Missing Proof, Protest Denied: Indiana Finds Throwback Proper Where Manufacturer Fails to Substantiate Taxability

By Mike Le and Open Weaver Banks

The Indiana Department of State Revenue issued a Letter of Finding denying a taxpayer’s protest of throwback sales because the taxpayer failed to substantiate being subject to tax in multiple jurisdictions. For income tax purposes, Indiana requires the throwback of sales when tangible personal property is shipped from Indiana to a jurisdiction where a taxpayer is not subject to tax. The taxpayer argued that it was subject to tax in multiple jurisdictions because it was either included in its parent’s combined/unitary returns, employed employees who solicited sales in various states, or conducted business in foreign countries. The Department, however, concluded that the taxpayer failed to carry its burden and did not provide sufficient evidence to prove that it was subject to taxation in those jurisdictions. In particular, the Department determined that since the taxpayer filed a separate Indiana return, its Indiana-origin sales to states in which it was included in combined/unitary returns with its affiliates must be thrown back to Indiana. The Department also denied the taxpayer’s request for abatement of the negligence penalty, finding that the taxpayer failed to demonstrate that its actions were reasonable. Ind. Dep’t of State Rev., Ltr. Of Findings No. 02-20170298 (January 31, 2018).

COST 2018 Sales Tax Conference and Audit Session

Eversheds Sutherland is a proud sponsor of the COST 2018 Sales Tax Conference and Audit Session on February 26 - March 1, 2018, in New Orleans, Louisiana. The Eversheds Sutherland SALT Team presents and details of their presentations are below:

"Can “Gross” Ever Be Removed From Gross Receipts Taxes?"
Speaker: Maria Todorova

"Taking the Dash Out of M-PU: Best Practices to Report Products Simultaneously Used in Multiple States"
Speaker: Todd Betor

View details, including registration information, here.

Submit your pet to be featured as the February SALT Pet of the Month!

The Eversheds Sutherland SALT Team is always excited to see what kind of pets our clients and friends have. Our team features a different pet at the end of every month, and we want to feature YOURS! Featured pets will receive a fun prize from the SALT Team. The deadline for February submissions is Friday, February 23. 

To submit your pet to be featured, visit the Eversheds Sutherland SALT Shaker App, click “Pet of the Month” in the drop-down, then click "Submit A Pet."

Don’t have the app? It is available for download in the Apple App StoreGoogle Play and the Amazon Appstore.

View previously-featured furry friends.

How Will Georgia Conform to Federal Tax Reform? Annual Legislation Introduced

The Georgia Legislature has introduced its annual Internal Revenue Code (IRC) conformity bill—HB 821. Georgia conformity is typically updated annually to apply for the most recent tax year. In light of the recently enacted federal tax reform, this year’s conformity bill will receive particular attention because of what tax reform provisions Georgia chooses to adopt and not to adopt.

View the full Legal Alert.

Eversheds Sutherland SALT Shaker: January 2018 Digest

Read our January 2018 posts on stateandlocaltax.com or read each article by clicking on the title. For the latest coverage and commentary on state and local tax developments delivered directly to your phone, download the latest version of the Eversheds Sutherland SALT Shaker app.

FEATURED PUBLICATIONS

  • Eversheds Sutherland SALT Scoreboard Publication–Fourth Quarter 2017
    Eversheds Sutherland SALT releases the eighth edition of its SALT Scoreboard, a quarterly publication that tracks significant state tax litigation and controversy developments. This edition of the SALT Scoreboard includes our year-end observations for 2017, a discussion of the Pennsylvania Supreme Court’s decision in Nextel, and a spotlight on apportionment cases.
  • A Pinch of SALT: Maryland's Alternative Apportionment Violates Internal Consistency
    This installment of A Pinch of SALT examines the comptroller of Maryland’s practice of attributing in-state operating companies’ apportionment factors to affiliated out-of-state holding companies. This article posits that this type of attribution violates the internal consistency test reflected in the US Supreme Court’s dormant commerce clause doctrine.
  • California's Altered Tax Landscape
    On January 10, 2017, California Assembly member Phil Ting introduced and read Assembly Bill ("AB") 102 for the first time. Introduced as a placeholder bill, AB 102 consisted of a single section and sentence: "SECTION 1. It is the intent of the Legislature to enact statutory changes relating to the Budget." Then, in less than two weeks in June 2017, the California Legislature gutted and amended this innocuous bill into a 19-page plan to drastically alter the landscape of California's tax system. As signed by the governor, AB 102 stripped the California State Board of Equalization of all but its constitutional powers, created a new agency named the California Department of Tax and Fee Administration, and created a second new agency named the Office of Tax Appeals. Three months later, clean-up legislation in AB 131 made further changes. In his article for the January 2018 edition of the Journal of Multistate Taxation and Incentives, Eversheds Sutherland attorney Eric Coffill discusses the history and events leading up to those changes and provides a glimpse of the (somewhat uncertain) California tax landscape going forward.
  • Many State Tax Incentives Are Now Taxable Due to Federal Tax Reform
    Recently enacted federal tax reform is expected to generate $6.5 billion in additional federal revenue through 2027 by increasing corporate tax liability for certain state and local incentives. In their article for Bloomberg, Eversheds Sutherland attorneys Timothy Gustafson and Hanish Patel discuss the change and opportunities to minimize its impact.
  • An Interview with California BOE Chair Diane Harkey
    In this edition of Across State Lines, published by State Tax Notes, Eversheds Sutherland attorney Eric Coffill interviews Diane Harkey, Chair of the California State Board of Equalization.

