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On October 3, 2019, California’s Office of Tax Appeals (OTA) held that value-added tax (VAT) imposed on the provision of services is included in the sales factor of California’s apportionment formula. The taxpayer, filing on a worldwide unitary basis, included VAT in its sales factor denominator that it billed, and collected, to its customers in…

A California Superior Court ruled that a City of Oakland ballot measure seeking to impose a 30 year parcel tax to fund educational programs required a two-thirds vote. Ballot measure AA was the result of a citizens’ initiative. In publicly circulated materials prior to the election, the City Attorney indicated that passage of Measure AA…

On October 25, 2019, the Oregon Tax Court upheld the Department of Revenue’s proposed increase in the real market value of Level 3’s centrally assessed property. Level 3 operated an optical fiber network and provided various communication services. It argued that the Oregon Department of Revenue should not have included in its “unit” certain “investment…

The Washington Department of Revenue determined that a taxpayer did not qualify for the B&O tax deduction for payments made to an affiliate for the provision of “paymaster services” under R.C.W. § 82.04.43393. The paymaster services deduction did not apply to the taxpayer, which provided payroll services to affiliate restaurant employers, because the taxpayer had…

On October 16, 2019, the Pennsylvania Commonwealth Court held that a bank was required to pay sales tax on its purchases of computer hardware, canned computer software, and related services because a statutory amendment superseded the bank’s relied-upon exemption regulation. The court held that the bank complied with the regulation, which exempted from sales tax…

The California Office of Tax Appeals (OTA) found that a foreign single-member LLC domiciled in Georgia was “doing business” in California by reason of its 50 percent interest in a pass-through LLC operating in California (LLC) and thus, was subject to the state’s annual LLC tax. The OTA focused on California’s definition of “doing business”…

A Virginia statute gives circuit courts original jurisdiction to hear declaratory judgment actions brought by businesses to challenge another state’s assertion of sales or use tax nexus. Va. Code Ann. § 8.01-184.1. In a case of first impression, on October 9, 2019, a Virginia circuit court granted the Massachusetts Department of Revenue’s motion to dismiss…

The Utah Supreme Court upheld the constitutionality of Utah’s taxing scheme, which provides a credit against taxes paid to other states, but not against taxes paid to foreign governments.

The taxpayers – Utah residents who owned interests in a Subchapter S corporation doing business throughout the world – argued that this scheme taxed a disproportionate…

The Supreme Judicial Court of Massachusetts held that pipes and appurtenant equipment used by a taxpayer to produce, store and distribute steam for heating and power generation were exempt from local personal property tax as manufacturing property. Affirming the Appellate Tax Board, the court applied the “great integral machine” doctrine to find that the pipes…

The New Jersey Appellate Division held that New Jersey’s insurance premium tax (IPT) for self-procured insurance coverage is based only on the risks insured in the state, and not based on risk insured throughout the United States. In reversing the New Jersey Tax Court, the appellate court noted the differences between self-procured insurance and surplus…