of our state editions.) This is despite the fact that we have authored this book series for all 50 states since the 1980s, in print and/or electronic versions. However, Amazon is a large company and we are a small publisher, so we are no longer able to publish this, or a number of our other state editions in the Kindle Store.

    ILLINOIS EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions.

    INDIANA EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions. (Of course it would be similar, since the Federal laws are the same in every state. They ignored the fact that the state laws and other state information is different in each of our state editions.)

    IOWA EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions. This is despite the fact that we have authored this book series for all 50 states since the 1980s, in print and/or electronic versions. However, Amazon is a very large company and we are a small publisher, so we are no longer able to publish this, or a number of our other state editions in the Kindle Store.

    KANSAS EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions.

    KENTUCKY EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions.

    LOUISIANA EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions.

    MAINE EDITION. The top individual tax rate under the Maine income tax has been reduced from 7.95% to 7.15%, beginning with the 2016 taxable year. In addition, the state unemployment tax rate for new employers decreased from 2.66% in 2015 to 2.10% in 2016.

    MAINE EDITION. Under Maine tax legislation, the general sales tax was "temporarily" increased from 5% to 5.5%, from October 1, 2013 through June 30, 2015, then extended to December 31, 2015. The 7% tax rates on lodging, prepared food, and liquor were increased to 8% during that period. However, now the above increases have all been made permanent and the tax on lodging was increased further, to 9%, beginning January 1, 2016. In addition, the Service Provider Tax, similar to the sales tax, but imposed on numerous services, was increased from 5% in 2015 to 6% in 2016 and thereafter.

    Finally, for tax years beginning in 2012, the Maine additional taxes on lump-sum and early retirement plan distributions were reduced from 15% to 7.5% of the federal tax amount on these distributions. For tax years beginning after 2012, the additional Maine taxes on lump-sum and early retirement plan distributions are repealed. Beginning in 2014, up to $10,000 of pension income, including IRA distributions, may be deducted from taxable income under the Maine income tax.

    MAINE EDITION. The Maine minimum hourly wage was increased to $7.50 an hour on October 1, 2009, where it remains in 2016. However, the city of Portland, Maine, has enacted a minimum wage within the city limits, of $10.10 an hour, beginning January 1, 2016, increased to $10.68 on January 1, 2017.

    MAINE EDITION. A number of other important tax and other law changes affecting small businesses went into effect in 2016, which are covered in the April, 2016 Kindle Edition of "Starting and Operating a Business in Maine."

    MARYLAND EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions.

    MASSACHUSETTS EDITION. As of July 14, 2016, it is illegal for employers in Massachusetts to discriminate in employment based on a person's status as a veteran.

    MASSACHUSETTS EDITION. Effective July 1, 2015, Massachusetts employers are required to accrue paid sick leave for all employees, including part-timers. Such leave accrues at the rate of one hour for every 30 hours worked, up to 40 hours a year. Details of the new law's requirements were covered in the 2015 edition of "Starting and Operating a Business in Massachusetts".

    MASSACHUSETTS EDITION. The Massachusetts individual income tax rate on Part B income (most types of income, except short-term and certain other gains) was reduced from 5.3% to 5.25% in 2013, and further reduced to 5.2% in 2014, to 5.15% in 2015, and 5.1% in 2016.

    MASSACHUSETTS EDITION. Due to the fact that ObamaCare has gone into effect in 2014, Massachusetts has repealed its "Fair Share" contribution requirement that was previously imposed under its universal healthcare law, on employers that did not provide adeequate health insurance coverage to their employees. Also effective in 2014, the tax that all employers formerly had to pay for medical assistance to unemployed workers, whether or not they provided health care coverage for employees, has been repealed.

    However, taking the place of the above contributions (taxes) is a new (in 2014) Employee Medical Assistance Contribution (EMAC) program, to which employers are required to contribute. For details on the EMAC tax rates, see the current edition of the Kindle e-book, Starting and Operating a Business in Massachusetts. (The Massachusetts Edition was completely revised and updated in November, 2016.

    MASSACHUSETTS EDITION. The Massachusetts minimum wage, which had been $6.75 an hour since January 1, 2001, increased to $7.50 an hour on January 1, 2007 and increased again to $8.00 on January 1, 2008, where it remained through 2014. The state minimum wage increased to $9.00 an hour on January 1, 2015, to $10.00 on January 1, 2016, and increases to $11.00 on January 1, 2017.

    MASSACHUSETTS EDITION. For 2015 and 2016, the taxable wage base per employee under the Massachusetts unemployment tax has increased to $15,000, up from $14,000 in 2014. However, the general new employer unemployment tax rate decreased from 2.83% to 1.87% in 2015 and 2016, the solvency assessment rate decreased from 1.31% in 2014 to 1.0% of covered wages in 2015, and to 0.81% in 2016. The Workforce Training Fund tax rate decreased slightly from 0.060% in 2014 to 0.056% in 2015 and 2016.

