Missouri is set to enact economic nexus requirements, asserting a sales and use tax collection obligation on remote sellers and marketplace facilitators. On May 14, 2021, the Missouri Legislature passed S.B. 153, which the governor is widely expected to sign. Upon signing, Missouri will join the other 44 states and the District of Columbia that have already enacted economic nexus provisions, making it the final state that imposes sales and use tax to enact economic nexus provisions. Under the bill, vendors with cumulative gross receipts from the sale of tangible personal property into the state of at least $100,000 in the previous or current calendar year will be required to collect and remit tax beginning on January 1, 2023.  The bill also requires marketplace facilitators to collect and remit use taxes on behalf of the third-party sellers utilizing their platform beginning January 1, 2023.  A “marketplace facilitator” is defined as a person that “facilitates a retail sale by a marketplace seller by listing or advertising for sale by the marketplace seller, in any forum, tangible personal property or services that are subject to tax”, and that “either directly or indirectly through agreements or arrangements with third parties collects payment from the purchaser and transmits all or part of the payment to the marketplace seller.” A “marketplace seller” is “a seller that makes sales through any electronic marketplace operated by a marketplace facilitator.”

On May 14, 2021, the House Finance Committee passed HB21-1311 and HB21-1312, but not without noteworthy amendments changing certain aspects of both bills.

HB21-1311, as introduced, would have repealed Colorado’s unique “3 of 6” test for determining C corporations that can be included in a combined report, and required “members of a unitary business” to file a combined report. The proposed repeal of the “3 of 6” test was short lived, however, as amendments to the bill keep the “3 of 6” regime in place. Thus, C corporations that satisfy the “3 of 6” test could continue to be included in a Colorado combined report under the amended version of the bill.  HB21-1311, as passed, continues to contain the tax haven “black list” provision and the provision that would move Colorado from “Joyce” to “Finnigan.”

The Committee also approved HB21-1312, which if enacted would codify the Department of Revenue’s current treatment of digital goods. Specifically, HB21-1312 would include “digital goods” in the definition of “tangible personal property,” and define “digital good” to mean “any item of tangible personal property that is delivered or stored by digital means, including but not limited to video, music, electronic books, or computer files.” The amendments to the bill, however, removed “computer files” from the proposed definition of “digital good.”

Although HB21-1311 and HB21-1312, with various amendments, were adopted by the House Finance Committee, they will not be formally incorporated into the bills unless they are adopted by the full House of Representatives. The amended bills now head to the House Appropriations Committee for review.


Meet Toby Aloysius Gustafson! This Shih Tzu and Bichon Frise mix (aka “Teddy Bear”) has big paws to fill in the Gustafson household. After saying goodbye to their beloved Tessa (a former SALT Pet of the Month) nearly three years ago, Partner Tim Gustafson and his family took their time in finding another furry friend. As you can see, with his big brown eyes, Toby was worth the wait!

A dogged, natural explorer, Toby already has infiltrated the refrigerator, the dishwasher and every other small opening he can find. His super sharp teeth and penchant for biting (hey, he’s a puppy) make playtime an adventure for the entire family. As mischievous as he is, though, Toby is even more loveable. There are cuddles and tummy rubs aplenty. And he only falls asleep when his new family is near.

We’re thrilled to highlight Toby for our May Pet of the Month!



In Travelocity.com LP v. Comptroller of Maryland, filed April 30, 2021, the Maryland Court of Appeals held that the taxpayer did not qualify as a “vendor” for purposes of sales and use tax for years prior to a 2015 law change. The taxpayer was an online travel company that provided a platform to review and request reservations from third-party airlines, hotels, and rental car companies. In 2015, the Maryland General Assembly expanded the definition of a “vendor” liable for sales and use tax to include an “accommodations intermediary” that facilitates the sale of an accommodation for a fee. The court agreed that the statute was ambiguous as to whether Travelocity was liable for sales and use tax and that ambiguity must be interpreted in the taxpayer’s favor. Based on legislative history the court reasoned that a subsequent addition of “accommodations intermediary” to the statute was an indication that prior to the amendment a company such as Travelocity was not included in the statutory definition of a vendor liable for the tax.

The Washington Department of Revenue issued Excise Tax Advisory 3107.2021 on May 3, 2021 stating that credit bureau services transferred electronically are subject to retail sales tax and B&O tax. By statute, taxable retail sale includes “credit bureau services” and the sale of “digital goods” and “digital automated services.” Credit bureau services include the assembly or evaluation of information on the credit worthiness of an individual for the purpose of furnishing such information to third parties. The ETA states that credit bureau services are taxable whether delivered electronically or through a tangible medium. It further states that even if a credit bureau service transferred electronically qualifies for an exemption available for digital goods or digital automated service, and even if the electronically delivered credit bureau service does not fall within the definition of a “digital good” or “digital automated service,” the sale is still subject to retail sales tax and retailing B&O tax because the sale would be taxable as a sale of credit bureau service. Gross proceeds from wholesale sales of credit bureau services whether transferred electronically or in tangible form, are subject to B&O tax under the wholesaling classification, and sellers should obtain the buyer’s reseller permit and digital products and remote access software exemption certificate. The ETA clarifies that services provided by a credit rating agency registered with the SEC as nationally recognized statistical rating organizations are not credit bureau services. The ETA also provides guidance on the sourcing of these sales.

