Shaking things up in state and local tax
Shaking things up in state and local tax
By Maria Todorova and Prentiss Willson
The Minnesota Tax Court held that computer software consulting and implementation services were not subject to sales tax in Minnesota. The taxpayer, SAP Retail, Inc., licensed enterprise resource planning software. It also provided consultation and implementation services to configure the software to a customer’s particular business activities. The court…
By Todd Betor and Andrew Appleby
The Illinois Department of Revenue granted a taxpayer’s request to use an alternative apportionment method, determining that application of the standard single sales factor formula did not fairly represent the market for the taxpayer’s goods, services or other sources of income. The taxpayer’s only sale during the year in…
By Mary Alexander and Andrew Appleby
The Tennessee Court of Appeals held a wide area network (WAN) service provided by IBM was not taxable because the true object of the service was not a “telecommunications service.” IBM’s WAN service was a technological infrastructure that enabled remote access to information by linking geographically separated computers. The…
In a 6-1 decision, the Illinois Supreme Court affirmed an Illinois Circuit Court holding that Illinois Public Act 96-1544 (The Click-Through Nexus Act), requiring out-of-state retailers to collect and remit use tax, violates the Internet Tax Freedom Act. Performance Marketing Ass’n v. Hamer, Docket No. 114496 (Oct. 18, 2013).
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By Christopher Chang and Timothy Gustafson
The Massachusetts Department of Revenue issued a Letter Ruling stating that, for purposes of determining common control with regard to a combined report, the Department looks to actual voting control as opposed to voting power, which is the test for federal consolidated reporting. Under the Massachusetts combined reporting rules…
By Saabir Kapoor and Andrew Appleby
After the U.S. Court of Appeals for the Tenth Circuit denied an en banc rehearing on October 1, 2013, the Direct Marketing Association (DMA) is expected to bring suit in Colorado District Court to challenge the constitutionality of the Colorado law that requires out-of-state retailers without a physical presence…
By Madison Barnett and Prentiss Willson
The Indiana Department of Revenue determined in a Letter of Finding that an out-of-state information service provider must apportion its receipts from sales to Indiana customers to Indiana in a market-sourcing-like manner, even though the majority of its costs were incurred outside Indiana. The taxpayer provided information services electronically…
By Scott Booth and Andrew Appleby
Although states continue to challenge the validity of captive insurance companies, Wendy’s has notched several taxpayer victories. In a win involving Scioto Insurance Company (Scioto), Wendy’s captive insurance company, the Illinois Appellate Court held that Scioto constituted a bona fide insurance company that was properly excluded from Wendy’s combined…
By Zachary Atkins and Douglas Mo
A Florida trial court ruled that imposing different tax rates on cable and satellite television services did not violate the Commerce Clause or the Equal Protection Clause of the U.S. Constitution. The statute in question imposes a statewide communications services tax at a higher rate on satellite service than…
By Shane Lord and Timothy Gustafson
The Tennessee Court of Appeals held that a taxpayer’s wholesale service of converting end-user information into Internet protocol was an “enhanced” service for which the true object or primary purpose was to provide the non-taxable service of “Internet access” and not the taxable service of “telecommunications.” Adopting definitions set forth…