    MASSACHUSETTS EDITION. The Massachusetts Parental Leave Act was amended, effective as of April 7, 2015, to also apply to male employees, in the event of the pregnancy of a spouse or following certain adoptions of children. The "probationary period" before a new employee could utilize such leave could formerly be up to 6 months, but the new law reduces it to 3 months.

    MICHIGAN EDITION. The taxable wage base per employee under the Michigan unemployment tax was previously $9,500 per employee, but was reduced to $9,000, beginning with the third quarter of 2015. This amounts to a nearly 5%, across-the-board, reduction in state unemployment taxes.

    MICHIGAN EDITION. Michigan's filing due date for corporations will not change for 2016 and later years when the federal due date for C corporations changes from March 15 to April 15 (for calendar year taxpayers). Thus, the Michigan filing date of April 30 will be 15 days after the federal due date in future years, rather than 46 days after.

    MICHIGAN EDITION. The Michigan minimum wage was increased to $7.40 an hour on July 1, 2008, where it remained in early 2014. However, on May 27, 2014, Governor Rick Snyder signed bipartisan legislation that will raise Michigan's minimum wage to $9.25 an hour by 2018. At present (March, 2016), it is $8.50 an hour.

    The new law increases the Michigan minimum wage from $7.40 an hour to $9.25 over four years and will be adjusted to the rate of inflation or 3.5 percent, whichever is lower, starting in 2019. The new Michigan Workforce Opportunity Wage Act, which replaces the previously existing minimum wage and overtime laws, also sets new wage requirements for tipped employees, "training wages" for new employees under age 20, and a lower minimum wage for youths under the age of 18. For details on the new law, see the e-book, "Starting and Operating a Business in Michigan (July, 2014 Edition)," available in the Kindle Store on Amazon.com.

    MICHIGAN EDITION. The Michigan individual income tax, which had been imposed at a flat rate of 3.9% in recent years, was increased to 4.35%, from October 1, 2007 through September 30, 2011. Beginning October 1, 2011, it was scheduled to decrease by 0.1% each year until October 1, 2015, when it was to decrease from 3.95% to 3.9% once more. However, under 2011 tax reform legislation, the scheduled cuts were frozen. Instead, the rate decreases only once, to 4.25%, for tax years starting on or after October 1, 2012, with no further cuts scheduled.

    MICHIGAN EDITION. On May 25, 2011, Michigan Governor Snyder signed into law a sweeping reform of Michigan's extremely burdensome and complex tax system. Beginning in 2012, the Michigan Business Tax (MBT), an income tax and Modified Gross Receipts Tax on all but very small businesses, was repealed. In its place, a flat 6% corporate income tax took effect in 2012. Thus, the onerous entity-level tax on unincorporated businesses and S corporations was eliminated after 2011. Only C corporations are now subject to the corporate income tax. As a result, roughly 100,000 small businesses in Michigan will no longer be subject to double taxation of their incomes. For details on the tax reform legislation, order the new edition of "Starting and Operating a Business in Michigan," at Michigan Edition info page. (Also available in a Kindle edition.)

    The new law froze scheduled annual tax reductions in the individual income tax that were to begin in October, 2011, although one decrease, from 4.35% to 4.25%, went into effect for taxable years beginning on or after October 1, 2012 (the calendar year 2013 for most individual taxpayers). The tax reform eliminated a wide range of individual tax credits and tax credits that were allowed under the Michigan Business Tax, greatly simplifying tax compliance and administration.

    MINNESOTA EDITION. The Minnesota minimum wage increased to $8.00 an hour, effective August 1, 2014, for larger employers. For small firms, with annual receipts of less than $500,000, the minimum wage increased to $6.50 on August 1, 2014. In 2015, the minimum wage increased to $9.00 for large employers and $7.25 for small employers. On August 1, 2016, the rates increased to $9.50 and $7.75 for large and small employers, respectively.

    MINNESOTA EDITION. Large employers, with 50 or more employees, are now required to make all payments of Minnesota unemployment taxes by electronic funds transfer. [MINN. STAT. § 268.051, Subd. 1a]

    MINNESOTA EDITION. The Minnesota Department of Revenue has released the 2017 tax and tax brackets for the "Minnesota Minimum Fee" that is imposed on all businesses in the state other than individual sole proprietorships or very small businesses. The 2017 rates and brackets as well as 2016 income tax and corporate franchise tax rates and brackets are covered in the November, 2016 edition of "Starting and Operating a Business in Minnesota" (for Kindle).