The Revenue Legal Counsel division of the Arkansas Department of Finance and Administration published a Revenue Legal Opinion on May 6, 2021 (dated March 25, 2021) determining that cloud-based software that allows customers to monitor and prioritize the usage of internet bandwidth is not taxable. The taxpayer sells a cloud-based service (Saas) that customers purchase at certain speed levels, such as 100Mbps, for a recurring monthly fee.  Customers also rent a taxpayer-provided router (sales and use tax is collected on the rental fee) to connect to the taxpayer’s network servers. The service then allows customers to prioritize and allocate bandwidth across the cloud-based applications they use, and to re-route internet traffic as necessary to avoid internet service interruptions. The Department determined that because the taxpayer’s customers do not receive the software in a tangible form which is only operated online, the software was not taxable as tangible personal property and the Arkansas tax code does not “specifically enumerate the service of allowing access to, and use of, software over the internet as a taxable service.”

Colorado House Bill No. HB21-1311

On May 10, 2021, Colorado House Bill No. HB21-1311 was introduced, which if enacted would make sweeping changes to Colorado’s unique combined reporting regime.  Specifically, for tax years beginning on or after January 1, 2022, the bill would repeal the states’s unique “3 of 6” test for determining C corporations that can be included in a combined report and would require members of an affiliated group of C corporations that are “members of a unitary business” to file a combined report.

Although the bill would maintain Colorado’s water’s edge reporting requirements (i.e., a C corporation with 80% or more of its property and payroll assigned to locations outside the U.S. cannot be included in a combined report), it includes a “tax haven” provision that would require affiliated C corporations “incorporated in a foreign jurisdiction for the purpose of tax avoidance” to be included in a taxpayer’s combined report.  The bill includes a “blacklist” containing 44 “listed jurisdictions,” similar to Montana’s tax haven blacklist, and C corporations incorporated in those jurisdictions are presumed “to be incorporated for the purpose of tax avoidance.”

While the bill allows taxpayers to rebut the “tax haven” presumption, including a blacklist creates numerous compliance challenges and tax policy concerns.  Also, the bill requires a taxpayer to subtract from federal taxable income certain foreign source income (i.e., subpart F or GILTI) from C corporations “incorporated in a foreign jurisdiction for the purpose of tax avoidance,” which – while necessary to avoid double taxation – calls into question the rationale for enacting a tax haven provision to begin with.

Finally, for apportionment purposes, the bill would require the apportionment factor to be calculated on a combined group basis, “regardless of the separate entity to which those factors may be attributed.”  Thus, if enacted, the bill would transition Colorado from a “Joyce” state to a “Finnigan” state.

Colorado House Bill No. HB21-1312

Also on May 10, Colorado House Bill No. HB21-1312 was introduced, which proposes to amend the definition of “tangible personal property” in the sales and use tax statutes to include “digital goods.”  The bill defines a “digital good” to mean “any item of tangible personal property that is delivered or stored by digital means, including but not limited to video, music, electronic books, or computer files.”

In this episode of the SALT Shaker Podcast, Partners Nikki Dobay and Breen Schiller are joined by Keith Staats, Executive Director of the Illinois Chamber Tax Institute, an operating division of the Illinois Chamber of Commerce. During their conversation, they discuss Keith’s work, as well as the recent decision of the Illinois Independent Tax Tribunal in Pepsico, Inc. and Affiliates v. Illinois Department of Revenue. The participants take issue with the Tribunal’s determination that PepsiCo’s subsidiary, Frito-Lay North America Inc. (FLNA) was not an excluded 80/20 company.

The podcast ends with a new feature — “surprise nontax question” — that host, Nikki Dobay, and her guests each answer!

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









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This week’s question: What state’s governor recently appointed a retired longtime circuit court judge to fill a vacant tax tribunal position?

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

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

California AB 71 is set for hearing in the Assembly Appropriations Committee tomorrow, May 12, at 9 am.  The Appropriations Committee is typically the final committee to consider a bill before it goes to an Assembly floor vote. Please see our previous post here for more information on AB 71’s proposed corporate tax increases, including the inclusion of GILTI and repatriation income of affiliated corporations in a California taxpayer’s gross income.