Following a taxpayer’s appeal of a local Virginia county (County) Business, Professional and Occupational License (BPOL) tax assessment, the Virginia Tax Commissioner held that the taxpayer’s remote employees’ payroll was properly excluded from the numerator of the payroll apportionment calculation. The taxpayer was headquartered out of state and maintained offices worldwide, including an office in
Income Tax
New York False Claims Act case remains in federal court
The Southern District of New York denied a plaintiff-relator’s motion to remand a dispute over the defendant’s transfer pricing arrangement brought under the New York’s False Claims Act to New York state court. The plaintiff initiated the suit on behalf of the State of New York in state court alleging that the company did knowingly…
Booted out of Indiana: Indiana DOR finds that parent holding company has no nexus for combined return
The Indiana Department of Revenue found that a holding company was properly excluded as a member of its affiliates’ financial institutions tax (FIT) combined group return because the company failed to establish nexus with the state. The Department also decided that for purposes of the FIT, there is no distinction between business and nonbusiness income.…
Ohio Court of Appeals upholds taxation of employee working from home
On February 7, 2022, the Ohio Court of Appeals upheld the constitutionality of a statute providing that, during the duration of a stay-at-home order issued by the Governor related to the COVID-19 pandemic, and for thirty days after its end, any day on which an employee works from home because of the order shall be…
California Office of Tax Appeals shuts down refund claim related to 338(h)(10) election
The California Office of Tax Appeals (OTA) recently sustained the Franchise Tax Board’s (FTB) income tax treatment of an IRC 338(h)(10) election. In return for all the outstanding stock in the target S-Corporation taxpayer, third-party buyers paid an initial (fixed) purchase price and agreed to make deferred contingent earnout payments totaling up to $50 million…
That aged well: Storage of tobacco during aging process not “use” for Virginia property factor purposes
In Virginia Department of Taxation v. R.J. Reynolds Tobacco Co., the Virginia Supreme Court ruled that the taxpayer was entitled to a corporate income tax refund because leaf tobacco stored in the taxpayer’s Virginia warehouse was not “used” by the taxpayer for purposes of inclusion in its Virginia property factor.
The taxpayer stored leaf…
Income tax rate reduction legislation – watch list
In just the first few months of the 2022 tax year, we have already seen several states introduce legislation that would decrease corporate and individual income tax rates. Idaho became the first state to pass such legislation this year, on February 4. The Eversheds Sutherland SALT team expects other states to follow and will provide…
Idaho Governor Little signs rate reductions and income tax rebate bill into law
On February 4, Idaho Governor Little signed into law HB 436, which will decrease individual and corporate income tax rates. HB 436 was passed and signed into law in just over 20 days after being introduced. Specifically, the legislation lowers the corporate income tax rate from 6.5% to 6% and consolidates the personal income…
Washington finds B&O tax applies to transfer pricing payments
The Washington Administrative Review and Hearings Division (the Division) of the Department of Revenue held that payments between affiliated entities could not be deducted from “gross income” subject to the business and occupation tax (B&O Tax). Each of the taxpayers, three affiliated entities falling under the same parent company umbrella with each providing investment management…
Breaking domicile is hard to do: Arkansas OHA holds couple did not abandon Arkansas domicile
In a decision dated January 18, 2022, the Arkansas Office of Hearings and Appeals (OHA) held that a married couple remained domiciled in and residents of Arkansas for individual income tax purposes for the 2013 through 2018 tax years, rejecting the couple’s assertion that they had abandoned their Arkansas domicile by relocating to another state.…