    MINNESOTA EDITION. The Minnesota unemployment tax rate for new non-construction employers decreased from 1.76% in 2015 to 1.59% in 2016, and the rate for new construction employers decreased from 9% to 8.44%. Various supplemental assessments that were imposed in 2014 and 2015 were no longer imposed in 2016. However, the taxable wage base per employee increased from $30,000 in 2015 to $31,000 in 2016.

    MISSOURI EDITION. The Missouri franchise tax on the capital of corporations has gradually been reduced each year, in recent years, and has finally been eliminated entirely, beginning in 2016.

    MISSOURI EDITION. The Missouri minimum wage, which is indexed for inflation, increased from $7.60 an hour to $7.65 an hour on January 1, 2016.

    MISSOURI EDITION. The new employer tax rate for the Missouri unemployment tax remains at 3.51% for 2016, on the first $13,000 of wages per employee, unchanged from 2015. A higher new employer rate, 4.362%, applies to construction industry employers, down slightly from 4.622% in 2015.

    Missouri was no longer a "credit reduction state" in 2015, for purposes of the Federal Unemployment Tax (FUTA). This means that employers in Missouri were able to claim the full 5.4% credit against the 6.0% FUTA tax in 2015.

    MISSOURI EDITION. The special additional tax deduction of $10,000 or $20,000 for small businesses for each new job they created in Missouri expired in 2015, for any tax year that ends after December 31, 2014.

    MISSISSIPPI EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions.

    MONTANA EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions.

    NEBRASKA EDITION. Beginning in 2016, businesses in Nebraska that own taxable personal property are given an exemption for the first $10,000 worth of such property in each county.

    NEBRASKA EDITION. Beginning January 1, 2015, the Nebraska minimum wage increased from $7.25 an hour to $8.00. It increased further, to $9.00 an hour, on January 1, 2016.

    NEBRASKA EDITION. For 2016 and 2017, the Nebraska unemployment tax general new employer rate is 1.25% and the new construction employer tax rate is 5.4%, while the taxable wage base remains at $9,000 for both years. Nebraska has one of the lowest jobless rates of any state, well the national unemployment rate. The low rate of unemployment in Nebraska has helped to keep unemployment tax rates low, compared to most states.

    NEVADA EDITION. In 2015, Nevada enacted a new "Commerce Tax," in the form of a gross receipts tax on all types of businesses, at rates that vary by industry. The first returns, the tax period of 12 months ending June 30, 2016 are due by August 15, 2016. Every business, no matter how small, must file annual Commerce Tax returns, even if no tax is due. See the May, 2016 of "Starting and Operating a Business in Nevada" for details.

    NEVADA EDITION. The "temporary" .35% sales tax increase that was due to expire on July 1, 2015 remains in effect in 2016.

    NEVADA EDITION. Effective July 1, 2016, the sales tax rate in Elko County increases from 6.85% to 7.1%. The Clark County (Las Vegas) sales tax rate increased from 8.1% to 8.15% on January 1, 2016.

    NEVADA EDITION. The $100 annual state business license fee was increased to $200 for the period from July 1, 2009 through June 30, 2011. The fee was due to revert back to $100 on July 1, 2011, but will instead remain at $200. It was due to revert back to $100 on July 1, 2013, but was extended at $200 for two more years, to July 1, 2015. It was then made permanent at $200 for unincorporated businesses and increased to $500 annually for corporations.

    NEVADA EDITION. The Nevada Modified Business Tax on employers was temporarily reduced from 0.65% to 0.63% on July 1, 2005 and was scheduled to revert back to 0.65% on July 1, 2007. However, further legislation in 2007 made the 0.63% tax rate permanent. (Supposedly.) Further legislation in 2009 has created a two-tier Modified Business Tax system, where the tax rate is lowered to 0.50% on the first $62,500 of quarterly wages and is increased to 1.17% on the excess over $62,500. The new two-tier system was only to be in effect from July 1, 2009 through June 30, 2011. The tax rate for financial institutions remained unchanged, at a flat 2% of payroll. In 2011, the tax rate was reduced to zero for companies with less than $62,500 of wages per quarter, after health care deductions, and the 1.17% rate applied to all companies, if their quarterly payrolls exceeded $62,500.

    As of July 1, 2013, the tax rate was scheduled to revert to back 0.63%, and the $62,500 exemption would no longer exist. However, the 1.17% rate was extended again, until July 1, 2015, but the quarterly exemption was increased to $85,000 of wages. [NEV. REV. STAT. § 363B.110, eff. until July 1, 2015]

    On July 1, 2015, the tax rate increased to 1.475% on most employers, with a quarterly exemption of $50,000 of payroll, and is a permanent increase. However, employers may now apply 50% of any Commerce Tax they pay as a tax credit against the Modified Business Tax and certain wages paid to veterans can now be excluded from taxable payroll, since July 1, 2015.

