The Delaware Supreme Court reversed a lower court’s ruling and held that Overstock.com was not liable for nearly $7 million in damages because there was insufficient evidence to show that Overstock violated the Delaware False Claims Act by not reporting gift card unredeemed balances. The Plaintiffs – Delaware and the whistleblower who brought this case
Maria Todorova
The Impact of Altera on State Tax Transfer Pricing
On June 22, the US Supreme Court denied Altera Corp.’s petition for certiorari seeking review of the US Court of Appeals for the Ninth Circuit’s decision upholding the US Department of the Treasury’s transfer pricing regulation requiring related participants in cost-sharing agreements to include stock-based compensation costs in the joint cost pool to comply with…
Michigan Supreme Court Rules Service Revenues Must be Sourced to the Location where the Services are Performed for City Income Tax Purposes
The Michigan Supreme Court held that revenue from the performance of services must be sourced to the location where the service provider’s employees performed the work, not where the services were delivered, for purposes of the City of Detroit’s income tax. Detroit imposes an income tax under the Uniform City Income Tax Ordinance (“UCITO”), which…
Prohibited contacts: Washington Company’s Audit Disqualifies its Affiliates from Voluntary Disclosure Program
The Washington Department of Revenue’s Administrative Revenue and Hearings Division ruled that a company’s audit disqualifies its affiliates from participating in the state’s voluntary disclosure (VDA) program. One of the criteria for participating in the program requires that a business must have never been contacted by the Department for enforcement purposes including audits. The Division…
Failed Test – State of Washington Holds University of Utah Lab Not Exempt from Taxation
The Washington Court of Appeals held that a laboratory created by the University of Utah was not a government entity exempt from Washington taxation.
Affirming the lower court’s decision, the Washington Court of Appeals rejected Arup Laboratories, Inc.’s arguments that it should be excluded from paying B&O taxes because it is an “arm of the…
Is Free Really Free? New York Tax Appeals Tribunal Holds “Free” Promotional Gift Cards Do Not Reduce Taxable Sales Price
The New York State Tax Appeals Tribunal (TAT) held that Apple improperly collected sales tax on sales of Apple computers and iPads because it discounted the purchase price by the amount of gift cards it gave to customers as part of a back-to-school promotion. Under New York tax regulation, the amount of a discount of…
Get Your Refunds: New Jersey’s Alternative Minimum Tax Preempted by P.L. 86-272, Tax Court Says
On June 28, the New Jersey Tax Court held that the state’s alternative minimum tax (known as the “Alternative Minimum Assessment,” or AMA) – which was repealed for tax years beginning on or after January 1, 2018 – is preempted by P.L. 86-272, a federal statute that bars states from imposing a net income tax…
New York Court of Appeals Dismisses Commerce Clause Challenge For Lack of a “Substantial Constitutional Question”
New York’s highest court dismissed taxpayers’ appeal of an Appellate Division ruling that the payment of tax on intangible income to New York as statutory residents, without a credit for tax paid to Connecticut as domiciliaries, determining that the appeal did not raise a “substantial constitutional question.” Edelman v. New York State Dep’t of Taxation …
Alabama Leaves No One Behind: All Software is Taxable
The Alabama Supreme Court ruled that all software, including custom software, is tangible personal property subject to Alabama sales tax. The taxpayer filed refund claims for sales tax paid on computer software and accompanying equipment, claiming that an Alabama Department of Revenue regulation exempted these purchases from the sales tax as “custom software programming.” The…
Tennessee rules the “true object” of a bundled transaction is nontaxable data analytics services, not remotely accessed software
The Tennessee Department of Revenue issued a letter ruling finding that a taxpayer’s mobile and web data analytics services were not subject to sales and use tax. The taxpayer’s customers installed the taxpayer’s software code, which collected user data about the customers’ websites or mobile applications. The taxpayer then analyzed the data and granted the…