Shaking things up in state and local tax
Shaking things up in state and local tax
By Scott Booth and Prentiss Willson
The Vermont Supreme Court held that coupon books distributed monthly, within a free weekly newspaper and also separately distributed on news racks, were not “component parts” of the newspaper, and thus were not exempt from Vermont sales and use tax as newspapers. Vermont exempts newspapers and tangible personal property…
By Mary Alexander and Prentiss Willson
The disallowance of a credit for income taxes paid to other states against Maryland’s county income tax was ruled unconstitutional as a violation of the dormant Commerce Clause by the Court of Appeals of Maryland. Maryland’s income tax, which includes both state and county components, is imposed on all…
The Virginia Tax Commissioner overturned the Department of Taxation’s adjustments to a taxpayer’s nonresident Virginia income tax return based on a determination that certain transactions between related entities were indeed conducted at arm’s-length, contrary to the Department’s prior findings. The nonresident taxpayer was the majority owner of both an out-of-state LLC as well as a…
By Kathryn Pittman and Andrew Appleby
The Utah Department of Revenue concluded that gift codes sold by an out-of-state seller (Gift Code Issuer) to Utah consumers were not subject to sales and use tax and that specified activities conducted by third parties in Utah relating to such sales of gift codes did not create nexus…
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…
By Madison Barnett and Timothy Gustafson
The Missouri Administrative Hearing Commission ruled that interest income and capital gains generated by a “rabbi trust”—a trust established to fund a nonqualified deferred compensation plan for the taxpayer’s officers—constituted nonbusiness income under the Uniform Division of Income for Tax Purposes Act (UDITPA). The trust income failed the transactional…
In a case pitting statutory language against a department of revenue’s historical practice, the Kentucky Court of Appeals held that the “franchise” of a public service corporation is a separate asset for ad valorem taxation purposes, and it is subject to state and local property taxation. Dayton Power & Light Co. v. Dep’t of Revenue…
The Michigan Court of Appeals held that a $2.2 billion transaction involving the sale of assets related to the Grey Goose vodka product line did not constitute a “sale” for purposes of apportioning the Michigan Single Business Tax (SBT). Sidney Frank Importing Co., Inc. v. Dep’t of Treasury, No. 306742 (Mich. Ct. App. 2012). The taxpayer, Sidney Frank, transferred all of its tangible and intangible assets in the top-shelf vodka, including inventory, to Bacardi, Ltd. The transaction produced a substantial gain, and Sidney Frank included the proceeds in the denominator of its sales factor for 2004 apportionment purposes.
For purposes of the SBT, which was repealed in 2006, “sale” was defined in relevant part as the amounts received from the rental, lease, license or use of property that constitutes business activity. The taxpayer argued that the transfer of the Grey Goose assets was a sale of intangible property (and thus the proceeds should be included in the sales factor denominator) because it was a “use” of intellectual property. The Department argued that the term “sale” includes only transactions where the taxpayer allows a person to use property and does not transfer title to the property.Continue Reading The (Grey) Goose that Got Cooked in Michigan
Retailers and banks continue to get whipsawed on sales tax bad debt deductions where a retailer provides a private label credit card program in conjunction with a third party bank. The Kentucky Board of Tax Appeals ruled that a retailer was not entitled to a bad debt deduction because it was not the party that…
The Tennessee Department of Revenue released two taxpayer-favorable rulings related to the intangible expense addback statute and economic nexus on January 8, 2013. In Letter Ruling No. 12-32 (Dec. 19, 2012), the Department ruled that the discount incurred in the course of factoring trade receivables using an affiliated factoring company did not constitute an “intangible…
