On Tuesday, June 24, the Judiciary Committee of the US House of Representatives held a hearing on “Examining the Wayfair decision and its Ramifications for Consumers and Small Businesses.” The hearing was scheduled at the direction of Rep. Robert Goodlatte (R-VA), Chairman of the Judiciary Committee and did not address any specific pending or former legislation, but instead was informational and used to assist the committee in determining whether and how Congress should intervene.
SALT Scoreboard – Second Quarter 2018
This is the tenth edition of the Eversheds Sutherland SALT Scoreboard, and the second edition of 2018. Each quarter, we tally the results of what we deem to be significant taxpayer wins and losses and analyze those results. This edition of the SALT Scoreboard includes a discussion of the United States Supreme Court’s decision in South Dakota v. Wayfair, Inc., insights regarding Chicago’s taxation of streaming video, and a spotlight on New York cases.
View our Eversheds Sutherland SALT Scoreboard results from the second quarter of 2018!
Submit your pet to be featured as the July SALT Pet of the Month!
The Eversheds Sutherland SALT Team is always excited to see what kind of pets our clients and friends have. Our team features a different pet at the end of every month, and we want to feature YOURS! Featured pets will receive a fun prize from the SALT Team. The deadline for July submissions is Wednesday, July 25.
To submit your pet to be featured, visit the Eversheds Sutherland SALT Shaker App, click “Pet of the Month” in the drop-down, then click “Submit A Pet.”
Don’t have the app? It is available for download in the Apple App Store, Google Play and the Amazon Appstore.
North Carolina Supreme Court Decides in Favor of Taxpayer in Trust Nexus Dispute
The North Carolina Supreme Court recently held that the presence in the state of a trust’s beneficiary is not sufficient to establish income tax nexus for the trust. In the Kimberly Rice Kaestner 1992 Family Trust case, the trust’s beneficiaries were residents of North Carolina. There were no other connections between the state and the trust. The court held that the trust did not have sufficient minimum connections with the state of North Carolina to satisfy the due process requirements of the US Constitution and the equivalent due process requirements of the Constitution of North Carolina. The court emphasized that a trust is a separate and distinct entity from its beneficiaries, and a trust’s connections with the state are what matters for determining whether the tax violates due process. The court reasoned that the beneficiaries’ residency in North Carolina cannot be viewed as the trust conducting purposeful activities in the state because the trust and its beneficiaries are separate legal entities. Kimberley Rice Kaestner 1992 Family Trust v. N.C. Dep’t of Revenue, No. 307PA15-2 (N.C., June 8, 2018).
For more information on the lower court decisions in this case, please see our previous posts regarding the North Carolina Court of Appeals decision and the Wake County Superior Court decision.
Top New Jersey Tax Changes in the 2018 Budget Deal
In a last-minute deal to avert a government shutdown, New Jersey Governor Phil Murphy and the New Jersey Legislature cobbled together a budget with numerous amendments to New Jersey’s tax law.
View the full legal alert.
Eversheds Sutherland SALT Shaker: June 2018 Digest
Read our June 2018 posts on stateandlocaltax.com or read each article by clicking on the title. For the latest coverage and commentary on state and local tax developments delivered directly to your phone, download the latest version of the Eversheds Sutherland SALT Shaker app.
- SALT Pet of the Month: Duchie
Introducing Duchie, the family dog of Mark Swan, Vice President of Property Tax and Tax Counsel at Charter Communications. - Giving Credit Where It Isn’t Due: Arkansas Office of Hearings and Appeals Treats Sales of Tax Credits as Business Income
On June 13, 2018, an Arkansas Administrative Law Judge concluded that a taxpayer’s proceeds from dispositions of tax credits were apportionable business income. - New Jersey Legislature Passes Corporate Tax Increases, Still Negotiating with Governor
In the midst of a budget showdown between New Jersey’s Legislature and Governor Murphy, on June 25, 2018, the Legislature passed a replacement bill that seeks to raise revenue with a temporary Corporation Business Tax “surtax” on corporations meeting certain income thresholds and by limiting New Jersey’s dividend exclusion. - New Jersey Court Holds That Taxpayer Not Entitled to Exception to State’s Interest Add-Back Requirement
In Kraft Foods Global, Inc. v. Director, Division of Taxation, 2018 WL 2247356 (May 17, 2018), the New Jersey Superior Court, Appellate Division, recently upheld a New Jersey Tax Court decision denying a taxpayer an exception to the state’s interest add-back requirement in determining the taxpayer’s corporate net income subject to New Jersey’s corporation business tax (CBT). - New York Bill Introduced to Exempt GILTI
On June 11, 2018, Senate Bill 8991 was introduced by New York Senate Majority Leader John Flanagan. The Bill would decouple from the federal treatment of Global Intangible Low-Taxed Income (GILTI). - South Dakota v. Wayfair – Insights and Analysis
On June 21, 2018, the US Supreme Court struck down the “physical presence rule” of Quill and National Bellas Hess which barred states from imposing sales tax collection requirements on certain out-of-state sellers. - US Supreme Court Overrules Physical Presence Standard, Leaves Plenty of Questions
In a 5-4 decision, the US Supreme Court today overruled its landmark decisions in Quill Corp. v. North Dakota and National Bellas Hess, Inc. v. Department of Revenue of Illinois, disposing of the “physical presence” rule that has served as the bright-line standard for whether remote sellers are required to collect state sales taxes.
