On February 26, 2021, a subcommittee of the Georgia Ways & Means Committee quickly approved HB 428, which proposes to eliminate the current Georgia sales tax exemption for high-technology companies and facilities that invest at least $15 million in eligible computer equipment in Georgia during a calendar year. The exemption has been available to taxpayers in Georgia for over 20 years. The proposed legislation now proceeds to a vote before the full House Ways & Means Committee, where the committee chairman supports the legislation.

Read our full Legal Alert here.

Earlier today, in a last minute addition to the Maryland Senate’s Budget and Taxation Committee hearing, the committee voted to approve amendments to S.B. 787, Digital Advertising Gross Revenues Tax – Exemption and Restriction. Most notably, the amendments would delay the start of the digital advertising tax to January 1, 2022.

The other relevant amendments are to:

  1. Designate the bill as an emergency measure, meaning that it will take effect when enacted, rather than 30 days after the legislative override of any Governor veto; and
  2. Strike the contingency that the bill will be effective if the H.B. 732 veto is overridden (as it was already overridden on February 12, 2021).

There were no changes to the anti-passthrough or broadcast and news media entity exemptions.  The amendment language is not yet publicly available.

S.B. 787 will next head to the Senate floor for second reading. A hearing is set for 1:30 p.m. today on H.B. 1200, the House of Delegates companion bill to S.B. 787. We will be watching that hearing to see whether any amendments are proposed at that time.

The New York Tax Appeals Tribunal recently held that a vacation home constitutes a “permanent place of abode” to make taxpayers statutory residents for New York income tax purposes.

The taxpayers, a married couple, were domiciled in New Jersey. The husband was a hedge fund manager who primarily worked out of his New York City office and was in the state for more than 183 days per year. The couple also maintained a vacation home in Northville, where they spent no more than two to three weeks each year.

New York imposes income tax on those not domiciled in the state but who maintain a permanent place of abode in the state and who are present in New York for more than 183 days during the year. The Tribunal held that the husband’s presence in the state combined with the taxpayers’ ownership of a vacation home was sufficient to establish statutory residency in New York.

The taxpayers argued that the Northville home was not a “permanent place of abode” under Tax Law § 605(b)(1) because their primary residence was in New Jersey for the tax years at issue and the vacation home was more than 200 miles from the husband’s office. The Tribunal disagreed, holding that the vacation home qualified as a permanent place of abode because it was suitable for year-round habitation. The taxpayer’s actual use of the residence only for vacation purposes was not determinative. Rather, because the five-bedroom, three-bathroom house had year-round climate control and could be used as a primary residence, it was sufficient to render the taxpayers statutory New York residents for income tax purposes.

In the Matter of the Petition of Coulson, Dkt. No. 827736 (N.Y. Tax Appeals Tribunal, 2021).

In this episode of the SALT Shaker Podcast policy series, host and Eversheds Sutherland Partner Nikki Dobay is joined by Meredith Beeson, Director of State Government Affairs with the Global Business Alliance (formerly known as the Organization for International Investment) in Washington, DC. They discuss the Global Business Alliance, its state tax priorities and what Meredith is focused on this legislative session.

The Eversheds Sutherland State and Local Tax team has been engaged in state tax policy work for years, tracking tax legislation, helping clients gauge the impact of various proposals, drafting talking points and rewriting legislation. This series, which is focused on state and local tax policy issues, is hosted by Partner Nikki Dobay, who has an extensive background in tax policy.

Questions or comments? Email SALTonline@eversheds-sutherland.com.

 

 

 

 

 

 

 

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The Illinois Department of Revenue issued a private letter ruling determining that for purposes of the Retailers’ Occupation Tax (“ROT”) and the Services Occupation Tax (“SOT”), a taxpayer that procured marketing materials on behalf of its clients properly sourced these sales to the location of the product manager, the employee responsible for procuring the materials. At audit, the auditor determined that the taxpayer was required to source the sales to the taxpayer’s headquarters. In issuing the PLR, the Department disagreed with the auditor’s conclusions determining that for purposes of the ROT most of the primary selling activities, which determine how a sale is sourced, occurred at the location of the product manager and not necessary the taxpayer’s headquarters.  For purposes of the SOT, the taxpayer was unable to determine the location of its subcontractors so the sales of its services were properly sourced to the location of the product manager. At the time of the PLR, the taxpayer had a matter pending at the Informal Conference Board (“ICB”); however, the Department’s ruling was applicable to prospective sales of tangible personal property and services only.

Calling all trivia fans! Don’t miss out on a chance to show off your SALT knowledge!

We will award prizes for the smartest (and fastest) participants.

This week’s question: Which state is considering legislation would provide a gross receipts tax deduction for movie ticket and concession sales?

E-mail your response to SALTonline@eversheds-sutherland.com.

The prize for the first response to today’s question is a $25 UBER Eats gift card.

Answers will be posted on Saturdays in our SALT Weekly Digest. Be sure to check back then!

On February 17, 2021, the Washington Department of Revenue issued a Preproposal Statement of Inquiry regarding a proposed new rule for the business and occupation tax workforce education investment surcharge for select advanced computing businesses. A public meeting on the proposed rule is scheduled for March 10, 2021. Interested parties can submit written comments in advance or provide written or oral comments at the public meeting.

The Illinois Department of Revenue issued responses to Frequently Asked Questions regarding marketplace facilitators, marketplace sellers, and remote retailers. The Department considers food ordering and delivery services to be marketplace facilitators if they: (1) list or advertise food or drink for sale by a marketplace seller in a marketplace; and (2) either directly or indirectly, through agreements or arrangements with third parties, collect payment from the purchaser and transmit that payment to the marketplace seller, regardless of whether the marketplace facilitator receives compensation or other consideration in exchange for its services. The tax rate is that of: (1) the delivery location, if the food or drink order is delivered; or (2) the location of the restaurant, if the order is picked up. The FAQs also explain how marketplace sellers and marketplace facilitators should report sales on the Form ST-1, Sales and Use Tax and E911 Surcharge.

In a pending precedential decision, the California Office of Tax Appeals (OTA) held that the true object of a taxpayer’s prenatal imaging business involving elective 3D and 4D ultrasound services is the sale of images captured on tangible medium such as photos, CDs and DVDs.  Thus, receipts from such sales are subject to sales tax as tangible personal property.

California imposes sales tax on retail sales of tangible personal property but does not impose sales tax on the provision of a service that is not part of a sale of taxable tangible personal property. When a transaction involves both the provision of a service and transfer of tangible personal property, the taxability is determined based on whether the true object of the transaction is the tangible personal property or whether the transfer of tangible personal property is incidental to the performance of a service.

The taxpayer argued that the sale of the photos, CDs, and DVDs was incidental to the primary objective of the clinical service of elective diagnostic imaging. The taxpayer stated that only a small percentage of its patients purchased additional CDs and DVDs separate from the ultrasound services. OTA disagreed, determining that the true object of the sales was the tangible personal property, noting that the packaging and marketing of the services focused on the photos, CDs and DVDs containing the imaging, and the quality thereof.  OTA also determined that taxpayer’s services were not a medical necessity because the customers were required to have already obtained diagnostic ultrasounds from their healthcare providers.