EVENTS – LEARN ABOUT OUR UPCOMING EVENTS

SALT Pets of the Month: Johnny and June

J&J 6.jpgMeet Johnny and June (yes—as in Johnny and June Cash!), also known as “June Bug” and “Murr.” These four-and-a-half month old kittens belong to Sacramento SALT receptionist Sheryl Burns and her husband, Jordy. After the loss of their Labrador Retriever, Raven, in July (previously featured as the February 2017 SALT Pet of the Month), they debated on whether to get another dog. A few months later, a friend at the local animal shelter contacted Sheryl about an abandoned litter of kittens. She sent her pictures of the kittens, and Sheryl immediately fell in love with the black and white male and his little orange tabby sister.

J&J 5.jpg

When they are not wrestling with one another, the kittens love to sit by the windows and look outside. June is the instigator of most of the kitty mischief that goes on around the house. Sheryl is quite sure that June dreams of being an outside kitty, while Johnny is perfectly content staying indoors to slide Q-tips and hair bands across the floor. They are very affectionate and love to snuggle. At bedtime they start out either on the chair in their bedroom or on their cat tree, but by morning they are both tucked in bed with their humans.

We are so excited to feature Johnny and June as our January Pets of the Month!

To submit YOUR pet to be featured, visit the Eversheds Sutherland SALT Shaker App, click the Pet of the Month in the drop-down, then click "Submit A Pet."

An Interview with California BOE Chair Diane Harkey

In this edition of Across State Lines, published by State Tax Notes, Eversheds Sutherland attorney Eric Coffill interviews Diane Harkey, Chair of the California State Board of Equalization.

View the full article

Many State Tax Incentives Are Now Taxable Due to Federal Tax Reform

Recently enacted federal tax reform is expected to generate $6.5 billion in additional federal revenue through 2027 by increasing corporate tax liability for certain state and local incentives. 

In their article for Bloomberg, Eversheds Sutherland attorneys Timothy Gustafson and Hanish Patel discuss the change and opportunities to minimize its impact.

View the full article

Submit your pet to be featured as the January SALT Pet of the Month!

The Eversheds Sutherland SALT Team is always excited to see what kind of pets our clients and friends have. Our team features a different pet at the end of every month, and we want to feature YOURS! Featured pets will receive a fun prize from the SALT Team. The deadline for January submissions is Friday, January 26.

To submit your pet to be featured, visit the Eversheds Sutherland SALT Shaker App, click “Pet of the Month” in the drop-down, then click "Submit A Pet."

Don’t have the app? It is available for download in the Apple App StoreGoogle Play and the Amazon Appstore.

View previously-featured furry friends.

Eversheds Sutherland SALT Scoreboard Publication--Fourth Quarter 2017

Eversheds Sutherland SALT releases the eighth edition of its SALT Scoreboard, a quarterly publication that tracks significant state tax litigation and controversy developments. This edition of the SALT Scoreboard includes our year-end observations for 2017, a discussion of the Pennsylvania Supreme Court’s decision in Nextel, and a spotlight on apportionment cases. For 2018, we will reset our tallies and track the latest developments as they are issued in the new year.

View our Eversheds Sutherland SALT Scoreboard results from the fourth quarter of 2017!

ES SALT Scoreboard Q4 2017 graphic_v2.jpg