Photo 1.jpgAtlanta Office

Pictured from the left to right: Scott Wright, Alla Raykin, Suzanne Palms, Rether White, Chris Beaudro, Hanish Patel, Melissa Bragg, Maria Todorova, Jonathan Feldman, Justin Brown

 

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New York Office

Pictured from left to right: Chelsea Marmor, Aruna Chittiappa, Marc Simonetti, Sue Ann Charles, Dmitrii Gabrielov, Andrew Appleby, Nicole Boutros and Evan Hamme

 

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Sacramento Office

Pictured from left to right: Carley Roberts, Nick Kump, Eric Coffill, Robert Merten, Mike Le, Tim Gustafson, Jessica Allen and Stefanie Fulps


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Washington DC Office

Pictured from left to right, front row to back row: Todd Lard, Dominique Wharton, Michele Borens, DeAndre Morrow, Liz Cha, Jessie Eisenmenger, Stephanie Do, Sam Trencs, Debbie Manders, Mike Kerman, Charlie Kearns, Candice Alba, Jeff Friedman, Todd Betor and Michael Spencer 

By Liz Cha and Todd Lard

The Tennessee Department of Revenue issued a letter ruling finding that a taxpayer’s annual subscription charge for its cloud-based employee scheduling services is subject to Tennessee sales and use tax. 

In Tennessee, the use of computer software is subject to tax, even if it remains in the possession of the dealer or a third party. If a transaction involves taxable and non-taxable components, the entire transaction is subject to sales tax if the true object of the transaction is a crucial, essential, necessary, consequential or integral element of the transaction.

The taxpayer provides software and services that allows its customers to manage employee schedules remotely over the Internet through personal computers and handheld devices on a website or application. The taxpayer retains the scheduling software, and users in Tennessee access it remotely.

The Department determined that the true object of the transaction is the remotely accessed software, not the non-taxable services provided by the taxpayer, because without the software, the taxpayer’s services would be of no value to the subscribers. Thus, the cloud-based employee scheduling services are subject to Tennessee sales tax. Tenn. Dept. of Rev., Letter Ruling No. 17-15 (10/11/17).

Read our November 2017 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.

ANNOUNCEMENTS

  • 2017-2018 Maryland State Bar Association State Tax Study Group
    The Maryland State Bar Association (MSBA) Taxation Section works to further the mutual interest of MSBA members concerned with the law relating to taxes through stimulating the interest of MSBA members and informing them in the law concerning Maryland and Federal taxation; studying proposed improvements and reforms in such laws through legislation and otherwise; and generally promoting the interests and welfare of Bar members and the public in the areas of taxation. Throughout 2017 and 2018, Eversheds Sutherland SALT will host a live videocast of the MSBA State Tax Study Group’s meetings on the third Tuesday of a month from 8:30 – 9:30 a.m. Eastern in our Washington, DC office (700 Sixth Street, NW, Suite 700, Washington, DC).

EVENTS – LEARN ABOUT OUR UPCOMING EVENTS

Bathroom pose (002).jpgMeet Leon, the spunky little kitten belonging to Legal Secretary Samantha Duzniak. For the longest time, Sam did not want pets, but things changed when Leon and his sister Daphne were found in the street at just three weeks old. Sam’s sister helped foster the two siblings and ended up adopting Daphne, leaving Leon in need of a home. Sam would receive multiple pictures of Leon with messages of “Adopt me!” from her sister each day over the next several weeks. Eventually, Leon’s cute little face grew too irresistible to deny, and it wasn’t long before he had a home with Sam.

Snuggle time (002).jpgThis sweet boy is now four months old and full of energy! He loves galloping around the kitchen, playing hide and seek, and bird watching. His favorite toys include rubber bands and Mr. Mouse, who unfortunately lost his tail recently during playtime. When the rubber bands shoot across the floor, Leon runs right behind, often crashing into walls, tables and chairs to get to them. Strange as it seems, Leon also loves water. He climbs into the bathtub to watch the water flow from the faucet. Needless to say, the squirt bottle has not been the most effective discipline tool.

Leon has regular play dates with his sister Daphne, and they love wrestling and chasing each other around and around. They wipe each other out, and come back from their play dates exhausted. When this active boy is not galloping around or playing, he loves to snuggle and watch TV with Sam.

We are so excited to feature Leon as our November 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.”

