Biofuel Credit Compliance, A New Sales Tax, And Budget Woes
TIGTA: Fraud potential with biofuel tax credits calls for corrective action. The Treasury Inspector General for Tax Administration (TIGTA) recently reported that one-third of credits sampled by its auditors lacked required documentation. The IRS agreed to TIGTA’s recommendation that it improve the use of available tools to encourage more compliance with biofuel tax credit claims.
Alaska lawmakers advance marijuana tax reform bill. Voters legalized recreational marijuana in Alaska ten years ago; now lawmakers are working on the first major change to that law. The state’s House of Representatives voted to change the state’s $50-per-ounce marijuana tax to a 7 percent sales tax. It would be the state’s first statewide sales tax. Alaska’s current wholesale-level marijuana tax is the highest in the country.
In Michigan, firearm safety devices are now exempt from sales tax. The exemption is part of a package of provisions enacted after the February 2023 mass shooting at Michigan State University. The new tax exemptions apply to products such as gun locks, safes, cases, and lock boxes.
Oklahoma Senate stands firm against proposed tax bracket changes. Republican Gov. Kevin Stitt and House Republicans want to condense the state’s multiple tax brackets into a single flat rate of 4.25 percent on earnings above $27,100. But the Senate is not in favor of this, arguing that Oklahoma cannot afford it. They’ll need to work out their differences and pass a budget by May 31, the last day of the legislative session.
Facing a $45 billion budget deficit, California Gov. Gavin Newsom proposes temporary tax changes. The Democratic governor has called for a temporary suspension of the net operating loss carryover provision and a cap on the use of tax credits. The proposal would bring in $900 million in revenue this year, with $558 million available to counter the deficit. It would also save $5.5 billion in fiscal 2026, with $3.4 billion going to address the budget gap. Newsom has pledged not to pursue any broad-based tax increases, reports Tax Notes (paywall).
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