The New York Tax Appeals Tribunal affirmed its prior decision, upholding an Administrative Law Judge’s issuance of a subpoena requiring three Department employees to appear, and for the Department to produce documents for in-camera review, which included third-party tax information. The Tribunal rejected the Department’s request for re-argument because the Department presented no new issues, only re-asserting that the Tribunal misapplied its legal authority in compelling the testimony of the Department employees and ordering the production of privileged documents. While the documents and testimony include third-party tax information, the Tribunal found that Administrative Law Judges have historically allowed in-camera review of materials and documents when determining if the Department’s claim of privilege is warranted.

In re 123 LINDEN, LLC, Nos. 830249, 830866, (N.Y. Tax App. Trib., Oct. 30, 2025).

The Washington Court of Appeals held that a Washington-based consulting firm was not entitled to a refund of Washington Business and Occupation (B&O) Tax because the taxpayer failed to show that the benefit of services provided to its client were received outside of Washington.

The taxpayer provided technology information services to a number of software companies, such as “translating client websites into foreign languages, creating and updating customer-facing websites, providing support for product launches in foreign markets, merchandising support, and website management.” During the tax years at issue, over 85% of the taxpayer’s gross income was attributable to services performed for one client. The taxpayer and its client entered into a contract outlining their business relationship; however, certain assignments were specified in statements of work. For taxable years beginning January 2011 through March 2015, the taxpayer remitted nearly $455,000 in B&O Tax. The taxpayer sought a nearly $404,000 refund, arguing that for the taxable years at issue, the Department failed to apportion its gross income properly. The taxpayer based its refund claim on the “reasonable proportional method” of attributing receipts under Washington Admin. Code 458-20-19402, which treats Washington’s single sales factor apportionment statute, Wash. Rev. Code Ann. § 82.04.462. On this basis, the taxpayer apportioned its revenue based on internet usage data.

The Audit Division for the Washington Department of Revenue requested and obtained further information on the statements of work, concluding that the taxpayer’s services rendered to its client related to “localization services” provided to a specific team located in Washington. The auditors determined that the taxpayer’s client received the benefit of such localization services in Washington, and, as a result, the services rendered were subject to tax in Washington. The taxpayer sought review at the Washington Board of Tax Appeals, which deemed most of the localization services taxable in Washington. The taxpayer sought review at the Washington Court of Appeals.

On Appeal, the taxpayer argued that its client did not receive the benefit of the services provided in Washington, but, instead, received such benefit in every country where the client’s products were marketed, and, therefore, its numerator for Washington purposes should have been zero. The taxpayer further asserted that the Department incorrectly calculated its sales factor denominator, arguing that it had no throw out income. Note, for state corporate tax purposes, certain states may opt to “throw-out” or remove income from the sales factor denominator when such income is not subject to tax in another state, which, in effect, operates to increase a taxpayer’s apportionment percentage as a whole.

Ultimately, the Washington Court of Appeals affirmed the Board of Tax Appeal’s decision, holding that 1)  the taxpayer failed to show where its client received the benefit of its services, and, in the alternative, if the client received the benefit of the taxpayer’s services in more than one state, the taxpayer also failed to show where the client primarily received the benefit of the taxpayer’s services; and 2) the taxpayer failed to demonstrate that service receipts included in its denominator were subject to tax in another state.  

Valente Solutions, LLC v. Washington Department of Revenue, No. 87280-0-I (Wash. Ct. App. Dec. 22, 2025).

Calling all trivia fans! Don’t miss out on a chance to show off your SALT knowledge!

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This week’s question: In which state did the Court of Appeals recently rule that an online ticket seller was required to collect sales and use tax even before the state enacted its marketplace laws, because the marketplace laws were merely a “clarification rather than substantive change”?

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

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The Alabama Tax Tribunal (Tribunal) determined that a wastewater treatment facility was entitled to a sales and use tax exemption for equipment purchased for use in its wastewater treatment business because the equipment was used primarily for exempt pollution control purposes.

The taxpayer, a privately owned entity that provided wastewater collection and treatment services, had previously received exemption certificates from the Alabama Department of Revenue (the Department) to purchase pollution control equipment and materials tax free (e.g., pumps, pipes, valves, fittings, etc.). been allowed to purchase equipment tax free.

In 2023, the taxpayer applied for another exemption certificate, but the Department only partially granted the request, limiting the exemption to certain specified pieces of equipment, while denying the exemption for certain materials that transported wastewater from homes and other properties to sewer lines. The taxpayer appealed the denial, and during the appeal, the Department provided a similar partial grant for the taxpayer’s 2024 exemption certificate request. 