FEATURED PUBLICATIONS
- The Sales Taxation of Virtual Currency
Bitcoin and other virtual currencies may be the most controversial financial assets on the market right now and are certainly the most discussed. In their article for Bloomberg BNA, Eversheds Sutherland attorneys Jonathan Feldman and Christopher Beaudro examine the state sales tax implications of selling virtual currency.
FEATURED EVENTS
- State Tax Reform Roundtables
Eversheds Sutherland Partners Jeff Friedman, Todd Lard and Eric Tresh present on the Tax Executives Institute’s (TEI) State and Local Tax Committee’s series of State Tax Reform Roundtables. The series of calls will enable SALT professionals to stay abreast of state tax developments associated with the Tax Cuts and Jobs Act, to engage with subject-matter experts, and to hear from peers regarding their “boots on the ground” knowledge and experience.
SALT Pet of the Month: Duchie
Introducing Duchie, the family dog of Mark Swan, Vice President of Property Tax and Tax Counsel at Charter Communications. Mark, his wife Patty and their kids, Mack and Payton, are active members of the South Charlotte Dog Rescue Group, an organization that monitors kill shelters and strives to place animals with new families. Mark and his family foster many different dogs each year, and welcomed Duchie into their home after her adoptive family had returned her due to an allergy.
Though they were accustomed to welcoming many new dogs to their home, Duchie, a miniature pincher/huskie, quickly found a special place in their hearts. Formally adopted by Mark and his family in December, Duchie goes everywhere with them. She even went skiing with them this winter and enjoyed playing in and cooling off in the snow. She is loyal and kind and loves to go on off-leash hikes in the woods.
We are thrilled to feature Duchie’s story and celebrate her as our June Pet of the Month!
To submit YOUR pet to be featured, visit the Eversheds Sutherland SALT Shaker App, click the Pet of the Month in the drop-down, then click “Submit A Pet.”
New Jersey Legislature Passes Corporate Tax Increases, Still Negotiating with Governor
In the midst of a budget showdown between New Jersey’s Legislature and Governor Murphy, on June 25, 2018, the Legislature passed a replacement bill that seeks to raise revenue with a temporary Corporation Business Tax “surtax” on corporations meeting certain income thresholds and by limiting New Jersey’s dividend exclusion. The Legislature also responded to the Tax Cuts and Jobs Act (TCJA) passed by the United States Congress late last year by decoupling from the IRC § 199A qualified business income deduction. However, the current version of the bill fails to address other TCJA provisions, such as the tax on global intangible low-taxed income and the foreign-derived intangible income deduction. With the Governor threatening to veto the bill, the Legislature and the Governor are expected to continue negotiations over the next few days as the end of June deadline for the budget approaches.
View the full legal alert.
State Tax Reform Roundtables
The Tax Executives Institute’s (TEI) State and Local Tax Committee is holding a series of State Tax Reform Roundtables to enable SALT professionals to stay abreast of state tax developments associated with the Tax Cuts and Jobs Act, to engage with subject-matter experts, and to hear from peers regarding their “boots on the ground” knowledge and experience.
This series of calls will create a platform for all members to learn, share and engage about issues of interest. Each call will highlight a particular topic and will provide a general update of state tax reform developments. Partners Jeff Friedman, Eric Tresh and Todd Lard will present on the roundtable calls, and details of their presentations are below.
IRC 965, BEAT, GILTI and FDII – Through the Lens of a SALT Professional + Recent Developments
June 21, 2018
Presenter: Jeff Friedman
Legislative Roundup – What are the States Doing + Recent Developments
July 19, 2018
Presenters: Eric Tresh and Todd Lard
IRC Sec 118, Credits and Incentives – What To Do With All That “New Cash” + Recent Developments
August 9, 2018
Presenter: Todd Lard
Join the roundtable community now!
Giving Credit Where It Isn’t Due: Arkansas Office of Hearings and Appeals Treats Sales of Tax Credits as Business Income
On June 13, 2018, an Arkansas Administrative Law Judge concluded that a taxpayer’s proceeds from dispositions of tax credits were apportionable business income. In Arkansas, business income arises from either: (1) transactions and activity in the regular course of the taxpayer’s business (the transactional test); or (2) income from the acquisition, management and disposition of property that constitutes integral parts of the taxpayer’s regular business (the functional test). The ALJ followed the Commissioner’s interpretation of the term “integral” and concluded that the taxpayer’s sales of credits “contributed to and were identifiable with (i.e. ‘integral parts of’) the Taxpayer’s trade or business operations.” The taxpayer routinely sold tax credits and had previously lost an appeal on the same issue because its tax credit depositions generated the majority of its federal taxable income. The taxpayer argued that the years at issue in this appeal were different because tax credits no longer constituted the majority of the taxpayer’s federal taxable income. The ALJ rejected this argument, concluding that the proceeds from the dispositions of the credits were integral and business income under the functional test. Dkt. Nos. 18-232, 18-405, Ark. Dep’t of Fin. & Admin., Office of Hearings & Appeals (Jun. 13, 2018).