The Louisiana Court of Appeal, First Circuit held that a taxpayer was not entitled to a refund of franchise tax under an interpretation of the franchise tax law by the Department of Revenue that was struck down in Utelcom, Inc. v. Bridges, 2010-0654 (La. App. 1 Cir. 9/12/2011); 77 So. 3d 39. In Bannister, the court relied on La. R.S. 47:1621(F) finding that such section precluded the Department from issuing a refund because the tax was paid as a result of a “mistake of law arising from the misinterpretation by the secretary of the provisions of any law or of the rules and regulations promulgated thereunder.” Instead, the taxpayer could only seek to recover franchise tax paid under a mistaken interpretation of law by the Department by (1) paying the tax under protest (and filing a petition to recover the payment under protest), or (2) seeking recovery from the Louisiana Legislature under the claim against the state procedure. (Bannister Properties, Inc. v. State of Louisiana, Dkt. No. 2018-0030 (La. App. 1 Cir. 11/02/2018)).
Missouri Director of Revenue Finds Sales Fulfilled and Shipped from Warehouse in Missouri Subject to Sales Tax.
The Missouri Department of Revenue, in a letter ruling, found that a taxpayer’s sales of exercise products were subject to state and local sales taxes because the transactions were not in commerce, since the orders were fulfilled and shipped to Missouri customers by a third-party warehouse in Missouri. The Department of Revenue also found that the taxpayer had substantial nexus with the state, through its use of a third-party warehouse in Missouri, to require it to collect state and local use tax for the sales of its products, fulfilled and shipped outside of the state directly to Missouri customers. (Missouri Director of Revenue, Letter Ruling No. 7972 (Aug. 23, 2018)).
Podcast: P.L. 86-272 Protection for Deliveries
Massachusetts ATB Finds that Indiana Utility Receipts Tax Not a Deductible Transaction Tax for Massachusetts Corporate Excise Tax
The Massachusetts Appellate Tax Board disallowed a deduction for Indiana utility receipts tax (URT) paid by a natural gas distribution operator with operations in Indiana. The deduction for the URT was disallowed, for purposes of computing Massachusetts net income for corporate excise tax, because the URT is not a deductible “transaction tax.” The Board found that while the URT may have some characteristics of a transaction tax, on balance the URT is more akin to the types of income and franchise taxes that must be added back to net income under the Massachusetts statute. Bay State Gas Co. v. Comm’r of Revenue, Dkt. No. C332071 (Mass. App. Tax Bd. Oct. 23, 2018).
SALT Pet of the Month: Lola Kerman!
Meet Lola, the svelte and sprightly pet of Mike Kerman, SALT associate in Eversheds Sutherland’s Washington office, and his wife Kristy Callahan (Lola’s “real” last name is Kermallahan, a portmanteau). Lola is a black lab-whippet mix, to be confirmed by DNA test, who celebrated her first birthday on Thanksgiving Day.
Mike and Kristy took Lola in one fateful September day when they received an email from an adoption agency saying Lola (née Seashore) desperately needed to be picked up to prevent her from spreading her highly contagious “kennel cough” to her fellow cellmates. After a few days of wheezing, Lola recovered enough to contract several new ailments. Luckily she loves going to the vet, which eases the burden of her frequent appointments.
Lola is a recovering sufferer of separation anxiety, a remnant of her early shelter life. But with lots of positive training and reassurance that Mike and Kristy will always come home, she now snoozes away on Mike’s big green chair when she has to be left home alone. 
Lola is without fail the fastest dog at the park, zipping back and forth so fast that her ears get stuck inside out. She will happily fetch all day long and expertly fends off attempts from other dogs to steal her favorite ball.
Lola loves all food and is an avid counter-surfer (unauthorized food was consumed during the writing of this post). Besides fetching and scavenging, Lola’s favorite thing to do is meet new people. She turns a short walk around the block into a welcoming committee for every neighbor, stranger and passerby.
Lola is excited to be featured as January’s Pet of the Month!
New Mexico Administrative Hearings Office Rejects Department’s Attempt to Eliminate Payroll Factor from Apportionment Factor Calculation
The State of New Mexico Administrative Hearings Office held that the New Mexico Taxation and Revenue Department could not remove the payroll factor from the apportionment factor calculation of a taxpayer in the credit card and personal lending business. The Hearings Office determined that “the party seeking to depart from the proscribed apportionment method,” which, in this case, was the Department, “bears the burden of proving by clear and convincing evidence that such departure is appropriate.” In this circumstance, the Department failed to prove that the taxpayer’s employees were not contributing significantly enough to the generation of the taxpayer’s income to warrant a full weighting of the payroll factor with the property and sales factors.
Webcast: Unclaimed property – through the looking glass
Significant developments in unclaimed property laws have turned settled expectations upside down in a variety of areas. While states continue to press forward on audits, new legislation, new regulation and litigation across the country are shifting the rules in this already uncertain area. Companies under audit face difficult choices ahead, and those not (yet) under audit face an uncertain risk and compliance landscape. This webcast will examine recent trends and what to expect moving forward. Topics include:
· trends in audits, legislation and regulation
· IRA reporting under new IRS guidance
· gift cards and False Claims Act issues
· other litigation highlights
· emerging unclaimed property issues
Don’t Bank on It: South Carolina Administrative Law Court Holds Banks Not Allowed to Utilize NOL Carryforwards
The South Carolina Administrative Law Court found that the taxpayer bank could not deduct net operating loss (NOL) carryforwards when computing its bank tax liability. The taxpayer argued that banks should be allowed to deduct NOLs regardless of whether it is paying under the income or the franchise tax, because of the state’s conformity with the Internal Revenue Code (IRC), which allows corporations to deduct NOLs. The Department of Revenue (DOR) argued that IRC conformity did not extend to banks, because under state law, corporate income tax is based on “taxable income,” and the bank tax is a franchise tax based on “entire net income.” The administrative law judge agreed with the DOR and concluded that the NOL carryforward deduction is only authorized when computing tax based on taxable income rather than entire net income. Synovus Bank v. Dep’t of Revenue, No. 17-ALJ-17-0418-CC (S.C. Admin. Law Ct. Oct. 22, 2018).
Legal Alert: New York Governor proposes significant tax changes
New York State Governor Andrew Cuomo released his Fiscal Year 2020 budget and accompanying legislation on January 15, 2019 (the Budget Bill). Among other things, the Budget Bill proposes statutory revisions to respond to the Tax Cut and Jobs Act of 2017 (TCJA) and to impose a sales tax collection obligation on “marketplace providers.”
California FTB Confirms Delivery by Private Vehicles Is Protected Under P.L. 86-272
In a Technical Advice Memorandum issued on December 4, 2018, the California Franchise Tax Board (FTB) concluded that delivery of tangible personal property via private truck is a protected activity under P.L. 86-272. However, any activity that goes beyond the scope of delivery, such as backhauling, is not protected. The FTB explained that Congress, when it enacted P.L. 86-272 in 1959, chose not to limit P.L. 86-272 protection to shipments by common or contract carrier. The FTB further noted that Congress intended to broadly protect activities “by or on behalf of” an out-of-state company, including “shipment or delivery” from out-of-state. Cal. FTB Tech. Adv. Mem. No. 2018-3 (Dec. 4, 2018).