Eversheds Sutherland (US) is a proud Gold-Level sponsor of the NYU 36th Institute on State and Local Taxation on December 4-5, 2017, in New York, New York. The Eversheds Sutherland SALT Team presents, and the details are below:

Review and Preview of Federal Constitutional Issues
Speaker: Jeffrey A. Friedman

State Tax Aspects of Cross-Border Transactions and Federal Legislation
Speaker: Maria M. Todorova

View details, including registration information, here.

 

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 November submissions is Monday, November 27.

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.

View previously-featured furry friends.

By Dmitrii Gabrielov and Tim Gustafson

The New York State Supreme Court, Appellate Division, affirmed the New York City Tax Appeals Tribunal’s (Tribunal) determination that certain real estate transactions were subject to the New York City Real Property Transfer Tax (RPTT) under the step transaction doctrine.

The taxpayer and a nonparty owned, respectively, 45% and 55% tenant-in-common interests in New York City real estate. They contributed their tenant-in-common interests to a newly formed LLC in exchange for 45% and 55% LLC membership interests, respectively. On the same day, the taxpayer transferred its 45% LLC membership interest to the nonparty in exchange for cash and debt relief.

In the Tribunal proceeding, the taxpayer argued that the contribution of the 45% tenant-in-common interest to the LLC was exempt from RPTT as a “mere change of form of ownership” and the transfer of the 45% LLC membership interest was exempt as a transfer of a noncontrolling interest in an entity that owns real property. However, the Tribunal applied the step transaction doctrine to characterize these transactions as a taxable transfer of the 45% tenant-in-common interest in exchange for cash and debt relief. The Tribunal found that the contribution agreement contained provisions more typical of a sale than the formation of a joint venture. The Tribunal noted, in part, that the taxpayer was released under its obligations under the mortgage on the property and received back its collateral while the nonparty was not released and had to provide a replacement letter of credit. The nonparty’s obligation to close also was conditioned on the LLC’s interest in the property being insured while the taxpayer’s obligation to close was not.

The Appellate Division affirmed the Tribunal’s application of the step transaction doctrine. The Appellate Division also held that even if the step transaction did not apply, the taxpayer’s contribution to the LLC did not constitute a “mere change of form of ownership” because the taxpayer no longer held a 45% direct or indirect interest in the real property at the conclusion of the same-day transactions. GKK 2 Herald LLC v. N.Y.C. Tax App. Trib., No. 82/16 4074 (N.Y. App. Div., 1st Dep’t Oct. 10, 2017).

By Samantha Trencs and Eric Coffill

The Colorado Court of Appeals held that a corporate parent doing business in Colorado was not required to include its subsidiary holding company that held no property or payroll in Colorado or elsewhere in its Colorado unitary combined corporate income tax report. The holding company was not an “includable” corporation under Colorado’s 80/20 test because it did not have more than 20% of its property and payroll assigned to locations in the US. The court also held that even though the holding company and its foreign subsidiaries (which held property and payroll outside of the US only) elected to be treated as a single C corporation on its federal return under the federal check-the-box regulations, Colorado was not bound by this election for state tax purposes. The court also rejected the Department of Revenue’s economic substance argument to include the holding company in the Colorado combined report. Agilent Technologies, Inc. v. Dep’t of Revenue of Colorado, No. 16CA849 (Colo. App. Nov. 2, 2017).

On November 2, 2017, Republicans in the House of Representatives released their much-anticipated tax reform bill. The Tax Cuts and Jobs Act proposes numerous changes to the Internal Revenue Code, many of which will have an impact on taxpayers’ state and local tax liabilities.

  • Most states conform to the federal income tax base —at least in part. Consequently, federal base changes—either in the form of contraction or expansion—will have an impact on the state tax bases. States will need to weigh many considerations as they decide whether to conform.
  • The Commerce Clause may restrict a state’s ability to conform to some of the international tax provisions of the House Plan that may not also apply to purely domestic companies.
  • The House Plan proposes numerous changes that would move toward a territorial system of taxation. These will have an impact on state and local taxation, both by changing a taxpayer’s federal taxable income and by impacting taxpayer decision-making.

View the full Legal Alert.

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).

Following is the 2017-2018 MSBA State Tax Study Group schedule:

  • November 21, 2017
    Speaker Charles Zephir on “Administrative Reorganization of the Hearings and Appeals Division and Recent Cases”
  • December 19, 2017
    Speaker Brian Oliner on “Recent and Pending Litigation; Maryland General Assembly Prognosis”
  • January 16, 2018
    Speakers Vince Guida Jr., Bill Hammond and Jeff Comen on “Update of Cases; Recent and Pending Legislation concerning SDAT”
  • February 20, 2018
    Speakers Denise Herndon and Brian Berg on “SDAT Reorganization; Personal Property Tax Developments”
  • March 20, 2018
    Speaker Sam Buo on “Comptroller Business Collections and Unclaimed Property Issues”
  • April 24, 2018
    Speakers Wally Eddelman and Sarah Dufresne on “Analysis of the Last Session of the Maryland General Assembly; Income Tax Developments”
  • May 15, 2018
    Speakers Chris Riley, Jay Maschas, Robert Scheerer, and Kimberly Cordish on “Pending and Enacted Maryland Legislation; Developments in the Maryland Comptroller’s Office”

Members attending are required to sign in and show a photo ID at the lobby security desk, as well as check in with our reception on the 7th floor.

