Eversheds Sutherland has filed an amicus curiae brief on behalf of the 550 members of the Council On State Taxation (COST) on an important issue as to whether a California imposition of certain local taxes is required to be passed by a two-thirds vote of the California legislature, or a simple majority. City and County of San Francisco v. All Persons Interested in the Matter of Proposition C. The case is pending in the California Court of Appeal, First Appellate District, on appeal from a judgment of the San Francisco County Superior Court holding that a special tax imposed by initiative requires for passage only a simple majority, and not a two-thirds, vote. The amicus brief urges the Court to adopt the well-reasoned arguments of the appellants that both Proposition 13 and Proposition 218 require passage by a two-thirds vote and that nothing in the California Supreme Court’s decision in California Cannabis Coalition v. City of Upland (2017) 3 Cal.5th 924 alters that result.

In 2015, Chicago expanded its 9% “amusement tax” to reach amusements that are delivered electronically. In September , 2019, an Illinois appellate court held in Labell v. City of Chicago that the new streaming tax complied with the state constitution and did not violate the Internet Tax Freedom Act. On March 25, 2020, the Illinois Supreme Court denied the taxpayer’s petition for leave to appeal, leaving the appellate court ruling in place.

For full coverage of the Chicago amusement tax and the September 2019 ruling, see the Eversheds Sutherland legal alert, Illinois appellate court upholds Chicago streaming tax.

In Gannon v. Airbnb, Inc., a Florida appellate court held that vacation rental platforms are not required to collect local lodging tax. The ruling reasons that the tax is imposed on the owner of the property, and vacation rental platforms are “conduits,” not owners. A dissenting opinion analogized rental platforms to property managers, which are generally required to collect tax on behalf of the owners.

The Florida legislature had briefly considered a bill, H.B. 1011, to require vacation rental platforms to collect lodging taxes, but the bill was withdrawn on March 14, 2020.

In response to California Governor Gavin Newsom’s Executive Order N-40-20, the California Department of Tax and Fee Administration (CDTFA) has updated its guidance to taxpayers impacted by COVID-19 regarding relief from interest and penalties and extended filing deadlines for sales and use taxes and other various taxes. All taxpayers filing a return for less than $1 million in tax automatically receive an additional three months to file returns between now and July 31, 2020. Taxpayers with tax liability of $1 million or more are eligible for an extension as well, but must request it.

The City of San Francisco has waived quarterly estimated tax payments of the City’s Gross Receipts, Payroll Expense, Commercial Rents, and Homelessness Gross Receipts Taxes that otherwise would be due on April 30, 2020, for taxpayers or combined groups with combined San Francisco gross receipts in 2019 of $10 million or less. The payments now must be made along with 2020 annual tax payments generally due by March 1, 2021. The City is also extending the due date for annual license fees until June 30, 2020.

The West Virginia governor vetoed S.B. 163, which would require vacation rental platforms and hotel booking platforms to collect and remit local occupancy taxes. It is believed the veto is tied to technical concerns about how the localities are to collect the tax.

The bill passed the senate unanimously and the house by a vote of 95-3, meaning the legislature will likely have either the numbers to override the governor’s veto or the will to work on technical adjustments. The 2020 West Virginia legislative session ended March 7, so it is unclear at this time when or how this legislature issue will progress.

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.

Today’s Question
Which two states refer to their state taxing agency as “the Comptroller?”

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

The prize for the first response to today’s question is a $20 UBER Eats gift card.

Answers will be posted later this week. Be sure to check back then.

After nearly a decade of stalled litigation in Illinois state court, the U.S. Court of Appeals for the Seventh Circuit permitted a group of taxpayers to proceed in federal court with their U.S. constitutional challenge to property tax assessments, over Tax Injunction Act and comity objections by Cook County. While the district court held that the TIA barred the federal suit, the Seventh Circuit reversed noting that this is the rare case where there is not a “plain, speedy and efficient remedy” in Illinois courts. And, for similar reasons, the Seventh Circuit rejected the county’s argument that the appeals court should decline jurisdiction on the principle of comity.

Here, the procedural statute at issue, (35 ILCS 200/23-15(b)(3)), solely permits a taxpayer to challenge the correctness of a property assessment, without regard to an assessor’s methods or intent. The taxpayers were able to show the appeals court that the statute limited who the taxpayers could name as a defendant, what evidence they could present, and what arguments they could raise. Therefore, the Seventh Circuit concluded that the governing procedural statute effectively prohibits a taxpayer from raising an Equal Protection Clause challenge in state court because it ignores the assessor’s methods and intent, which are needed to meet the “no rational basis” test to prevail on such a challenge.

A.F. Moore & Associates, Inc., et al v. Maria Pappas, et al., Illinois Court of Appeals Case No. 19-1971 (Jan. 29, 2020).

On March 30, 2020, California Governor Gavin Newsom issued Executive Order N-40-20 (Order) regarding the state’s COVID-19 State of Emergency. The Order grants additional extensions to taxpayers and gives new authority to the California Department of Tax and Fee Administration (CDTFA) to provide relief from interest and penalties to taxpayers impacted by the State of Emergency. The CDTFA administers California’s sales & use tax, as well as over 30 other special tax and fee programs.

The Order provides that for taxpayers filing a return for less than $1,000,000 in tax, the CDTFA may suspend statutory rules requiring taxpayers to request a filing extension and file a statement under penalty of perjury for up to three months after the due date of the return or payment. The Order also extends the statute of limitations for taxpayers to file a refund claim with the CDTFA for 60 days. Additionally, the Order extends the time limit for taxpayers to appeal a CDTFA determination to the Office of Tax Appeals for 60 days. Each of these proclamations is effective from March 31, 2020 to July 31, 2020.

Our newest SALT associate, Annie Rothschild, might have had to start her new job working from home, but she does get a pretty great office-mate to work alongside with because of it. Meet Marlowe, a 1.5 year-old Goldendoodle. While she’s forced to work from home, Annie and Marlowe have gotten a chance to spend a lot more time together.

Annie and her boyfriend adopted Marlowe in December of 2018, when a local family’s dog had puppies. When searching for a cute and unique name, Annie was inspired by Raymond Chandler’s fictional character Detective Phillip Marlowe.

In-between conference calls and video chats, Marlowe enjoys cuddling on the couch, going on walks and chasing birds. The current work from home situation has Marlowe missing his friends. One of his favorite things to do is play with all of his dog friends.

Marlowe’s first birthday party was held at a local park, and he invited a few of his closest friends to join. The party included its own dog-exclusive birthday cake. After playing with the other dogs for a while, Marlowe ventured off on his own to find a large mud puddle. Marlowe LOVES mud. Before he could be stopped, Marlowe proceeded to lay down in the mud, covering himself almost completely in mud. It’s a moment that everyone considers the best day of his life so far!

We are thrilled to feature Marlowe as our March Pet of the Month!

The California Franchise Tax Board just issued Notice 2020-02, providing an extension to July 15th for taxpayers to file income/franchise tax refund claims, protests, or appeals and petitions for rehearing at the Office of Tax Appeals that would normally have statutory due dates during the “postponement period” of Mar. 12, 2020 to July 15, 2020.

The Notice also states that the FTB has until July 15th to issue Notices of Proposed Assessment where the statute of limitations is set to expire during the postponement period.