As March comes to a close, we invite you to read all of our articles from the past month here on our website, or read each article by clicking on the title. If you prefer, you may also view a printable PDF version.
Legal Alert: A Royal Opportunity: Amendments to New York’s Royalty Expense Add-back Statute Leave the Income Exclusion Intact for Prior Years
On March 28, 2013, the New York State Legislature passed budget legislation (S.2609D/A.3009D) that replaces the existing New York State and City related-party royalty add-back requirements with provisions based on the Multistate Tax Commission’s model add-back statute. In addition, the legislation repeals the New York State and City royalty income exclusions, which permitted taxpayers to
SALT Pet of the Month: Cooper
Meet Cooper, the three-year-old Labradoodle of Washington, D.C. SALT Partner Todd Lard and his partner, Brian. Cooper lives in the Capitol Hill neighborhood of D.C., and his biggest claim to fame (and Todd’s greatest life accomplishment to date) was being named “Best Dog” in the annual pet photo contest in his neighborhood paper, The Hill Rag
Delivered by Independent Contractors, Undelivered by P.L. 86-272: Order Fulfillment Activities Subject Out-of-State Seller to New York Corporation Franchise Tax
By Sahang-Hee Hahn and Prentiss Willson
The New York State Department of Taxation and Finance ruled in an Advisory Opinion that a Virginia corporation was subject to New York corporation franchise tax because it hired independent contractors to store its consigned inventory and to solicit orders from and deliver products to New York customers. In
Everything’s Bigger in Texas, Even the Burden of Proof
By Christopher Chang and Timothy Gustafson
A prepaid telephone card and long-distance service provider’s attempt to source phone card sales receipts outside of Texas was rebuffed by the Texas Comptroller because the taxpayer failed to carry its burden of proof. After initially sourcing 100% of its gross receipts to Texas and unsuccessfully claiming a cost-of-goods-sold
Publish This: Unpublished Michigan Case Rejects Department’s Estimated Assessment in Favor of Statutory COP Sourcing Method
By Madison Barnett and Jack Trachtenberg
The Michigan Court of Appeals ruled in two consolidated cases that the state’s estimated corporate income tax assessments were invalid because the taxpayers’ sales factors were improperly calculated using an alternative population-based formula rather than the statutory costs of performance (COP) formula. The two taxpayers were out-of-state book publishers
Oregon’s Definition of Business Income Still Less Than Crystal Clear
By Zachary Atkins and Andrew Appleby
The Oregon Supreme Court held that a taxpayer’s sale of an FCC license as part of a liquidation generated apportionable business income. The taxpayer, Crystal Communications, Inc., sold all of its assets to AT&T, including an FCC license. The gain on the FCC license was treated by the taxpayer
U.S. Bankruptcy Court Puts the W[H]AM-O on Oregon’s Joint and Several Liability Claim for Corporate Excise Taxes on Bankrupt WAMU Parent
By Todd Betor and Pilar Mata
Oregon’s $29 million corporate excise tax claim against the taxpayers’ parent company was held to violate both the Due Process and Commerce Clauses of the U.S. Constitution by the U.S. Bankruptcy Court for the District of Delaware. Oregon claimed that Washington Mutual, Inc. (WMI) was liable for its subsidiaries’
Division Imposes Penalties on UPS, New Jersey Appellate Court Returns to Sender
By David Pope and Timothy Gustafson
The abatement of late payment and tax amnesty penalties was upheld in favor of several United Parcel Services (UPS) subsidiaries by the New Jersey Superior Court, Appellate Division. The taxpayers and their parent company utilized a cash management system designed to ensure that all subsidiaries had access to cash
Pass the Kleenex: Massachusetts Appeals Court Affirms Appellate Tax Board’s Decision in Kimberly-Clark Case
By Zachary Atkins and Jack Trachtenberg
The Commonwealth notched another win before the Massachusetts Appeals Court in a case of first impression affirming corporate excise tax assessments based on a disallowance of the taxpayers’ interest and royalty expenses for pre-addback (pre-2002) and addback tax years (post-2001). Under a clear and convincing evidence standard, the court