    NEVADA EDITION. The "annual list" filing fees for corporations, LLCs, LLPs, and limited partnerships have been increased by $25, under 2015 legislation.

    NEW HAMPSHIRE EDITION. The Business Enterprise Tax now only applies to a business if its gross business receipts for a year exceed $207,000 (rather than $200,000 previously) or if its tax base is more than $103,000 ($100,000 previously). These new filing thresholds went into effect for taxable periods ending on or after December 31, 2015, and are indexed for inflation in $1,000 increments every other year.

    NEW HAMPSHIRE EDITION. For tax periods ending on or after December 31, 2016, the Business Profits Tax rate will decrease from 8.5% to 8.2% of taxable income, and may decrease further to 7.9% for tax periods ending on or after December 31, 2018, if certain state budget and revenue goals are met by June 30, 2017.

    NEW HAMPSHIRE EDITION. For tax periods ending on or after December 31, 2016, the Business Enterprise Tax rate will decrease from 0.75% to 0.72% of the enterprise tax base, and may decrease further to 0.675% for tax periods ending on or after December 31, 2018, if certain state budget and revenue goals are met by June 30, 2017.

    NEW HAMPSHIRE EDITION. Effective as of January 1, 2016, the Secretary of State's filing fees for forming a corporation, LLC, or limited partnership or to register a domestic limited liability limited partnership (LLP) all increased from $50 to $100. Likewise, the former $50 fee for registering any such foreign entities to do business in New Hampshire also increased to $100 on January 1, 2016.

    NEW HAMPSHIRE EDITION. The New Hampshire unemployment new employer tax rate for 2016 is 1.7% and the taxable wage base for all employers is the first $14,000 of wages per employee, unchanged from 2015. (The new employer rate was 2.7% in 2014.)

    NEW JERSEY EDITION. For New Jersey unemployment tax, Temporary Disability Insurance (TDI) and Family Leave Insurance (FLI), the taxable wage base for 2016 is increased to $32,600, up from $32,000 in 2015. The combined new employer unemployment tax rate (including TDI) for the year from July 1, 2016 through June 30, 2017 has decreased to 3.3%, from 3.9% the previous year.

    NEW JERSEY EDITION. The New Jersey minimum wage increased by $1.00, to $8.25 an hour, in 2014, and to $8.38 in 2015. It remains at $8.38 in mid-2016, but may be increased later in the year, depending on whether there is any inflation (according to a federal inflation index) during the 12-month period ending in August.

    NEW MEXICO EDITION. New Mexico's legislature has enacted major corporate income tax cuts, first effective in 2014, but with additional cuts phased in each year until 2018. Beginning January 1, 2014, the top New Mexico corporation income tax rate decreased from 7.6% to 7.3%. Further decreases are scheduled each year until 2018, when the top tax rate will be down to 5.9%. The top rate in 2016 is 6.6%, on taxable income over $1 million.

    NEW MEXICO EDITION. The New Mexico unemployment tax rate for new employers in 2016 is the higher of 1.0% or an Assigned Industry Rate, which varies from 1.2% for the utility industry to 3.04% for construction. The taxable wage base increased from $23,400 in 2014 and 2015 to $24,100 in 2016.

    NEW MEXICO EDITION. Formerly, corporation and LLC documents were filed with the Corporations Bureau of the New Mexico Public Regulation Commission, while limited partnership, limited liability partnership, and other partnership documents were all filed with the Secretary of State. Under a recent state government reorganization, corporation and LLC filings are now handled by the Secretary of State, as well as all partnership filings.

    NEW MEXICO EDITION. The maximum individual income tax rate in New Mexico decreased to 4.9% in 2008, from 5.3% in 2007, and remains at 4.9% in 2016.

    NEW MEXICO EDITION. The New Mexico state minimum wage increased to $6.50 an hour on January 1, 2008 and increased again to $7.50 on January 1, 2009, where it remains in 2016.

    NEW MEXICO EDITION. The City of Santa Fe adopted a minimum wage ordinance that initially applied only to businesses with 25 or more employees that were licensed to do business in that city. The ordinance has now been upheld by the New Mexico courts, after being challenged by a business group.

    The Santa Fe minimum wage was set at $8.50 an hour on January 1, 2004, increased to $9.50 on January 1, 2006, and was scheduled to increase again to $10.50 on January 1, 2008. It would then increase in line with inflation, beginning in 2009. However, the $10.50 rate increase on January 1, 2009 was been canceled, but the Santa Fe minimum wage now applies to businesses of any size that are licensed to do business in the city. The minimum wage was adjusted for inflation on January 1, 2009, to $9.85 an hour. [CITY OF SANTA FE ORDINANCE No. 2003-8] It remained at that level through 2011, as there was no inflation (officially), and until March 1, 2012, when the rate was increased to $10.29 per hour.The Santa Fe living wage has since increased to $10.91 an hour on March 1, 2016. [Per Santa Fe Living Wage Poster, 6/2016]

    Albuquerque also has enacted a city minimum wage, which increased to $8.60 an hour in 2014. It increased again to $8.75 an hour in 2015 and remains at $8.75 in 2016.

