What do you get when you cross a Bernese Mountain Dog with a poodle? A pup so fluffy she doesn’t even look real! This month’s SALT pet belongs to Jennifer Zimmerman, Senior Manager of State Tax Audits and Controversy at Walgreens.

Rosie is a one-year-old Bernedoodle who pawed her way into the Zimmerman family’s hearts in March of 2020, thanks to a breeder in southeast Michigan.

Rosie’s middle name is a tribute to Hermoine from the Harry Potter series, thanks to popular vote by her family. However, with her soft fur, she’s earned herself the nickname of “fluff nugget.”

Beyond exploring through off-leash nature walks with her humans, she loves to chow down on any kind of meat – ham and steak are two favorites!

Don’t let her sweet brown eyes fool you, though. She likes to stir up her own brand of trouble. When she isn’t barking at random noises outside at night, she likes to grab food that isn’t meant for her. This has resulted in consumption of chocolate cake and a chicken skewer, with two vet visits to match. However, this mischief is well worth it for her puppy love.

We’re happy to highlight this fluff nugget for our March Pet of the Month!

The Massachusetts Legislature has recently introduced a variety of bills that would tax digital advertising. Notably, HD.3210 would establish the Digital Advertising Local Revenues Tax, which would be imposed on the annual gross revenues of a person derived from digital advertising services in Massachusetts. “Digital advertising services” is defined as including “advertisement services on a digital interface, including advertisements in the form of banner advertising, search engine advertising, interstitial advertising, promoted, boosted, or sponsored content, and other comparable advertising services.” The tax rate would vary from 5 – 15%, depending on the level of the taxpayer’s annual gross revenues. The 15% rate applies to those taxpayers with annual gross revenues exceeding $200,000,001. The tax does not apply to those persons with less than $50,000,000 of annual gross revenues. If passed, the bill would take effect for the tax year beginning on January 1, 2022.

The Massachusetts Legislature has also introduced HD.3601, which would impose a 5% tax on a person’s annual revenue from digital advertising services within Massachusetts.

Alabama considers the sale of prepaid telephone calling cards and the sale of prepaid authorization numbers not evidenced by a physical card, to be the sale of tangible personal property subject to sales tax. Specifically, Alabama statute considers the “sale of prepaid wireless service that is not evidenced by a physical card” to constitute the sale of a prepaid authorization number. The taxpayer was an authorized dealer for a wireless provider and was required to accept customer payments for the monthly cellular service plans offered by the provider. The taxpayer accepted payments from customers, and within a day or two of the deposit into the Taxpayer’s account, the wireless provider would withdraw the payment and later pay the taxpayer a 5% commission. The taxpayer argued that while it accepted payments from customers that replenished the customers’ monthly cellular service plans through the provider, it did not provide a card to its customers, did not provide an authorization number, and was merely facilitating customer payments to the provider. However, the Tax Tribunal disagreed that the taxpayer was merely processing payments and determined that because the taxpayer sold wireless service, and because that the service was prepaid, the transaction was subject to sales tax under Alabama statute even if a physical card or authorization number was not provided.

Cellular Express, Inc. v. Department, Ala. Tax. Trib. No. S. 14-320-JP, (2021)

On February 26, 2021, a subcommittee of the Georgia Ways & Means Committee quickly approved HB 428, which proposes to eliminate the current Georgia sales tax exemption for high-technology companies and facilities that invest at least $15 million in eligible computer equipment in Georgia during a calendar year. The exemption has been available to taxpayers in Georgia for over 20 years. The proposed legislation now proceeds to a vote before the full House Ways & Means Committee, where the committee chairman supports the legislation.

Read our full Legal Alert here.

Earlier today, in a last minute addition to the Maryland Senate’s Budget and Taxation Committee hearing, the committee voted to approve amendments to S.B. 787, Digital Advertising Gross Revenues Tax – Exemption and Restriction. Most notably, the amendments would delay the start of the digital advertising tax to January 1, 2022.

