New York

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By David Pope and Jack Trachtenberg

The New York State Department of Taxation and Finance has determined that a financial services firm is not subject to the New York State sales and use tax because the product being sold by the taxpayer constitutes a single, integrated, nontaxable service.  The taxpayer provides its clients with investment…

By Christopher Chang and Jack Trachtenberg

The New York State Division of Tax Appeals (DTA) ruled that the dividend income received by a taxpayer holding company from its minority ownership in a publicly traded corporation constituted “investment income” for purposes of New York’s Article 9-A franchise tax on business corporations. The holding company held stock…

By Mary Alexander and Andrew Appleby

The New York State Department of Taxation and Finance determined that a women’s apparel company’s “inspirational shopping” trips were not sufficient to be considered “doing business” in the state for corporate franchise tax purposes. Petitioner was a traditional remote seller headquartered outside of New York. Petitioner’s employees occasionally traveled…

We hope you enjoy this very special edition of the Sutherland SALT Shaker newsletter. In this issue:

  • Click This!: New York Enacts Über Nexus Statute
  • Compact Litigation Fallout
  • Two States Expected to Join MTC Compact
  • Lesser-Known Tax Council Convenes in South Georgia
  • U.S. Supreme Court Defines De Minimis: “You’ll Know It When You Don’t See

…

On March 28, 2013, the New York State Legislature passed budget legislation (S.2609D/A.3009D) that replaces the existing New York State and City related-party royalty add-back requirements with provisions based on the Multistate Tax Commission’s model add-back statute. In addition, the legislation repeals the New York State and City royalty income exclusions, which permitted taxpayers to…

By Sahang-Hee Hahn and Prentiss Willson

The New York State Department of Taxation and Finance ruled in an Advisory Opinion that a Virginia corporation was subject to New York corporation franchise tax because it hired independent contractors to store its consigned inventory and to solicit orders from and deliver products to New York customers. In…

By Jessica Kerner and Pilar Mata

In an Advisory Opinion, the New York State Department of Taxation and Finance held that a taxpayer developing a data center for Internet services is eligible for the State’s sales and use tax exemption pertaining to Internet data centers. In order to qualify for the exemption, the tangible…

We recently launched the Sutherland SALT Digital Economy Forum, which provides comprehensive state tax resources regarding the taxation of the digital economy. Following is a summary of recent digital economy administrative guidance, noteworthy cases and legislation. If you would like to learn more about the Sutherland SALT Digital Economy Forum or any of the issues covered here, please contact us.

Sales, Use and Other Transaction Taxes

Administrative Guidance

  • Massachusetts Soliciting Comments on Software Directive. On February 7, the Massachusetts Department of Revenue issued a draft directive that addresses the application of the Massachusetts sales and use tax to sales of software and computer-related services.
  • Wisconsin Updates Guidance Regarding the Sales and Use Tax Treatment of Computer Hardware, Software, and Services; Addresses Cloud Computing. On January 25, 2013, the Wisconsin Department of Revenue (DOR) updated its software guidance for sales occurring on and after October 1, 2009. While the taxability conclusions and destination-based sourcing regime remain largely unchanged, the DOR expressly addressed software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS).
  • Missouri DOR: Computer Software May Not Be Eligible for Manufacturing Exemption. The Missouri Department of Revenue (DOR) recently determined that a company’s software programs were not eligible for the manufacturing equipment exemptions from sales and use tax because the software was not directly used in the manufacturing process.

Continue Reading Digital Economy Update: Administrative Guidance, Noteworthy Cases and Legislation