By Liz Cha and Carley Roberts

The California Court of Appeal held that the entire value of an air taxi company’s jets were subject to the County of Los Angeles 1% personal property tax, despite the fact that the jets spent 40% of their time outside of California. The court reasoned that the brief touchdowns of the jets in out-of-state airports were insufficient for other states to acquire situs over the jets such that California could no longer tax the full value of the aircraft. The court further stated that the landing-based situs rule for aircraft under California Revenue & Tax Code section 1161(b) only applies to fractionally owned aircraft and thus declined to extend this special situs rule to all aircraft. Jetsuite Inc. v. Los Angeles, No. B279273 (2d Dist. 2017).

By Chelsea Marmor and Jonathan Feldman

The Washington Administrative Review and Hearings Division of the Department of Revenue found that an out-of-state diamond and gold wholesaler was subject to the business and occupation (B&O) tax based on in-state consigned property. The wholesaler consigned jewels to Washington jewelry retailers for five days at a time, during which time the retailers had the option to purchase. The audit began when the Department identified the wholesaler as a creditor in financing statements within Washington UCC filings. Upon petition of an assessment for the wholesaling B&O tax, the Hearing Division concluded that the consigned jewels constituted substantial nexus as the person who consigns property retains ownership of that property. Further, the B&O tax applied because the jewels were located in Washington at the time they were sold to the retailer and thus the purchaser received the goods in Washington. Det. No. 17-0057, 36 WTD 529 (2017).

Tax reform efforts, if successful, will have a major impact on virtually every business. There has been a great deal of reporting on the tax reform process and the proposed changes to the US Internal Revenue Code (IRC). This Alert provides a high-level overview of the top 7 tax reform issues that all executives need to know:

  • Current status of tax reform
  • Tax rate for corporations and partnerships and other pass-through income
  • Limitations on interest deductibility
  • Immediate deductibility of otherwise capital costs
  • Changes to the US international tax system
  • State and local tax impacts
  • Compensation and benefits provisions

View the full Legal Alert.

Eversheds Sutherland (US) is a proud sponsor of the COST Pacific Northwest Regional State Tax Seminar on December 7, 2017, in Seattle, Washington. The Eversheds Sutherland SALT Team presents and details of their presentations are below:

“Discussion of National State Tax Cases and Issues”
Speakers: Jeff Friedman and Michele Borens

“The Collision of Formulary Apportionment and Transfer Pricing”
Speakers: Todd Lard and Ted Friedman

“State Tax Policy Update – Including State Tax Implications of Federal Tax Reform”
Speaker: Todd Lard

View details, including registration information, here.

 

Eversheds Sutherland (US) is a proud sponsor of the TEI Silicon Valley Chapter State and Local Tax Day on December 5, 2017, in Santa Clara, California. The Eversheds Sutherland SALT Team presents and details of their presentations are below:

“The Collision of Formulary Apportionment, Alternative Apportionment and Transfer Pricing”
Speakers: Eric Tresh and Tim Gustafson

“State-Level Gross Receipts Taxes:  More to Come?”
Speakers: Jeff Friedman and Marc Simonetti

“Property Tax Disputes – Best Practices”
Speakers: Eric Tresh and Robert Merten

“Sharing is Caring: The Implications of Increased Information Sharing by Revenue Authorities”

Speakers: Carley Roberts and Marc Simonetti

 

“Jurisdictions Overreaching: A Survey of Recent Sales & Use Tax Decisions”
Speakers: Michele Borens and Jeff Friedman

“California’s Department of Taxation & Fee Administration and Office of Tax Appeals:  What Now?”
Speakers: Eric Coffill and Carley Roberts

View details, including registration information, here. 

By Dmitrii Gabrielov and Andrew Appleby

The New York State Department of Taxation and Finance issued an advisory opinion determining that non-US unauthorized life insurance companies’ premiums were not includable in the New York State insurance franchise tax apportionment factor. The Department reasoned that the apportionment statute requires a life insurance company to report its premiums on a basis “consistent with” the Insurance Law filing requirements for authorized insurers. The applicable Insurance Law statute: (1) does not apply to unauthorized insurers; and (2) requires (authorized) non-US insurers to report only their US business and assets. Therefore, the Department concluded that a non-US unauthorized life insurance company’s premiums were neither “New York premiums” nor “total premiums” (the premium factor numerator and denominator, respectively). Notably, the Department relied on Insurance Law filing requirements to determine the insurance companies’ tax treatment. N.Y. Advisory Opinion TSB-A-17(2)C (Oct. 4, 2017).