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Earlier this month, Maryland State Senators Miller and Ferguson introduced Senate Bill 2, which would tax Maryland digital advertising service gross revenues at up to a 10% rate. Earlier today, the Department of Legislative Services issued the Fiscal and Policy Note for the proposal, which estimates up to $250 million of revenue in the…

The California Court of Appeal for the Fourth Appellate District upheld a trial court’s judgment that a plaintiff lacked standing to challenge the sales tax practices of a technology company because she did not establish the existence of an economic injury. The plaintiff purchased cellphones from the technology company at a discounted price as part…

On January 13, 2020, the Washington Court of Appeals upheld the Washington Department of Revenue’s retailing characterization of taxpayer’s provision of online access to information in a digital research library. Therefore the taxpayer’s service was subject to Washington sales tax and the higher business and occupation (B&O) tax rate. Gartner, Inc. v. Washington Department of…

On January 14, 2020, legislation (L.B. 989) was introduced in the Nebraska Legislature that would expand the sales tax base to include sales of “digital advertisements.” “Digital advertisement” means “an advertising message delivered over the Internet that markets or promotes a particular good, service, or political candidate or message.” Nebraska is now the…

On December 19, 2019, the New York Division of Tax Appeals (DTA) held that a corporate taxpayer must include royalties received from foreign affiliates in the computation of its entire net income for its 2007 through 2012 tax years. Matter of IBM Corp., DTA Nos. 827825, 827997, and 827998 (N.Y. Div. Tax App. Dec. 19…

The California Office of Tax Appeals held that pursuant to market-based sourcing rules, a nonresident individual did not derive California sourced income and was not required to file a California return or pay personal income tax. The taxpayer resided in Texas and worked as an independent contractor for Christopher Konrad Consulting, LLC (Konrad), a company…

The New Jersey Tax Court held that distributions made to a corporation’s two shareholders constituted dividends, and rejected the corporation’s argument that the distributions should be treated as compensation for managerial services that could be deducted for New Jersey Corporation Business Tax purposes. The Court explained that New Jersey has adopted the federal test to…

The Maryland Court of Special Appeals upheld the Comptroller’s determination that an out-of-state pet food seller did not qualify for Public Law 86-272 protection because the seller’s collection of competitive information in Maryland by its employees was not ancillary to solicitation of sales and not de minimis. The out-of-state pet food seller maintained a limited…

The Massachusetts Appellate Tax Board determined that three licensors of software properly sought refunds (or “abatements”) to apportion sales tax based upon proof of their purchasers’ intent to use the software in multiple locations, including outside of Massachusetts. In doing so, the Board rejected the Commissioner of Revenue’s argument that the taxpayers could apportion sales…