    NEW YORK EDITION. The State of New York has enacted the "Start-Up New York" program for businesses, which you may have seen promoted on national television ads. START-UP NY provides a 10-year exemption from taxes, including income, franchise, sales, and property taxes, for qualifying start-up businesses, expanding businesses that create new jobs, and out-of-state businesses that relocate in the state. Eligibility for these benefits depends on a number of factors, which are discussed in more detail in the current edition of "Starting and Operating a Business in New York" (for Kindle).

    NEW YORK EDITION. New York (state) enacted a number of major tax reforms in 2014 and 2015, most of which began to go into effect in 2015:

    • The corporate income tax rate (one of the four franchise tax calculations) on taxable income is reduced from 7.1% to 6.5%, beginning in 2016;
    • The alternative minimum tax, one of the four franchise tax calculations, was abolished, beginning with tax years that begin in 2015;
    • The tax on capital of corporations, another of the four four franchise tax calculation, begins phasing out in 2016, and is repealed by 2021;
    • The fixed minimum tax, based on gross receipts, which was previously limited to $5,000 on C corporations with New York-source gross receipts over $25 million, will increase in 2015 to amounts ranging from $10,000 to $200,000, on gross receipts over $50 million to over $1 billion;
    • The incorporation fee, based on the value of par value and non-par value stock of the new corporation, was repealed as of January 1, 2015, after which only the current $125 filing fee applies;
    • The annual license fees and maintenance fees imposed on foreign corporations were repealed, beginning in 2015.

    NEW YORK EDITION. Beginning December 31, 2013, New York State’s minimum wage was scheduled to increase in a series of three annual changes as follows: $8.00 on 12/31/13, $8.75 on 12/31/14 and $9.00 on 12/31/15. Under new legislation, New York has enacted major minimum wage increases that will begin to be phased in at different rates for different parts of the state, with higher rates for fast food workers, and lower New York City rates for most small employers. The state minimum wage in all areas will eventually increase to $15 an hour, but much sooner in New York City. For details on the complex new minimum wage provisions, see Chapter 6 of the 2016 Edition of the Kindle e-book, "Starting and Operating a Business in New York."

    NEW YORK EDITION. New York State individual income tax rates were reduced in 2012 for various tax brackets. For example, the maximum tax rate was reduced from 8.97% in recent years to 8.82% in 2012 through 2017. However, the marginal rates for taxpayers with over $100,000 of income are actually considerably higher, since there is a "recapture" tax for such high-income individuals that gradually recaptures the benefits of the lower tax rates that are less than the maximum 8.82% bracket.

    NEW YORK EDITION. In 2016, New York (state) enacted a paid family leave law, under which workers will be able to take up to 12 weeks of paid family leave, such as to care for sick family members or a new child, once the new law is fully phased in. Benefits will begin, at a reduced rate, for 8 weeks of leave, in 2018. The benefits will be funded by a payroll tax, to be deducted from the wages of all workers, rather than as a tax on employers. For details on the new paid leave law, see Chapter 6 of the 2016 Edition of the Kindle e-book, "Starting and Operating a Business in New York."

    NORTH CAROLINA EDITION. As the North Carolina economy has recovered, the state has enacted significant individual and corporation income tax cuts in 2014 and 2015. For individuals, the income tax rate is reduced to 5.8% in 2014 and to 5.75% in 2015 and 2016, under a new flat tax. However, under the flat tax, all personal exemptions have been eliminated and many tax deductions and tax credits have also been eliminated. A further cut in the individual tax rate is scheduled for 2017. See the 2016 edition of Starting and Operating a Business in North Carolina for detail.

    NORTH CAROLINA EDITION. For corporations doing business in North Carolina, the former 6.9% tax rate prior to 2014 was reduced to 6% in 2014, 5% in 2015, and is 4% in 2016 and may be reduced to 3% in future years if certain state budget goals are met. In addition, the current 3-factor (sales, property, and payroll) method of apportioning taxable income to North Carolina for corporations will change to a single-factor (sales) method in 2018, under 2015 legislation.

    NORTH CAROLINA EDITION. Effective in 2017, the "tax base" calculation for the franchise tax will change, with a corporation's net worth factor replacing the current capital stock, surplus, and undivided profits factor. In addition, the current $35 minimum annual franchise tax on corporations will increase to $200 in 2017.

    NORTH CAROLINA EDITION. Effective January 1, 2009, North Carolina's gift tax was repealed, for gifts made on or after that date. The estate tax has also been repealed, for deaths occurring on or after January 1, 2013.

