The purpose of this alert is to ensure you are aware of time-sensitive state opportunities that may be beneficial for your company to pursue.  Below is a summary of these opportunities.


Based on a recent Pennsylvania Supreme Court decision, the rental of wooden pallets by a paper products manufacturer were deemed to be qualified wrapping supplies exempt from Pennsylvania sales tax. Prior to the Supreme Court decision, pallets were considered to be returnable containers subject to sales or use tax.  The decision represents a refund opportunity for any company that paid sales or use tax on pallets that were used as non-returnable containers to facilitate the delivery of goods.

If you distribute goods and are using pallets to ship your goods, you may be eligible for a refund.


New Jersey is currently running a program that ends January 15, 2013 for intangible holding companies to come forward and register with the DOR if they have New Jersey source income from the use of intangible assets within the state.

The look back period is limited to years beginning after December 31, 2003 or when business commenced, whichever is later.  All penalties will be waived, with the exception of a 5 percent  amnesty penalty.  DOR discovery of the taxpayer will result in a look back period as far back as 1996 and impose penalties of up to 35 percent.  The DOR has also indicated that it will consider proposals for discretionary relief related to throw out sales.  The program could apply to holding companies that were unwound prior to 2003.

You may wish to consider participation to receive a limited look back period to determine the liability and receive a waiver of almost all penalties.


New York's MTA payroll tax was declared to be unconstitutional by the New York Supreme Court.  The decision is expected to be challenged by the State, however, it is accepting protective refund claims in the event the decision is upheld and the MTA payroll tax is repealed.

The MTA payroll tax is imposed on an employer's payroll expense for employees who are employed within the Metropolitan Commuter Transportation District (MCTD).  The tax is also imposed on self-employed individuals who work within the MCTD as well.  The MCTD includes New York City, Bronx, Brooklyn, Queens, and Staten Island.  It also includes the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and West Chester.

If you have activity in the MCTD, you may want to consider filing protective claims.  Protective claims cannot be filed by amending original returns.  The claims must be filed using an online service, an electronic form or an automated telephone application.

Protective claims for employers for the fourth quarter of 2009 and subsequent years must be filed by January 31, 2013.  Self-employed individuals have until April 30, 2013 to file a refund claim for 2009 and subsequent years.  One protective claim will cover all open periods.  You should continue to file and pay the MTA payroll tax until the matter is fully resolved.


The California Court of Appeals ruled in favor of taxpayers by allowing them to use the Multistate Tax Compact equally weighted three factor formula.

Prior to the Court of Appeals decision, taxpayers were required to use a formula where the sales factor was double weighted.  Taxpayers who used the double weighted sales factor to compute California apportionment should consider filing protective claims for all open periods.  A protective refund claim can be made by filing an amended return or submitting a letter.  There is a four year statute of limitations which generally runs from the date the return was filed.

Taxpayers will need to consider how to file current year returns.  Making the election on an originally filed return could subject a taxpayer to the large corporate understatement penalty (20 percent strict liability penalty) if the decision is overturned on appeal.


  • Kentucky: The Kentucky program will run through November 31, 2012 and covers all taxes administered by the DOR.  Applicants will receive abatement of penalties and 50 percent of the interest;
  • Maine: The Maine program will run through November 30, 2012 and covers only use tax liabilities.  The look back period will cover 2006 through 2011 and the taxpayer will be required to pay the 3 highest liabilities during that look back period;
  • Ohio: The Ohio program will run through May 1, 2013 and covers consumer use taxes.  The look back period will run from January 1, 2009 and forward.  There are provisions for penalty and interest waiver.  All tax owed prior to January 1, 2009 will be forgiven;
  • Rhode Island: The Rhode Island program will run through November 15, 2012.  The program covers corporate income, estate, fiduciary and personal income, sales and use, cigarette and tobacco products and employer taxes.  There are provisions for abatement of both penalty and interest.

If you have tax exposure over a long period of time in any of these states, you may want to consider pursuing relief under an amnesty program as a mechanism to minimize the exposure for tax, penalty, and interest. 

If you feel you may benefit from any of these items, please contact Thomas Frascella, Director, Tax Strategies at 215.734.0092 or Email

Information contained in this alert should not be construed as the rendering of specific accounting, tax, or other advice. Material may become outdated and anyone using this should research and update to ensure accuracy. In no event will the publisher be liable for any damages, direct, indirect, or consequential, claimed to result from use of the material contained in this alert. Readers are encouraged to consult with their advisors before making any decisions.