For questions regarding the DC simulcast, please contact Jessie Eisenmenger at JessicaEisenmenger@eversheds-sutherland.com.

By Dmitrii Gabrielov and Andrew Appleby 

The New York State Supreme Court, Appellate Division, affirmed the New York City Tax Appeals Tribunal’s (Tribunal) decision that Aetna’s subsidiary health maintenance organizations (HMOs) were subject to the New York City General Corporation Tax (GCT) for 2005 and 2006. The Appellate Division determined that the Tribunal’s reasoning was not arbitrary and capricious. The Tribunal reasoned that the GCT exemption for companies doing an insurance business in New York State did not apply because the HMOs were regulated almost entirely under New York’s Public Health Law, not the Insurance Law, and therefore were not doing an insurance business in the state. Aetna, Inc. v. N.Y.C. Tax App. Trib., No. 70/16-4533 (N.Y. App. Div., 1st Dep’t Oct. 19, 2017).

Read our October 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.

FEATURED PUBLICATIONS

  • Eversheds Sutherland SALT Scoreboard Publication – Third Quarter 2017
    Eversheds Sutherland SALT releases the seventh edition of its SALT Scoreboard, a quarterly publication that tracks significant state tax litigation and controversy developments. This edition of the SALT Scoreboard highlights developments regarding the sales taxation of drop shipments and the inclusion of entities in a combined report. Also included is a Spotlight on cases involving the United States Commerce Clause.
  • A Pinch of SALT: Getting to First Base with Your New Assessment
    At the conclusion of a state tax audit resulting in an assessment, one of the first questions to consider is: “How much time do we have to do something about this?” Likely, there is a reference to a deadline of some sort somewhere around the middle of page 2 of the assessment notice. Those deadlines are often 30, 60, or 90 days. In this edition of A Pinch of SALT, using baseball as a theme, Eversheds Sutherland attorneys Open Weaver Banks and Charles Capouet describe variations in state administrative appeal processes and considerations taxpayers should be aware of once they receive an assessment or similar notification from a state taxing authority.
  • Don’t Get Your Hopes Up – Maryland Letter Ruling Process is Hardly a Done Deal
    In recent years, the tax community has engaged in an effort to promote transparency in tax administration. This effort culminated in Maryland with the passage of Senate Bill 843 by the 2016 General Assembly and was enacted in Chapter 582 of the Acts of 2016 (the “Act”). Included in a statute that largely addressed the evaluation process of certain tax credits are four lines that could provide Maryland taxpayers with the ability to obtain guidance through private letter rulings (“PLRs”). Specifically, the Act required the Comptroller to adopt procedures and protocols related to the implementation of a PLR process intended to provide guidance to taxpayers. The legislation was hailed in tax blogs and tax publications, such as Tax Analysts and the Council On State Taxation’s Scorecard on Tax Appeals & Procedural Requirements. In their article for the October 2017 edition of Tax Talk, Eversheds Sutherland attorneys Jessica Eisenmenger and DeAndre Morrow discuss that the kudos may have been premature, as Maryland’s 2017 legislative session has called into doubt the future prospects of the Act’s PLR process.

EVENTS – LEARN ABOUT OUR UPCOMING EVENTS

IMG_1728.jpgMeet Louie, the handsome Maltese belonging to Sacramento SALT Associate Mike Le and his girlfriend Lai. Louie is six years old and maintains his youthful appearance effortlessly with the puppy haircuts he receives from Lai.

Louie has been known to play the “shy guy” around new people and animals when he first meets them. But when it comes to meal time, Louie does not hold back. He LOVES his food. He will growl (though not at all intimidating) and protect his meal at all costs!

IMG_4870.jpgAlso affectionately known as “Bubba,” Louie loves going for walks and playing with his favorite toy – his orange dragon. Another favorite activity of Louie’s – possibly a Pet of the Month first – is taking baths. As soon as he hears Mike say, “bath time,” Louie runs excitedly to the tub. When it’s time to wind down, Louie curls up in his bed on the floor next to Mike and Lai. In the morning, it only takes a few little cries for either Mike or Lai to pick him up and snuggle with him in their bed!

We are thrilled to feature Louie as our October 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.”

At the conclusion of a state tax audit resulting in an assessment, one of the first questions to consider is: “How much time do we have to do something about this?” Likely, there is a reference to a deadline of some sort somewhere around the middle of page 2 of the assessment notice. Those deadlines are often 30, 60, or 90 days.

In this edition of A Pinch of SALT, using baseball as a theme, Eversheds Sutherland attorneys Open Weaver Banks and Charles Capouet describe variations in state administrative appeal processes and considerations taxpayers should be aware of once they receive an assessment or similar notification from a state taxing authority.

View the full article.