    NORTH CAROLINA EDITION. The North Carolina minimum wage increased to $6.15 an hour, effective January 1, 2007, and increased along with the federal minimum wage to $6.55 an hour on July 24, 2008. It increased again to $7.25 an hour to match the federal minimum wage, on July 24, 2009, where it remains in 2016.

    NORTH CAROLINA EDITION. LLCs are not generally subject to the North Carolina franchise tax, unlike corporations. However, LLCs that elect to be taxed as C corporations are subject to the state franchise tax. Such LLCs will receive a $175 tax credit, which is the difference between the $25 (formerly $20) annual report fee for a corporation and the $200 annual report fee for LLCs that do not elect to be treated as corporations. Since January 1, 2009, the franchise tax also applies to an LLC that elects to be treated as an S corporation for income tax purposes.

    NORTH DAKOTA EDITION. At a time when most other states are raising taxes, North Dakota has reduced corporate and individual tax rates several times for tax years beginning after December 31, 2008. The top individual rate was reduced from 5.54% to 4.86%, beginning in 2009, reduced again to 3.99% in 2011 and 2012, and to 3.22% in 2013 and 2014.

    In 2015 and 2016, the top coporate rate is reduced further, to 4.31%, and the top individual rate is reduced to 2.9%.

    NORTH DAKOTA EDITION. The North Dakota corporate income taxes were cut by approximately 12%, beginning in 2013. The top bracket rate of 5.15% was reduced to 4.53%, the 4.25% bracket was lowered to 3.75%, and the bottom bracket rate was lowered from 1.68% to 1.48%. Rates in the 3 brackets were cut again in 2015 (continuing in 2016 and thereafter) to 4.31%, 3.55%, and 1.41%, respectively.

    NORTH DAKOTA EDITION. New Hire Reports must now include additional information, including the date of hire (or rehire) and the whether or not the employer offers the employee health insurance coverage.

    NORTH DAKOTA EDITION. The North Dakota unemployment tax rates in 2016 are 1.62% for new non-construction employers with positive account balances or 6.81% for those with negative account balances. The 2016 tax rate for all new construction employers is 10.72%. The taxable wage base increased to $37,200 in 2016 from $35,600 in 2015.

    OHIO EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions.

    OKLAHOMA EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions.

    OREGON EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions.

    PENNSYLVANIA EDITION. Effective January 1, 2016, the Pennsylvania franchise and capital stock taxes on corporations and LLCs, which had been imposed since 1844, was finally completely phased out.

    PENNSYLVANIA EDITION. Reacting to new federal tax legislation regarding the due dates for corporation income tax returns, the Pennsylvania Legislature has enacted new tax filing due dates for the state corporation income tax returns. For details, see the current edition of "Starting and Operating a Business in Pennsylvania," December 1, 2016 edition. (Available for Kindles on Amazon.com.)

    PENNSYLVANIA EDITION. The Philadelphia Parking Tax rate was increased from 20% to 22.5% of parking charges, as of July 1, 2015. In addition, the "temporary" increase in the Philadelphia sales tax from 1% to 2%, which was due to expire on July 1, 2014, has been continued in effect after that date and remained in effect in 2016.

    RHODE ISLAND EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions.

    SOUTH CAROLINA EDITION. For South Carolina unemployment tax purposes, the taxable wage base (per employee) on which tax is computed increased from $10,000 to $12,000 for 2012, 2013, and 2014, and increased further to $14,000 in 2015 and 2016. However, the new employer unemployment tax rate decreased from 1.996% in 2014 to 1.55% in 2015 and to 1.39% in 2016.

    SOUTH CAROLINA EDITION. Beginning in 2014, the special South Carolina income tax rate on operating business income (other than for C corporations) was reduced to 3%.

    SOUTH CAROLINA EDITION. Beginning in 2011, South Carolina business personal property tax returns must now be filed online, at the South Carolina Business One Stop portal, rather than filing a paper return on Form PT-100.

    SOUTH DAKOTA EDITION. The South Dakota inheritance tax and estate tax were formally repealed by the legislature in 2014.

    SOUTH DAKOTA EDITION. Under the South Dakota sales tax law, vendors who collect and pay over sales and use taxes, as well as certain excise taxes, have been allowed to claim a credit against the tax of 1.5% (up to a maximum of $70 per month) to help defray their compliance costs. Beginning January 1, 2014, this collection credit is only allowed if the vendor files returns electronically and makes the tax payments by electronic funds transfer. [S.D. CODIFIED LAWS § 10-45-27.2, as amended]

    SOUTH DAKOTA EDITION. New employers are generally required to pay South Dakota unemployment tax at a rate of 1.2%, plus an "investment fee" of 0.55%, or a total rate of 1.75% in 2016, on the taxable wage base -- the first $15,000 of wages paid to each employee. A higher initial tax rate applies to employers in the construction industry. In their second and third years of coverage, the new employer tax rates are somewhat lower than in the first year. (See Chapter 6, Section 6.2 of the Kindle edition of STARTING AND OPERATING A BUSINESS IN SOUTH DAKOTA for details.

