Shaking things up in state and local tax
Shaking things up in state and local tax
By Mary Alexander and Andrew Appleby
The Indiana Department of Revenue disallowed a taxpayer’s deduction for interest expenses accrued to a subsidiary because the Department considered the loan a sham. Unless eligible for an exemption under Ind. Code § 6-3-2-20(c), a taxpayer that is subject to Indiana’s adjusted gross income tax is required to add…
By Madison Barnett and Timothy Gustafson
In a case involving the exclusion of captive insurance companies from combined reporting groups, the Indiana Tax Court held that a captive must be physically present in Indiana to be “subject to” the insurance premiums tax and therefore exempt from the corporate income tax. The Tax Court initially…
By Saabir Kapoor and Andrew Appleby
The Illinois Department of Revenue determined that the redemption of rewards points by a hotel patron was generally not subject to the state’s Hotel Operators’ Occupation Tax (HOOT) because the rewards program was operated by the hotel, and the HOOT was remitted upon a patron’s initial stays at the…
By David Pope and Timothy Gustafson
The Virginia Tax Commissioner determined that an out-of-state manufacturer was subject to use tax on “local marketing group” fees charged to its customers because the true object of the transaction was the sale of tangible personal property. The taxpayer manufactured heating, ventilating and air conditioning (HVAC) systems for sale…
Click here to read our August 2013 posts on stateandlocaltax.com or read each article by clicking on the title. If you prefer, you may also read a printable PDF version.
…
By Saabir Kapoor and Timothy Gustafson
The California Court of Appeal, in affirming summary judgment in favor of the City of Los Angeles, concluded that the taxpayer, j2 Global Communications, Inc., did not produce evidence to demonstrate that its purchase of telecommunications services was exempt from the City’s communication users tax (CUT) under the Internet…
By Todd Betor and Andrew Appleby
The Indiana Department of Revenue issued a Letter of Findings denying a taxpayer’s deductions for certain intercompany payments to a subsidiary management company. The taxpayer and its subsidiary management company (Management Co.) entered into an intercompany agreement based on a federal income tax transfer pricing study, which endorsed the…
By Nicole Boutros and Pilar Mata
The U.S. Court of Appeals for the Second Circuit determined that dial-up internet services were taxable local telephone services when analyzing an Internal Revenue Service bankruptcy claim for federal excise taxes (FET). The taxpayer, WorldCom, Inc., purchased central-office-based remote access (COBRA) services from local telephone companies to provide internet…
In its unanimous decision in Elk Hills Power, LLC v. Board of Equalization, the California Supreme Court held that the California State Board of Equalization may not assess the value of intangible Emission Reduction Credits when valuing taxable power plant property. The decision makes clear that property taxation of virtually all intangible assets is…
By Zachary Atkins and Andrew Appleby
An Arizona Department of Revenue hearing officer determined that the gross receipts from a taxpayer’s deemed asset sale pursuant to I.R.C. § 338(h)(10), including gross receipts attributable to goodwill, could not be included in the taxpayer’s sales factor for corporate income tax apportionment purposes. The taxpayer asserted that goodwill…
