Nonresident partners' retirement income.On Aug. 3, 2006, President Bush signed a bill extending to nonresident retired partners the exemption nonresident retired employees have from state taxation of retirement income. P.L. 109-284 clarifies the original intent of a 1996 law (EL. 104-95) that prohibits states from taxing nonresident employees' retirement income. The 1996 law eliminated state taxation of nonresident retirement income received from qualified retirement plans, simplified employee pensions, annuity contracts, individual retirement plans, eligible deferred-compensation plans, governmental plans or other retirement plans or masts that provided benefits as a series of "substantially equal periodic payments Substantially equal periodic payments (SEPP) A method of distribution from IRA account assets that under certain conditions is not subject to the IRS's 10% premature withdrawal penalty for those under age 59-1/2. ." The bill was introduced in 2005 to deflect action that New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of had taken to tax nonresident partners' retirement income. The state had said partners were not included in the tax exemption tax exemption, immunity from the requirement of paying taxes. Federal, state, and usually local law provide exemption from taxation for a wide variety of organizations, usually not-for-profit, such as churches, colleges, universities, health care providers, various created by P.L. 104-95. The bill also clarifies that adjustments in the retirement amounts that are set in advance in a predetermined pre·de·ter·mine v. pre·de·ter·mined, pre·de·ter·min·ing, pre·de·ter·mines v.tr. 1. To determine, decide, or establish in advance: formula or adjustments to reflect the cost of living would not cause the plan to fail. It is retroactive to 1996. AICPA AICPA See American Institute of Certified Public Accountants (AICPA). approval: The AICPA issued a statement supporting the new law, which it said is important to many CPAs who are, or were, partners of accounting and consulting firms. According to Tom Ochsenschlager, AICPA Vice President--Taxation, the new law "ensures that states' tax rules for retirees are uniform, whether the retiree was an employee or a partner. It guarantees equity." Lesli S. Laffie, J.D., LL.M LL.M Legum Magister (Master of Laws) . |
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