    SOUTH DAKOTA EDITION. The South Dakota minimum wage increased from $7.25 in 2014 to $8.50 an hour in 2015, and increased to $8.55 in 2016, due to inflation indexing.

    SOUTH DAKOTA EDITION. The South Dakota state sales tax increased from 4% to 4.5%, effective June 1, 2016. Local governments generally impose a 1% or 2% local sales tax.

    SOUTH DAKOTA EDITION. Effective July 1, 2016, the office of the South Dakota Secretary of State began imposing an additional $15 fee on annual reports that must be filed by corporations, LLCs, and LLPs, if paper reports are filed. The fee for filing such reports online did not change.

    TENNESSEE EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions. (Of course it would be similar, since the Federal laws are the same in every state.) This is despite the fact that we have authored this book series for all 50 states since the 1980s, in print and/or electronic versions. However, Amazon is a large company and we are a small publisher, so we are no longer able to publish this, or a number of our other state editions in the Kindle Store.

    TEXAS EDITION. > Under the Texas franchise tax law, if the tax as computed is less than $1,000, no tax is due, but a "no tax due" report must still be filed. For "no tax due" franchise tax reports originally due January 1, 2016 or later, electronic filing is now mandated.

    TEXAS EDITION. The small business exemption from the Texas franchise tax has increased to $1,110,000 of gross receipts for franchise tax reports first due in 2016 or 2017. Also, the limit on the compensation deduction per employee has increased from $350,000 to $360,000 for those two years and the two franchise tax rates have also been slashed, to 0.375% for retailers and wholesalers and 0.75% for other businesses. The tax rate for businesses that elect the "E-Z" computation of the tax was also cut, from 0.575% to 0.331%, for the same years.

    TEXAS EDITION. The general Texas sales tax is unchanged, at 6.25%, in 2016, but the 2% emissions surcharge imposed on sales or leases of certain off-road heavy machinery was reduced to 1.5% as of September 1, 2015. The surcharge will expire on August 31, 2019.

    For more on Texas business regulations and tax laws, see the current edition of Starting and Operating a Business in Texas. (Ordering information at: www.roninsoft.com/sbzorder.htm.)

    UTAH EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com no longer allows us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions. (Of course it would be similar, since the Federal laws are the same in every state. They ignored the fact that the state laws and other state information is different in each of our state editions.)

    VERMONT EDITION. A new segment has been added to "Starting and Operating a Business in Vermont", regarding registration and regulation of telemarketing firms by the state of Vermont.

    VERMONT EDITION. Effective January 1, 2017, Vermont employers will be required to provide paid sick leave benefits to eligible employees after a waiting period. Employees will accrue one hour of paid sick leave for every 52 hours worked, with certain annual limits that will increase in 2019. See details on who must be covered and what qualifies as "sick leave" other than personal illness of the employee, in the December, 2016 Kindle edition of "Starting and Operating a Business in Vermont", available in the Kindle Store on Amazon.com.

    VERMONT EDITION. The Vermont minimum wage increases each January by the lesser of 5% or the increase in the Consumer Price Index, CPI-U, U.S. City average. For 2015, the minimum wage was $9.15 per hour, and increased again to $9.60 in 2016. It is scheduled to increase further to $10.00 in 2017 and $10.50 in 2018. The Vermont minimum wage law applies to any employer of two or more employees. [VT. STAT. ANN., Tit. 21, Secs. 382 and 384]

    VIRGINIA EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions. (Of course it would be similar, since the Federal laws are the same in every state. They ignored the fact that the state laws and other state information is different in each of our state editions.) This is despite the fact that we have authored this book series for all 50 states since the 1980s, in print and/or electronic versions. However, Amazon is a large company and we are a small publisher, so we are no longer able to publish this, or a number of our other state editions in the Kindle Store.

    WASHINGTON EDITION. The Washington minimum wage increased to $9.47 an hour on January 1, 2015, and until recently was the highest (state) minimum wage in the nation. (California is now higher, at $10.00 as of January 1, 2016.) The Washington minimum wage law calls for an annual inflation adjustment, but because there was no increase in the cost-of-living index for the measurement period, the state minimum wage for 2016 remains at $9.47, unchanged from 2015, but was scheduled to increase to $9.53 in 2017. However, voters approved a ballot measure in November, 2016 that will increase the state minimum wage to $11 on January 1, 2017, $11.50 in 2018, $12 in 2019, and to $13.50 by January 1, 2020.

