Eversheds Sutherland’s SALT Team is a proud sponsor of the Georgetown Law 2018 Advanced State and Local Tax Institute taking place May 31 – June 1, 2018, in Washington, DC. Marc Simonetti presents, “Breakout B. Breakout the Income Taxes!” and Carley Roberts presents, “Is Alternative Apportionment the New Normal?” Eversheds Sutherland hosts and sponsors a welcome reception at our DC office from 6:00 – 7:30 p.m. Eastern standard time, on May 30, 2018.
What are the State Tax Implications of International Tax Reform? Jeff Friedman and others outline the key points at the COST 2018 Spring Audit Session/Income Tax Conference in snowy Boston, Massachusetts.
These issues were also addressed in a recent article, “Waiting for the Other Shoe to Drop: State and Local Tax Implications of Federal Tax Reform – International Tax Provisions,” in Bloomberg Tax – Daily Tax Report: State by Jeff Friedman, Todd Betor and Michael Spencer.
The Commonwealth Court of Pennsylvania affirmed a decision by the Board of Finance and Revenue that found American Electric Power Service Corporation (“Taxpayer”) was subject to Pennsylvania’s gross receipts tax as a wholesale seller of electricity. The Taxpayer presented two substantive arguments, both of which the Court found unconvincing. Taxpayer asserted that it was not subject to the gross receipts tax because it was not a “public utility.” Alternatively, Taxpayer asserted that its sales of electricity were exempt sales for resale because Taxpayer did not provide electricity to end-user customers. The Court found that the Taxpayer was subject to the gross receipts tax because the tax applied to all sales of electric energy, regardless of whether the Taxpayer was subject to the jurisdiction of the Pennsylvania Public Utility Commission. Additionally, the Court found that Taxpayer’s sales did not qualify as sales for resale because the customer to which Taxpayer sold electricity did not fall into one of the statute’s listed entities eligible for the resale exemption. See American Electric Power Service Corporation v. Commonwealth of Penn., Pa. Commw. Ct., Dkt. No. 861 F.R. 2013, (Mar. 15, 2018).
Eversheds Sutherland SALT releases the ninth edition of its SALT Scoreboard, and the first of 2018. Each quarter, we tally the results of what we deem to be significant taxpayer wins and losses and analyze those results. This edition of the SALT Scoreboard includes insights regarding New Jersey’s attempted taxation of foreign source income, Virginia’s corporate income tax addbacks, and Detroit’s sales factor numerator.
View our Eversheds Sutherland SALT Scoreboard results from the first quarter of 2018!
On April 10, 2018, and April 13, 2018, Oregon Governor Kate Brown signed into law S.B. 1529 and S.B. 1528 (the Bills), respectively, which provide a series of changes to Oregon’s income tax laws in response to recent federal tax changes as part of the federal Tax Cuts and Jobs Act. Most notably, the Bills: (i) update the state’s IRC conformity date to December 31, 2017; (ii) decouple from the federal temporary dividend received deduction with respect to the transition tax under IRC § 965 by requiring an addback of the federal deduction allowed under IRC § 965(c); (iii) provide relief from double taxation of repatriated income for taxpayers subject to Oregon tax under the state’s tax haven legislation by allowing a credit equal to the lessor of any taxes paid attributable to the tax haven addback for years beginning on or after January 1, 2014, and before January 1, 2017, or the amount of Oregon tax attributable to income reported under IRC § 965 for tax years beginning on or after January 1, 2017, and before January 1, 2018; and (iv) establish a state Opportunity Grant Fund and provide individual and corporate income tax credits for contributions made to this fund. Although taxpayers are required to addback the amounts deducted under IRC § 965(c), the Oregon Department of Revenue has issued guidance stating their position that the transition tax’s income inclusion is eligible for the state’s dividends received deduction under ORS 317.267(2)(b), which provides an 80% deduction for dividends received from a 20% owned corporation and a 70% deduction for all other dividends.
The Bills also repeal the tax haven addback found under Oregon Revised Statutes section 317.716 and require the Department of Revenue to evaluate the efficacy of including global intangible low-taxed income (GILTI) under IRC § 951A in the state tax base in comparison to Oregon’s now-repealed tax haven addback, with a report to be issued on or before December 1, 2020.
On April 17, the US Supreme Court heard arguments in South Dakota v. Wayfair, a case involving the states’ authority to tax online purchases. This is the first sales tax jurisdiction case heard by the US Supreme Court in 25 years and may have a significant impact on online sales across the country.
About the Case
- Title: South Dakota v. Wayfair, Inc., et al.
- Docket No. 17-494
- Decision Below: State v. Wayfair Inc., 901 N.W.2d 754 (2018) (PDF)
The Wayfair case re-examines the Supreme Court’s 1992 holding of Quill v. North Dakota, in which the court ruled that states could not require mail order retailers that lack a physical presence in the state to collect sales tax from their customers. The Quill decision protects Internet retailers that lack physical presence from being forced to collect tax on online sales.
On April 18, 2018, the Tax Executives Institute (TEI) and Thomson Reuters hosted a two-hour webcast entitled “South Dakota v. Wayfair – Insights on the Oral Argument.” Eversheds Sutherland Partner Jeff Friedman was among the panelists who addressed the issues raised by Wayfair and provided commentary on the oral arguments.
