Noteworthy Cases

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Reversing a judgment of the circuit court, the Alabama Court of Civil Appeals held that sales of prepaid authorization numbers that allow purchasers to access wireless services on cellular telephones are subject to the state’s sales tax. The court reasoned that during the 2008 through 2011 tax years at issue, the relevant sales tax statute…

On July 17, 2018, the Wisconsin Court of Appeals held that a taxpayer’s services qualified as taxable “laundry services” and were subject to Wisconsin sales tax.  The taxpayer entered into service agreements with clients and provided them contract cleaning services.  The taxpayer would hire its clients’ existing laundry department workforces as employees, who would then…

An Indiana taxpayer claimed net operation loss deductions (“NOLs”) on its adjusted gross income.  The NOLs were acquired by the taxpayer as part of a corporate acquisition.  The Indiana Department of Revenue did not dispute that the taxpayer was entitled to the NOLs, but limited the NOLs by an “asset ratio” based on the assets…

The California Court of Appeals affirmed a trial court’s holding that the California Franchise Tax Board can require interstate unitary businesses to use combined reporting, even though combined reporting is optional for intrastate unitary businesses. The taxpayer, a motorcycle retailer, argued that the differential treatment of interstate and intrastate business gave a direct commercial advantage…

The Alaska Superior Court denied the Alaska Department of Revenue’s (“DOR”) petition to enforce an administrative subpoena against Turo, Inc. (an out-of-state car sharing company), which sought all of the company’s business records from its inception in 2009 to 2017 in connection with an ongoing investigation regarding vehicle rental taxes. The court held that the…

The South Carolina Administrative Law Court ruled that the taxpayer was required to collect sales tax on its retail sales of prepaid cellular telephone service.  The taxpayer argued that its sales did not constitute “prepaid wireless calling arrangements,” which must be “sold in units or dollars which decline with use in a known amount.”  Because…

The Minnesota Tax Court held that  a tobacco distributor was entitled to a refund of Minnesota tobacco tax that it paid on federal excise tax (FET) that was passed through by the tobacco manufacturer, but only if the FET was separately stated on the manufacturer’s invoice. The court looked to the plain language of the…

The Texas State Office of Administrative Hearings (“SOAH”) found that the receipts of a non-nexus member of a combined group (Company A) “should be deleted” from the computation of the group’s gross receipts for purposes of apportioning revenue to the state.  The group was in the business of franchising fast food restaurants.  On audit, the…

The New Mexico Court of Appeals upheld the imposition of gross receipts tax on certain trademark-related royalty fees received by an out-of-state corporation pursuant to its franchise agreements with New Mexico businesses. The court examined whether, following statutory amendments in 2007, the royalty fees flowing from a limited trademark license provision contained within the franchise…

The New Jersey Tax Court upheld the New Jersey Division of Taxation’s use of the 25/50/25 sourcing rule for “certain services” against a provider of mass messaging services by fax, email and voice. Specifically, the court upheld the Division’s determination of a 76% receipts factor, which consisted of 25% for all transactions originating in New…