    The city of Tacoma has adopted a $12 city minimum wage, which will phase in by January 1, 2018. The Tacoma minimum wage will increase to $11.15 an hour on January 1, 2017, from $10.35 since February 1, 2016.

    WASHINGTON EDITION. Important new changes in the Washington sales tax for restaurants that provide meals to employees, and for software developers who buy equipment (such as computers) used in the production of certain types of software went into effect in July and August, 2015. For details, see the Kindle edition of Starting and Operating a Business in Washington (March, 2016 edition).

    WASHINGTON EDITION. Effective August 1, 2015, the Washington state Business & Occupations tax rate on royalty income was more than tripled, going from .484% to 1.5%.

    WASHINGTON EDITION. In the November 6, 2012 election, voters in Washington approved Referendum 74, legalizing same-sex marriage in the state. The state had previously adopted a domestic partnership law several years before. In Initiative 502, Washington voters also legalized the adult use of recreational marijuana.

    WASHINGTON EDITION. Beginning July 1, 2015, the 25% excise taxes on producers, processors, and retailers of marijuana were replaced by a single 37% excise tax that is paid by the consumer and collected by the retailer. The new marijuana excise tax is no longer subject to the Washington sales tax.

    WEST VIRGINIA EDITION. In 2016, the West Virginia minimum wage is $8.75 an hour.

    WEST VIRGINIA EDITION. For periods starting on or after January 1, 2014, taxpayers making more than $25,000 in payments for a single business tax type, or a $100,000 payment for personal income tax, must file returns and make payments electronically, unless specifically excluded. Some business tax returns cannot be filed electronically on the State Tax Department website, including the corporate income and Business Franchise Tax returns, income tax returns for pass-through entities, and motor fuel taxes for suppliers, but may be e-filed through various software programs offered by private companies.

    WEST VIRGINIA EDITION. The West Virginia franchise tax, which applied to all business entities except sole proprietorships, was phased out over a period of years, and finally is completely repealed for 2015 and later years.

    WEST VIRGINIA EDITION. West Virginia has enacted a new exemption for businesses that are at least 51%-owned by veterans, exempting them from various Secretary of State fees, such as for filing articles of incorporation, articles of organization for an LLC, the limited partnership certificate, and to register as a limited liability partnership (LLP). In addition, annual report fees for those veteran-owned entities will not be imposed for their first four years after formation or registration, beginning on or after January 1, 2015.

    WISCONSIN EDITION. NOTE: We are no longer publishing this state edition, since Amazon.com stopped allowing us to publish it in the Kindle format, due to the fact that the Federal content was "too similar" to the Federal content of our other state editions.

    WYOMING EDITION. In 2014, based on 2011 state tax data (the most recent available), the Tax Foundation ratings showed that Wyoming had the lowest absolute per capita state and local taxes and the lowest taxes as a percentage of per capita income of any of the 50 states. The percentage of income paid as state and local taxes in Wyoming was 6.9%, compared to the national average of 9.8% (and 12.6% in New York, 11.4% in California).

    WYOMING EDITION. Effective since July 1, 2013, gratuities (tips) offered by a customer or invoiced by the seller are excluded from sales tax. Prior to that date, mandatory gratuities, such as a minimum 15% gratuity automatically added to the bill for parties of 10 or more persons, were taxable, but voluntary gratuities offered by a customer were not. [WYO. STAT. § 39-15-103]

    WYOMING EDITION. Under the Wyoming unemployment tax law, new employers are required to pay tax at a rate that varies by industry in 2016 on the first $25,500 of wages paid to each employee. For 2016, the minimum tax rate for any experience-rated employer is 0.27% and the maximum is 8.77%. In 2017, the taxable wage base will decrease slightly, to $25,400.

    WYOMING EDITION. Effective July 1, 2004, a new sales tax exemption was enacted, effective until December 31, 2010, for the purchase or lease of machinery and machine tools used in manufacturing. The exemption applied only to a manufacturer classified by the Department of Revenue under the NAICS code manufacturing sector 31 - 33. (NAICS is the North American Industry Classification System, which was developed jointly by the U.S., Canada, and Mexico to provide new comparability in statistics about business activity across North America.)

    This exemption was extended several times in recent years, until December 31, 2017. [WYO. STAT. § 39-16-105(a)(viii)(D)]

    WYOMING EDITION. Under 2015 amendments to the Wyoming wage payments law, the date by which final wages must be paid to a terminated employee has been changed. Before 2015, final wages had to be paid within five days of termination. For details of this change, see Chapter 6, Section 6.18 of the Kindle Edition of Starting and Operating a Business in Wyoming (July, 2016 Edition).

    WYOMING EDITION. Effective July 1, 2015, rentals or leases of tangible personal property between closely affiliated business entities, such as between a parent corporation and an 80%-owned subsidiary, are exempted from sales and use tax.


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