The other relevant amendments are to:

  1. Designate the bill as an emergency measure, meaning that it will take effect when enacted, rather than 30 days after the legislative override of any Governor veto; and
  2. Strike the contingency that the bill will be effective if the H.B. 732 veto is overridden (as it was already overridden on February 12, 2021).

There were no changes to the anti-passthrough or broadcast and news media entity exemptions.  The amendment language is not yet publicly available.

S.B. 787 will next head to the Senate floor for second reading. A hearing is set for 1:30 p.m. today on H.B. 1200, the House of Delegates companion bill to S.B. 787. We will be watching that hearing to see whether any amendments are proposed at that time.

The New York Tax Appeals Tribunal recently held that a vacation home constitutes a “permanent place of abode” to make taxpayers statutory residents for New York income tax purposes.

The taxpayers, a married couple, were domiciled in New Jersey. The husband was a hedge fund manager who primarily worked out of his New York City office and was in the state for more than 183 days per year. The couple also maintained a vacation home in Northville, where they spent no more than two to three weeks each year.

New York imposes income tax on those not domiciled in the state but who maintain a permanent place of abode in the state and who are present in New York for more than 183 days during the year. The Tribunal held that the husband’s presence in the state combined with the taxpayers’ ownership of a vacation home was sufficient to establish statutory residency in New York.

The taxpayers argued that the Northville home was not a “permanent place of abode” under Tax Law § 605(b)(1) because their primary residence was in New Jersey for the tax years at issue and the vacation home was more than 200 miles from the husband’s office. The Tribunal disagreed, holding that the vacation home qualified as a permanent place of abode because it was suitable for year-round habitation. The taxpayer’s actual use of the residence only for vacation purposes was not determinative. Rather, because the five-bedroom, three-bathroom house had year-round climate control and could be used as a primary residence, it was sufficient to render the taxpayers statutory New York residents for income tax purposes.

In the Matter of the Petition of Coulson, Dkt. No. 827736 (N.Y. Tax Appeals Tribunal, 2021).

In this episode of the SALT Shaker Podcast policy series, host and Eversheds Sutherland Partner Nikki Dobay is joined by Meredith Beeson, Director of State Government Affairs with the Global Business Alliance (formerly known as the Organization for International Investment) in Washington, DC. They discuss the Global Business Alliance, its state tax priorities and what Meredith is focused on this legislative session.

The Eversheds Sutherland State and Local Tax team has been engaged in state tax policy work for years, tracking tax legislation, helping clients gauge the impact of various proposals, drafting talking points and rewriting legislation. This series, which is focused on state and local tax policy issues, is hosted by Partner Nikki Dobay, who has an extensive background in tax policy.

Questions or comments? Email SALTonline@eversheds-sutherland.com.

 

 

 

 

 

 

 

Listen now: 

For a transcript of the podcast, click here.

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The Illinois Department of Revenue issued a private letter ruling determining that for purposes of the Retailers’ Occupation Tax (ROT) and the Services Occupation Tax (SOT), a taxpayer that procured marketing materials on behalf of its clients properly sourced these sales to the location of the product manager, the employee responsible for procuring the materials. At audit, the auditor determined that the taxpayer was required to source the sales to the taxpayer’s headquarters. In issuing the PLR, the Department disagreed with the auditor’s conclusions determining that for purposes of the ROT most of the primary selling activities, which determine how a sale is sourced, occurred at the location of the product manager and not necessary the taxpayer’s headquarters.  For purposes of the SOT, the taxpayer was unable to determine the location of its subcontractors so the sales of its services were properly sourced to the location of the product manager. At the time of the PLR, the taxpayer had a matter pending at the Informal Conference Board (ICB); however, the Department’s ruling was applicable to prospective sales of tangible personal property and services only.

Calling all trivia fans! Don’t miss out on a chance to show off your SALT knowledge!

We will award prizes for the smartest (and fastest) participants.

This week’s question: Which state is considering legislation would provide a gross receipts tax deduction for movie ticket and concession sales?

E-mail your response to SALTonline@eversheds-sutherland.com.

The prize for the first response to today’s question is a $25 UBER Eats gift card.

Answers will be posted on Saturdays in our SALT Weekly Digest. Be sure to check back then!