Income Tax

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On August 24, 2021 (released November 2021), the Virginia Department of Taxation (the Department) concluded that a provider of professional and information technology services was entitled to payroll apportionment of gross receipts for a local Business, Professional and Occupational License Tax (BPOL Tax) refund claim. Virginia localities may impose a BPOL Tax on the gross…

The Washington Court of Appeals recently issued a divided (2-1) decision in a case involving Washington’s “benefits received” test for apportioning service income.  The Court ruled that the “benefit” of an airplane design firm’s services were received in Washington, where the taxpayer’s direct customer, Boeing, manufactured the airplanes incorporating the taxpayer’s airplane designs, rather than…

The Wisconsin Tax Appeals Commission sided with the Department of Revenue, ruling that American Honda Motor Co.’s sale of environmental credits generated apportionable income for corporate income and franchise tax purposes. American Honda bought vehicles from related companies and resold them to car dealerships and other retailers in the U.S.

When American Honda sold its…

In a personal income tax residency decision that involves a fair amount of schadenfreude, the District of Columbia Court of Appeals affirmed a criminal tax evasion conviction of a District domiciliary and denied a motion to suppress documents obtained through extensive summonses issued by the Office of Tax and Revenue.

For background, the taxpayer filed…

On July 27, the Indiana Department of Revenue found that a taxpayer had abandoned her Indiana domicile and was therefore no longer subject to Indiana state income despite the taxpayer erroneously listing her permanent address with her employer as her old Indiana-based address.

The taxpayer protested the imposition of Indiana income tax and provided the…

The Michigan Court of Appeals reaffirmed its March 2020 decision that application of the state’s statutory apportionment formula was unconstitutionally distortive as applied to a taxpayer’s Michigan Business Tax (MBT) liability. The Michigan Supreme Court vacated and remanded the Court of Appeals’ March 2020 decision, which was the topic of a prior SALT Shaker post…

Residency/domicile is a critical issue in a state-tax analysis because, as a general principle, a state taxes its own residents on all their income from whatever sources it is derived (typically with a credit mechanism for some or all tax paid to another state on that same income). However, regardless of residency and regardless of…

The Maine Board of Tax Appeals (Board) disallowed a resident individual taxpayer’s claim for a Maine income tax credit for taxes paid to Connecticut by the taxpayer’s limited liability company (the Company). The Company, treated as an S corporation for federal purposes, paid Connecticut’s entity-level tax on pass-through entities (a tax that operates as a…

A New York Administrative Law Judge recently determined that a taxpayer was liable for income tax as a statutory resident of New York State and New York City for the entire 2014 tax year, as he maintained a permanent place of abode in New York City and was physically present in New York State and…

The Multistate Tax Commission (MTC) adopted its long-awaited guidance interpreting Public Law (P.L.) 86-272 protections for internet businesses on August 4, 2021. P.L. 86-272 was passed by the U.S. Congress in 1959, and protects businesses from the imposition of state income tax when the business’s only activity in the state is the solicitation of orders…