We’re excited to present our summary of last year’s SALT highlights, recently featured in Tax Notes State.
We hope you enjoy our take on 2024’s Most Interesting State Tax (MIST) developments.
Read the full article here.
California governor proposes changes to financial institution taxation
In his draft budget plan for Fiscal Year 2025-2026 released on January 10, 2025, California Governor Gavin Newsom proposed to bring financial institutions in line with most other corporate taxpayers when it comes to apportioning multistate income. Banks and “financial corporations” currently use a three-factor apportionment formula consisting of property, payroll and sales to apportion
Inequitable barriers to equitable apportionment
Apportionment formulas sometimes produce unfair results. To rectify the unfairness, taxpayers can (and should) use an alternative apportionment formula to apportion corporate income. In their article for TEI’s Tax Executive journal, Eversheds Sutherland attorneys Jeff Friedman and Sebastian Iagrossi focus on a troubling aspect of alternative apportionment— some states require pre-approval of an alternative apportionment
Arkansas Supreme Court holds that spin-off interest is an allocable, not apportionable, deduction
The Arkansas Supreme Court held that a taxpayer’s interest expense is allocable to Arkansas resulting in a refund. This decision is an example of a taxpayer successfully arguing that it can fully deduct – rather than apportion – its interest expense in its state of commercial domicile.
Arkansas adopted the Uniform Division of Income for
Pennsylvania Supreme Court holds Nextel decision does not apply retroactively
On November 20, 2024, the Pennsylvania Supreme Court concluded that its decision to invalidate a limitation (or “cap”) on net operating loss (NOL) carryforwards should be applied prospectively only.
The issue of whether to provide retroactive relief to taxpayers injured by the NOL cap arose based on two of its prior decisions:
- In Nextel Communications
Ambiguous allocation and apportionment statutes should favor taxpayers
Courts have formulated more than a dozen legal canons of statutory construction specific to tax.
In the October 2024 installment of “A Pinch of SALT” in Tax Notes State, Eversheds Sutherland attorneys Jeff Friedman, John Ormonde and Kelly Donigan examine the application of statutory construction principles to conflicts involving allocation and apportionment statutes.
Because
Breaking down results of significant state ballot initiatives
On November 5, voters cast their ballots to determine who would fill a variety of federal, state, and local offices. Several states also considered tax related ballot initiatives. We describe some of the more significant ballot initiatives and their results.
Sales Tax
There were a few states with ballot initiatives that would exempt items from
Rebalancing the role of deference to state tax regulations
In one fell swoop, Loper Bright rebalanced the way in which federal courts will apply federal regulations and other administrative guidelines.
In his Board Brief for Tax Notes State, Eversheds Sutherland SALT Partner Jeff Friedman explains how the U.S. Supreme Court’s decision to reverse Chevron will have short-term and long-term consequences regarding the application
Another item to check off: New state income tax disclosure requirements
In December 2023, the Financial Accounting Standards Board added significant income tax disclosure requirements to the already cumbersome and complex checklist of state tax financial statement disclosure rules.
In this installment of A Pinch of SALT published in Tax Notes State, Eversheds Sutherland attorneys Todd Betor and Jeff Friedman discuss the Financial Accounting Standards
Taxing truths: A discussion on the use tax implications in Ellingson Drainage
In the latest episode of the SALT Shaker Podcast, Eversheds Sutherland attorneys Jeff Friedman and Jeremy Gove welcome UConn School of Law Professor Rick Pomp to discuss Jeff and Professor Pomp’s US Supreme Court cert petition in Ellingson Drainage, Inc. v. South Dakota Department of Revenue.
Jeff, Jeremy and Professor Pomp delve into the