The taxpayer argued that under both the statute and the regulation the materials were exempt devices used to control water pollution, whereas the Department asserted that the materials in question were not purchased for pollution control purposes, but were purchased to fulfill contracts with its customers as a part of the taxpayer’s profit-motivated business. The Tribunal concluded that because 1) wastewater is a form of water pollution and 2) the taxpayer’s wastewater treatment plants were built for the sole purpose of treating wastewater, the taxpayer was entitled to the full exemption certificate.  The Tribunal also noted that the regulation acknowledges that an incidental or secondary purpose does not deprive the taxpayer of the exemption.

Baldwin Cnty. Sewer Serv. LLC v. State of Alabama Dep’t of Revenue, No. S. 23-654-JP (Ala. Tax Trib. Oct. 21, 2025).

In this episode of the SALT Shaker Podcast, SALT Partners Jeremy Gove and Chelsea Marmor kick off 2026 with a lightning round of their favorite SALT issues from 2025.

They cover market-based sourcing, tax base expansions, remote worker litigation, and the classification of streaming services as tangible property. The conversation also touches on federal intervention in AI regulation, the ongoing relevance of federal limits on state taxing power, and emerging local tax trends.

This week’s overrated/underrated segment asks: Are New Year’s resolutions overrated or underrated?

For questions or comments, email SALTonline@eversheds-sutherland.com. Subscribe to receive regular updates hosted on the SALT Shaker blog.

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Calling all trivia fans! Don’t miss out on a chance to show off your SALT knowledge!

We will award a prize for the smartest (and fastest) participant.

This week’s question: The New Jersey Senate recently passed a bill that would exempt what type of income from the personal income tax?

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

The prize for the first response to today’s question is a $25 UBER Eats gift card. This week’s answer will be included in our SALT Shaker Weekly Digest, distributed on Saturday. Be sure to check back then!

The Indiana Tax Court held that the Indiana Board of Tax Review misapplied the law by applying a “per-se” burden-of-proof standard, which deemed the taxpayer to have satisfied its burden of proof merely by offering an appraisal that was prepared by an expert in accordance with generally accepted appraisal principles. The taxpayer, the owner and operator of a retail department store in Indiana, appealed property assessments for 2019-2021 to the Indiana Board of Tax Review. The Board found significant flaws in both parties’ expert appraisals, but ruled that the taxpayer’s appraisal was “the most persuasive valuation evidence” presented by the parties; finding that the Assessor’s appraisal was “less credible,” and the flaws in the taxpayer’s analysis were “somewhat less egregious.” On appeal to the tax court, the Assessor argued that the Board erred in its conclusion that the taxpayer’s appraisal satisfied the burden of proof simply by being prepared by an expert – arguing that an expert appraisal is not “per se evidence” that an assessment is incorrect. The tax court agreed with the Assessor, stating that for an appraisal to satisfy the taxpayer’s burden of proving that the assessment is incorrect, the appraisal’s “analysis and conclusions of value must stand on their own.”

Madison Cnty. Assessor v. Kohl’s Ind., LP, Ind. T.C., No. 24T-TA-00009, 11/17/25.

Calling all trivia fans! Don’t miss out on a chance to show off your SALT knowledge!

We will award a prize for the smartest (and fastest) participant.

This week’s question: Which state’s governor recently vetoed legislation that would have allowed professional employer organizations to include certain expense reimbursements in their apportionment factor? 

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

The prize for the first response to today’s question is a $25 UBER Eats gift card. This week’s answer will be included in our SALT Shaker Weekly Digest, distributed on Saturday. Be sure to check back then!

On Friday, December 19, the City Council passed a budget which includes a new Social Media Amusement Tax (SMAT) and increases several existing taxes. If enacted, the SMAT would be a first of its kind tax (in the US) imposed exclusively on social media companies. The SMAT revenue is earmarked to fund Chicago’s mental and behavioral health operations and investments.

Read the full Legal Alert here.

Calling all trivia fans! Don’t miss out on a chance to show off your SALT knowledge!

We will award a prize for the smartest (and fastest) participant.

This week’s question: In the November 2025 elections, voters in which state approved a constitutional amendment that prohibits the legislature from imposing a state tax on the property of a deceased individual’s estate because of the death of the individual?

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

The prize for the first response to today’s question is a $25 UBER Eats gift card. This week’s answer will be included in our SALT Shaker Weekly Digest, distributed on Saturday. Be sure to check back then!