This Week in State Tax

Governor Meyer recently signed House Bill 255 into law, thus decoupling the state from certain provisions of the One Big Beautiful Bill Act (OB3). Specifically, for corporate and individual taxpayers, the First State will decouple from the OB3 changes made to IRC section 168(k) (bonus depreciation) for property acquired and placed in service between January 19, 2025 and January 1, 2031, as well as from IRC section 168(n) (bonus depreciation for qualified production property) for property placed in service before January 1, 2031. Finally, for corporate taxpayers, the bill decouples from the transitional rules under IRC section 174A (the acceleration of unamortized amounts of R&E expenses from tax years 2022-2024) and requires taxpayers to continue to amortize the R&E expenses paid or incurred in those years. These decoupling provisions for corporations apply retroactively to tax years beginning on or after January 1, 2022. For individuals, the changes apply beginning January 1, 2026. Contact Michael Paich with questions on House Bill 255. KPMG will continue to monitor state responses to OB3 and provide updates in TWIST.

Download PDF >

The Florida First District Court of Appeal affirmed a Circuit Court decision holding that a taxpayer was entitled to a refund of stamp and intangibles taxes on certain refinanced home loans and mortgages. Under Florida law, the documentary stamp tax and intangible tax are assessed when there is a promise to pay a sum certain signed by a borrower. For mortgage transactions, tax is paid at the time the mortgage is recorded. Home refinancing loans are exempt from these two taxes to the extent the lender provides no new money to the borrower. Specifically, a new loan must be a renewal of the old loan for the stamp tax exemption to apply, and the new loan must refinance the old loan with the same lender for the intangible tax exemption to apply.

The taxpayer refinanced home loans for many Florida customers, paying both the documentary stamp tax and intangible tax on each loan. If the refinanced amount exceeded the original loan, the taxpayer agreed it owed taxes on the “new money.” However, the Department contended that taxes were due on the full amount of the refinanced loans, including amounts rolled over from the original loans. The taxpayer paid the requested amount and sought refunds for the amounts that did not involve the provision of “new money” on the refinanced loans. The Department audited a sample of 980 loans. It concluded the taxpayer owed taxes on the full amount, treating the refinanced loans as wholly new loans rather than renewals, and denied the refund claim. The taxpayer appealed, and the trial court ruled in favor of the taxpayer, finding most loans qualified as renewals or refinancing. The Department appealed.

On appeal, the Department argued that the new loans were “novations” (i.e., new, unconnected agreements that discharged the original debts). The appellate court rejected the Department’s position and ruled that the obligations under the original loans were not extinguished but were rolled into the new loans, thereby qualifying as renewals. The appellate court explained that even though the taxpayer recorded “satisfactions” of the original home loans once the new loans were finalized, the evidence the taxpayer presented was sufficient to demonstrate that the borrowers’ obligations to pay the balance on their original loans to the taxpayer did not vanish, thus some of the refinanced loans qualified for the stamp tax and intangible tax exemptions.

The Department further argued that the taxpayer failed to meet the statutory requirement to attach the original note with proper notation to the renewal note. The appellate court rejected this argument, explaining that in the mortgage context, tax payment notations are made on the mortgage, not the note, and thus the taxpayer did not violate the attachment requirement. The Department had also waived certain evidentiary challenges by not raising them earlier. The appellate court affirmed the trial court decision, holding that the taxpayer’s refinanced loans qualified for the stamp and intangible tax exemptions to the extent there was no increased indebtedness. For more information on Department of Revenue v. Bank of America NA, contact Amanda Ribeiro. 

Download PDF >

Governor Tina Kotek recently signed House Bill 3991, a measure making changes to Oregon’s transportation-related taxes to raise revenue to maintain the state’s highway and transit infrastructure. Effective December 31, 2025, the state motor vehicle fuel tax will increase from $0.40 to $0.46 per gallon and now includes diesel fuel among the fuels subject to the motor vehicle fuel tax. The additional revenue generated is allocated among the state Department of Transportation, counties (with a portion specifically for small counties), and cities.

In addition, the legislation temporarily doubles the statewide payroll tax rate on wages for services performed in Oregon from 0.1 percent to 0.2 percent beginning January 1, 2026 through December 31, 2027, at which point it reverts to the original 0.1 percent. Funds from the tax are dedicated to public transit. The bill also raises vehicle registration and titling fees, effective December 31, 2025.

The bill also updates Oregon’s Road Usage Charge (RUC) program, known as OReGO, which is a voluntary alternative to the traditional fuel tax. Drivers participating in the RUC program pay a per-mile charge for the miles they drive. To offset the fuel tax that the participating drivers pay at the pump, the program provides a nonrefundable tax credit. HB 3991 expands the RUC program to specifically include electric, hybrid, and plug-in hybrid vehicles as subject vehicles and clarifies definitions for these vehicle types. Owners or lessees who voluntarily participate in the per-mile RUC program are exempt from certain reporting requirements until mandatory participation begins in 2031. For electric vehicle owners, an alternative flat annual fee of $340 is available instead of the per-mile charge. For questions regarding this bill or fuel taxes in general, please reach out to Jeff Cook.

Download PDF >

The Comptroller of Public Accounts determined that a taxpayer’s refund request was not timely under the Texas statute of limitations because its request for an extension to file a return in the year at issue had been made improperly. Texas law requires that a refund request be made within four years of the date on which the tax became due and payable; when a taxpayer files pursuant to an extension request, this is the extended due date. Texas law also specifies that a taxpayer’s request for an extension will be denied if the taxpayer does not make an estimated payment meeting certain statutory requirements alongside the extension request. In this case, the taxpayer timely filed a request for extension, which included a written notation that the taxpayer “has available tax credits to offset tax liability.” The taxpayer subsequently made a payment after the deadline to request an extension had passed. The taxpayer filed its return in November 2017, prior to the extended due date. In November 2021, the taxpayer filed a refund claim related to its 2017 franchise tax report. The Comptroller denied the refund request; the taxpayer requested a refund hearing, and the matter was referred to the State Office of Administrative Hearings.

The ALJ agreed with Comptroller’s decision to deny the claim, determining that, because the appropriate payment related to the extension was not made prior to the deadline for an extension request, the extension was improperly filed. Thus, the taxpayer was required to make its refund request within four years of the original due date of the franchise tax report. Because the refund request was filed more than four years from that date, it fell outside the statute of limitations.

Contact Jeffrey Benson or Karey Barton with questions on Comptroller Decision No. 119,062.

Download PDF >