Wayfair Case Background
In 1967, the US Supreme Court held that the Commerce Clause prohibits a state from requiring catalog retailers to collect sales taxes on sales unless the retailer has a physical presence there. Nat’l Bellas Hess v. Dep’t of Rev. of Ill., 386 U.S. 753 (1967).
In 1992, the US Supreme Court declined to overrule the physical presence requirement of Bellas Hess in a state sales tax case involving a mail-order catalog seller. Quill Corp. v. North Dakota, 504 U.S. 298 (1992). In Wayfair, South Dakota has brought a similar case against three online sellers – Wayfair Inc., Overstock.com, Inc., and Newegg Inc.
More: See the Supreme Court docket for complete case filings.
Photos from Oral Arguments
- Politico, A taxing case on the Supreme Court’s docket“.” Bernie Becker. (April, 17, 2018)
- Tax Notes, “South Dakota Slams Physical Presence Rule as ‘Unworkable and Indefensible.” Jad Chamseddine. (April 10, 2018) (Subscription.)
- Bloomberg, “South Dakota Rebuffs E-retailer Concerns in Last High Court Brief.” Ryan Prete. (April 9, 2018)
- Reuters, “U.S. Supreme Court takes up state online sales tax dispute.” Lawrence Hurley. (Jan. 12, 2018)
About Eversheds Sutherland SALT:
As state and local jurisdictions in the US evolve their tax systems and engage in increasingly sophisticated enforcement and litigation strategies, businesses need sound state and local tax (SALT) advice more than ever before. Eversheds Sutherland’s SALT practice is committed to delivering innovative solutions that meet the needs of your business. Read more.
For more than 25 years, the Tax Executives Institute (TEI) has met the tax controversy needs of the in-house professional community through its Audits & Appeals Seminar. Leading practitioners, regulators, policymakers and jurists join TEI annually to discuss the nuts, bolts and nuances of tax controversy.
Eversheds Sutherland is delighted to sponsor and lead the two days of the seminar focused on State and Local Tax Controversy (May 2 – 3, 2018), which includes the following sessions:
Wednesday, May 2
- Managing State Tax Filings and Audits
Speakers: Jeff Friedman and Andrew Appleby
- Challenging Assessments and Filing Protests
Speakers: Michele Borens and Eric Coffill
- Protest Workshop – Breakout and Regroup
Speakers: Carley Roberts and Scott Wright
- Coordinating Multistate Controversies
Speakers: Eric Tresh and Maria Todorova
- Industry Panel
Moderator: Jeff Friedman
Thursday, May 3
- Resolution Through the Courts
Speakers: Tim Gustafson and Carley Roberts
- Perspectives from the Other Side – State Tax Attorney Panel
- Moderator: Pilar Mata, Tax Executives Institute
- Ray Langenberg, Special Counsel for Tax Litigation, Texas Comptroller of Public Accounts
- Christine Mesirow, Chief, Taxation Section, Ohio Attorney General’s Office
- Brian Oliner, Assistant Attorney General/Principal Counsel, State of Maryland
- Innovative Uses of Technology in Tax Controversies (with tech vendors)
Speakers: Charlie Kearns
- State Tax Considerations Everyone Should Know About
Moderator: Andrew Appleby and Jonathan Feldman
- All Rise – A View from the Bench
- Moderator: Richard Pomp, University of Connecticut School of Law
- Martha Blood Wentworth, Judge, Indiana Tax Court
- Douglas Bramhall, Administrative Law Judge, California Office of Tax Appeals
- Cade Cole, Vice-Chairman, Louisiana Board of Tax Appeals
The program will take place April 30 – May 3 in New Orleans, Louisiana:
- April 30 – May 1: Federal Tax Controversy
- May 2: Transfer Pricing Controversy
- May 2 – 3: State and Local Tax Controversy, sponsored by Eversheds Sutherland
Eversheds Sutherland also invites attendees to join us for a reception at House of Blues New Orleans the evening of Wednesday, May 2. Join us and register for TEI’s Audits & Appeals Seminar today!
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 April submissions is Wednesday, April 25.
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.”
On April 17, 2018, the US Supreme Court is poised to hear oral arguments in the case of South Dakota v. Wayfair. The Wayfair case will re-examine the 1992 holding of Quill v. North Dakota, in which the US Supreme Court ruled that states could not compel mail order retailers that lack a physical presence in the state to collect sales tax from their customers. The Quill decision now protects Internet retailers that lack physical presence in states from collecting tax on online sales.
Please join the Tax Executives Institute (TEI) and Thomson Reuters for a two-hour complimentary webcast, on April 18, 2018, entitled “South Dakota v. Wayfair – Insights on the Oral Argument.” Eversheds Sutherland (US) Partner Jeff Friedman will be among the panelists who will address the issues raised by Wayfair, provide commentary on the oral arguments and predict the outcome of the case.
The Georgia legislative session concluded on March 29, 2018. In addition to two major bills relating to federal tax reform, Georgia enacted several other pieces of notable tax legislation.